UK Moves Closer to Keeping $5B Bitcoin Haul After High Court Ruling

The UK government's chances of keeping a 61,000 BTC haul seized from convicted fraudster Zhimin Qian have improved after the High Court in London ruled on Monday that Chinese law should govern victims' claims to the coins.

The Bitcoin is worth about $5 billion at its current price of around $83,200, per CoinGecko data.

Qian was jailed for more than 11 years last year after pleading guilty to fraud and money laundering charges over a Ponzi scheme that defrauded investors in China between 2014 and 2017. According to the ruling, at least 128,409 investment contracts were entered into, and victims paid in about RMB 40.2 billion, roughly £4.1 billion. About RMB 34.1 billion of that was paid back out to some victims.

Thousands of victims have applied under the Proceeds of Crime Act to have parts of the Bitcoin declared theirs. To succeed, each must show a proprietary interest in the coins, Justice Mark Turner wrote, because the law creates no broader compensation scheme for people who lost out to crime.

English law had been seen as substantially more favorable to the victims, the Financial Times reported, because it could have let them argue the Bitcoin belonged to them.

Chinese law applies

Turner sided with the Director of Public Prosecutions, who heads the Crown Prosecution Service and brought the case, finding that the fraud, the victims' payments and the contracts all took place in China. "The relevant damage occurred in China. The Applicants parted with their money in China," he wrote.

The judge reached the same answer under each of the legal routes he considered, concluding that the governing law "is Chinese law." Because the Bitcoin was bought in China, he added, tracing the coins in England cannot revive any property rights the victims lost under Chinese law when that purchase took place.

The decision does not settle who keeps the Bitcoin. Questions about the content and proof of Chinese law are matters for a later stage, Turner wrote. Prosecutors have previously said victims could be compensated through a redress scheme run from China.

Unnamed Treasury officials have privately raised whether the seized Bitcoin, worth around $7 billion at the time of Qian's trial, could help fill a shortfall in the UK's public finances, the FT reported last year.

Law firm Fieldfisher, which represents the claimants, said it is pursuing an appeal, according to the FT. "There will be a further hearing to determine the application of the law and if any of the victims are able to establish an interest in the bitcoin," the CPS said.