The High Court of England and Wales has ruled that Chinese law, rather than English law, will govern a dispute over the recovery of approximately 61,000 Bitcoin (BTC) assets linked to the Qian Zhimin case, which involved the laundering of large sums of money across China and the UK. The court determined that the victims’ investment activities and conversion of funds into Bitcoin took place mainly in China, meaning that the legal basis for ownership claims also falls under Chinese jurisdiction.
As a result, more than 16,000 Chinese victims of fraud who participated in judicial confiscation and recovery proceedings in the UK are expected to face difficulties in receiving the substantial gains generated by the surge in Bitcoin’s price under the English legal system. While UK civil recovery proceedings could have allowed ownership to be disputed based on the asset’s current market value, the determination that Chinese law is the governing law fundamentally limits the nature and scope of compensation claims.
Legal experts say that under China’s judicial system, direct ownership of virtual assets or profits resulting from price appreciation may not be recognized, and compensation is likely to be limited to the original principal and statutory interest as actual losses. Accordingly, negotiations between the British and Chinese governments over who will confiscate the large price gains remaining after repayment of the criminal proceeds’ original principal, and how those assets will be divided between the treasuries of the two countries, are expected to emerge as a new central issue in diplomatic asset-repatriation discussions.
Qian Zhimin was previously sentenced to 11 years and 8 months in prison for allegedly operating a large-scale fraudulent fundraising organization that generated approximately 130,000 victims, then converting the criminal proceeds into Bitcoin and smuggling and laundering them in the UK. At the time, British police seized and held more than 61,000 Bitcoin, the largest amount in judicial history for a single case. Following this ruling, further proceedings are expected to address the victims’ proof of specific claims and the calculation of compensation amounts.