A UK High Court judge has ruled that Chinese law must govern claims over more than 61,000 Bitcoin seized in connection with a large-scale fraud orchestrated in China. The decision, which determines the legal framework for victims seeking to recover their assets, marks a significant preliminary step in a complex international case.
The ruling by Justice Turner rejected arguments that English law should apply. According to the judge, the contracts, investor payments, and Bitcoin purchases were fundamentally rooted in China, and the location of the cryptocurrency in England did not alter which law applied to the underlying rights. This decision addresses a preliminary question raised under Section 281 of the Proceeds of Crime Act 2002, which allows claimants to ask a court to declare recovered property as theirs.
The fraud, arranged by Zhimin Qian, took place in China between 2014 and July 2017. It involved approximately 10 schemes, including those related to digital currencies, through entities such as Tianjin Lantian Gerui Electronic Technology. An audit indicated that at least 128,409 investment contracts were associated with these scams, which collected an estimated 40.23 billion yuan (approximately £4.1 billion or over $5 billion).
During the period of the fraud, more than 100,000 Bitcoin were reportedly purchased via a Huobi trading account. Zhimin Qian fled China in July 2017, eventually arriving in London in September of that year. Following her arrival, she and an associate began converting Bitcoin into other assets. Subsequently, the Metropolitan Police investigated and seized over 61,000 Bitcoin, found in a safety deposit box and a property.
Zhimin Qian pleaded guilty at Southwark Crown Court to possession of criminal property in the form of cryptocurrency. This plea formed the background to the subsequent civil dispute over the legal ownership of the recovered assets.
However, the UK High Court’s recent ruling does not determine whether the victims can establish ownership of the cryptocurrency under Chinese law, nor does it specify how much they may ultimately recover. The judge’s decision focused solely on identifying the applicable law. Section 281 of the Proceeds of Crime Act requires victims to establish a proprietary interest in the property, rather than simply demonstrating that they lost money in the fraud.
Uncertainty remains regarding the prospects for victims to recover their losses. The application of Chinese law introduces a new layer of complexity, as the legal requirements for establishing ownership and the potential avenues for restitution under that jurisdiction are yet to be determined by the court. The ruling underscores the challenges inherent in cross-border cryptocurrency fraud cases, where the location of seized assets may not align with the jurisdiction governing the original transactions and claims.
Why This Matters
The materials describe a narrow update: A UK High Court judge determined that Chinese law, not English law, will be used to assess claims made by victims seeking ownership of over 61,000 Bitcoin recovered from a large-scale fraud orchestrated in China. Whether victims can establish ownership of the cryptocurrency.
Broader Context
Source materials place the factual news in this context: This case arises from investment scams arranged by Zhimin Qian in China from 2014 until July 2017.
