A UK High Court judge has ruled that Chinese law must govern the claims of victims seeking recovery of more than 61,000 Bitcoin seized from a fraud totaling approximately £4.1 billion. The decision settles an important preliminary legal question but does not determine whether victims can establish ownership of the cryptocurrency or how much they may recover.
Background of the Fraud
The case stems from investment scams arranged by Zhimin Qian in China from 2014 to July 2017. Approximately 10 schemes operated through entities including "Tianjin Lantian Gerui Electronic Technology," offering digital currencies, elderly care services, and consumer products. The company lacked authorization to offer financial products.
According to court records, at least 128,409 investment contracts were involved in the scams, with total funds collected of approximately 40.23 billion yuan, equivalent to roughly £4.1 billion or over $5 billion. Most funds were used to pay off previous investors, while some were converted into assets including Bitcoin.
More than 100,000 BTC were purchased through a Huobi trading account before Qian fled to Myanmar in July 2017 to evade arrest. She traveled to London in September 2017 and, with an associate named Wen, began converting Bitcoin into other assets.
The Metropolitan Police subsequently seized four devices containing more than 61,000 BTC from a safety deposit box and a property where the two individuals were living. Qian later pled guilty at Southwark Crown Court to possession of criminal property in the form of cryptocurrency.
The Legal Ruling
Victims initiated civil proceedings under Section 281 of the Proceeds of Crime Act 2002, seeking court declaration that recovered property belongs to them. Justice Turner's judgment addressed whether claims should be assessed under English law, Chinese law, or both.
The judge ruled that Chinese law applies, rejecting arguments that English legal principles should govern. Justice Turner found that the contracts, investor payments, and Bitcoin purchases were rooted in China, and that the physical location of the cryptocurrency in England did not change which law governed the underlying rights.
The judge also rejected the suggestion that English law should apply by default because Chinese law had not yet been fully presented in court, stating that identifying applicable law must precede determining what that law says.
Implications for Victim Recovery
Section 281 requires victims to establish an ownership interest in the property rather than simply demonstrate they lost money in the fraud. The court has not yet determined whether individual applicants have proprietary rights under Chinese law, nor how much they might ultimately recover.
