Chinese fraud victims seeking to recover 61,000 Bitcoin seized by the British government have lost a key legal battle after London’s High Court ruled that Chinese law, rather than English law, should govern claims to the assets.
On Monday, Justice Mark Turner rejected arguments for applying English law or a combination of English and Chinese law to the victims’ ownership claims. The judge ruled that Chinese law must determine whether the claimants have property rights in the seized Bitcoin, leaving the validity of claims for subsequent proceedings.
“The relevant damage occurred in China. The Applicants parted with their money in China,” Turner wrote. “The contractual relationships thereby induced were entered into in China.”
The dispute stems from an investment fraud scheme orchestrated by Zhimin Qian between 2014 and 2017, with British authorities seizing the assets during a money-laundering investigation. In March, victims challenged a proposed compensation arrangement involving a Chinese redress scheme, arguing that it could leave British authorities with much of the gains from Bitcoin’s appreciation.
The 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 UK ruling does not determine who ultimately owns the seized assets, with the victims’ property rights under Chinese law still to be assessed.
Fraud victims plan to appeal Bitcoin ruling
According to a Financial Times report, Law firm Fieldfisher, which represents claimants in the dispute, is pursuing an appeal against Turner’s ruling.
Despite the ruling, the case will remain before the High Court in London rather than being transferred to a Chinese court. FT reported that the next stage will involve expert evidence on Chinese law to determine whether the victims can establish ownership interests in the Bitcoin.
The Crown Prosecution Service told the FT that a further hearing would examine how Chinese law applies and whether any victims can establish an interest in the seized assets.
Related: UK sanctions three crypto exchanges tied to Russian illicit funds
The dispute involves more than 128,000 investors reportedly affected by the fraud, according to earlier Cointelegraph coverage. In March, Cointelegraph reported that law firm Candey represented about 5,700 victims.
Prosecutors previously argued that certain claims could allow a smaller group of victims and litigation funders to recover more than their actual losses.
The seized Bitcoin is currently worth more than $5 billion, according to CoinGecko.
Magazine: France is world’s most dangerous place for Bitcoiners: 90 attacks in 7 months
Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently.