UK court rules Chinese law governs victims' claims to $5 billion in seized bitcoin

The UK government's chances of keeping a 61,000 BTC haul — about $5 billion at current prices — have improved after the High Court in London ruled that Chinese law should govern victims' claims to the coins.

The case

The bitcoin was seized from Zhimin Qian, who was jailed for more than 11 years last year after pleading guilty to fraud and money-laundering charges over a Ponzi scheme that took money from investors in China between 2014 and 2017. The ruling says at least 128,409 investment contracts were signed and victims paid in about RMB 40.2 billion.

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.

The ruling

Justice Mark Turner sided with the Director of Public Prosecutions, finding that the fraud, the payments and the contracts all took place in China: "The relevant damage occurred in China." Because the bitcoin was bought in China, tracing it into England cannot revive property rights lost under Chinese law, he wrote.

English law had been seen as more favourable to the victims, the Financial Times reported.

What's next

The decision does not settle who keeps the bitcoin. How Chinese law applies will be decided at a later hearing. Fieldfisher, which represents claimants, is pursuing an appeal, and prosecutors have previously said victims could be compensated through a redress scheme run from China.