TheBlock
A UK High Court judge has ruled that Chinese law will determine whether victims of a multibillion-dollar fraud have rights to more than 61,000 BTC seized by London's Metropolitan Police. The bitcoin, now valued at roughly $5 billion, was allegedly bought with proceeds from Ponzi schemes run by Zhimin Qian in China between 2014 and 2017. About 16,000 Chinese investors have joined the UK proceedings.
Why it matters
The judgment settled the governing law, not ownership. The investors had asked the court to apply English law, or a combination of English and Chinese law, while prosecutors argued that Chinese law should control the claims. Mr Justice Mark Turner said applicants must establish a proprietary interest in the bitcoin, rather than only a creditor claim for repayment from the fraudsters.
The bitcoin was acquired through a Huobi, now HTX, trading account, over-the-counter transactions in China and mining. Qian later moved to London, where police seized devices used to access the assets in searches in October and November 2018. She was sentenced to 11 years and eight months in prison last November after pleading guilty to money laundering offenses.
Market impact
The court must still decide whether the investors can establish ownership rights under Chinese law. Lawyers representing the claimants are pursuing an appeal, while the ruling could improve the UK government's chances of retaining much of the seized bitcoin. The case therefore leaves the eventual ownership and disposition of a large government-held BTC balance unresolved.
The UK is estimated to hold 61,245 BTC, ranking third among governments behind the United States and China. The investors may also be limited to their original investments and interest rather than a share of bitcoin's gains, according to reporting on the proceedings.
Frequently asked questions
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What did the UK High Court decide about the seized bitcoin?
The court ruled that Chinese law must determine whether the fraud victims have proprietary rights to more than 61,000 BTC seized by London's Metropolitan Police.
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Did the ruling determine who owns the 61,000 BTC?
No. The judgment settled the governing law but left ownership unresolved. The court must still decide whether the investors can establish rights under Chinese law.
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Why are Chinese investors claiming the seized bitcoin?
The bitcoin was allegedly bought with proceeds from Ponzi schemes run by Zhimin Qian in China between 2014 and 2017. About 16,000 Chinese investors have joined the proceedings.
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What must the investors prove in the UK proceedings?
They must show a proprietary interest in the bitcoin. A personal claim for repayment from the fraudsters, as a creditor, is not enough.
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Could the UK government keep the seized bitcoin?
The ruling could improve the government's chances of retaining much of the bitcoin, valued at roughly $5 billion. Claimants are pursuing an appeal, so the final outcome remains unsettled.
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