Chinese fraud victims seeking to recover 61,000 Bitcoin seized by British authorities have lost a significant legal challenge. London's High Court ruled that Chinese law, rather than English law, must govern claims to the assets.
Justice Mark Turner rejected arguments for applying English law or a combination of English and Chinese law to the victims' ownership claims. The judge determined that Chinese law must decide whether the claimants have property rights in the seized Bitcoin, with the validity of claims to be assessed in subsequent proceedings.
The dispute stems from an investment fraud scheme orchestrated between 2014 and 2017. British authorities seized the assets during a money-laundering investigation. Victims challenged a proposed compensation arrangement involving a Chinese redress scheme, arguing it could leave British authorities with much of the gains from Bitcoin's appreciation.
Victims had sought to apply English law because it could have allowed them to claim direct ownership of the Bitcoin, rather than merely seek compensation as creditors. However, the ruling does not determine who ultimately owns the seized assets.
Law firm Fieldfisher, which represents claimants in the dispute, is pursuing an appeal against the ruling. The case will remain before the High Court in London rather than being transferred to a Chinese court. The next stage will involve expert evidence on Chinese law to determine whether the victims can establish ownership interests in the Bitcoin.
The dispute involves more than 128,000 investors reportedly affected by the fraud. The seized Bitcoin is currently valued at more than $5 billion.
