A group of about 16,000 Chinese victims that lost money investing in Qian Zhimin’s fraudulent crypto scheme were granted the permission to contest the October ruling that would have allowed the UK to pocket most of the gains on the roughly 61,000 BTC seized from the accused.
The UK court decided on October 16 to allow the group to continue to seek to claw back their losses on the seized crypto, which is now worth about $5 billion.
The group filed the appeal after an October 12 judgment by Justice Mark Turner that Chinese law should be used to rule on investors’ claims to the seized Bitcoin, not English law.
What’s the difference between English and Chinese law on seized crypto?
The victims in the Qian Zhimin fraud case have shone a light on the distinction between how English and Chinese law handle claims to seized cryptocurrencies.
Under English law, the claimants can claim rights to the Bitcoin itself, which would include all the dollar gains the tokens have made through the years. However, Chinese law caps the dollar value of the funds they can recover closer to the principal and interest they originally put in.
In this case, that gap amounts to billions of dollars, which could either end up in the hands of the victims or the UK Treasury.
The judge in the case, Justice Mark Turner, argued that “The relevant damage occurred in China. The applicants parted with their money in China. The alleged fraudulent representations were made in China,” as the reason he resolved on handling claims according to Chinese laws.
Justice Turner also stressed that his ruling does not decide who ultimately owns the Bitcoin. However, it does raise the bar for the claimants, who must now first establish ownership rights under Chinese law before a British court eventually decides whether their claims are strong enough for the seized assets to be returned to them.
The Crown Prosecution Service, which is pursuing civil recovery of the seized crypto sitting in UK government accounts, has argued victims can be made whole through a compensation route run from the Chinese side.
Qian ran a wealth-management Ponzi scheme through Tianjin Lantian Gerui Electronic Technology between 2014 and 2017. Court figures cited in reports put the inflows into the scheme at about £4.1 billion.
Qian fled to Britain in 2017 after converting customers’ funds into Bitcoin. She received an 11-year sentence after admitting fraud and money laundering.
Qian’s fixer, Hok Seng Ling, a 48-year-old Malaysian national living in Matlock, Derbyshire, handed the British government £5,603,305, plus £1,990 in interest, the Daily Mail reported on October 20 after a freedom-of-information request to the CPS. The confiscation sum was drawn mostly from cryptocurrency seized at his arrest.
Ling, who helped launder Qian’s funds and dodge police by booking Airbnbs and arranging helpers, received a four years and 11 months sentence at Southwark Crown Court.
There’s a forfeiture case on the same crypto in Tianjin, China
While the case continues to chug along through UK courts, prosecutors have made claims on the same assets in China. Shanghai outlet The Paper reported that the Tianjin Second Intermediate People’s Court said on October 13 that it had accepted a September 28 application from the city’s procuratorate to confiscate Qian’s criminal proceeds.
The application lists 61,896.41552945 BTC, alongside Bitcoin Cash, XRP, Dogecoin, cash in multiple currencies, jewelry and investment holdings. Prosecutors say the property, seized by British authorities, represents the proceeds of fund-raising fraud that cost more than 102,000 participants a combined RMB 19.977 billion.
The court set a six-month notice period during which affected investors can join the proceedings.
The Chinese forfeiture order does not automatically override the claims process being handled by the UK courts, setting the two jurisdictions on a possible collision course over the same wallet.
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