The U.K. High Court has ruled in a multi-billion-dollar Bitcoin clawback legal battle regarding the 61,000 BTC seized during one of the largest crypto money laundering cases in history.
The recent October 12 ruling could prove to have massive financial ramifications for around 16,000 Chinese fraud victims looking to claw back their money.
Instead of being able to recoup some of Bitcoin's mind-blowing price gains, investors may only be able to collect their initial investment plus interest.
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As per the official ruling, Mr. Justice Turner ruled that the law in China must be applied to decide whether the investors have the right to ownership of the seized cryptocurrency. Importantly, though, the court still has not ruled on whether they actually have these rights or not. Hence, the fate of this Bitcoin fortune is still up in the air.
Bitcoin scam breakdown
The saga begins back in 2014, when Chinese citizen Qian Zhimin (aka Yadi Zhang) formed Tianjin Lantian Gerui Electronic Technology. It was through this entity that Qian would create a web of fraudulent investment schemes.
Between 2014 and 2017, the firm lured in investors with promises of profitable returns on investments in the digital currencies space, senior care services, and more.
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Per court filings, they managed to get investors to sign up to 128,409 investment agreements that brought in a total of around 40.23 billion yuan ($5.9 billion, per current approx. exchange rates). Of that total, some investors received payouts of 34.1 billion yuan as per the structure of a Ponzi scheme.
Qian then took some of the money and used it to buy Bitcoin. It was determined that from June 2014 to June 2017, over 100,000 BTC was purchased using an account on the crypto exchange Huobi.
Fast forward to October–November 2018, when British police raided properties connected to Qian and her co-conspirator Jian Wen. They seized electronic devices and private keys related to the crypto. This investigation led to the seizure of over 61,000 BTC.
The significance of the new ruling
The new ruling comes as British prosecutors and Chinese investors spar over who is entitled to claim ownership of the massive stash of Bitcoin.
The Chinese investors were hoping to use English property law to their advantage. This would give them the right to follow the trail of their money through to the new Bitcoin purchased by Qian.
This would potentially enable the victims to assert their rights over the crypto itself, beyond just trying to get their initial investment money back.
However, Turner sided with the prosecutors, arguing that the vast majority of the fraudulent statements, investment agreements, payments, and initial Bitcoin purchases had a Chinese connection.