A UK High Court ruling has placed Chinese law at the center of a multibillion-pound dispute over more than 61,000 Bitcoin seized by London’s Metropolitan Police, potentially making it harder for thousands of Chinese fraud victims to establish a direct ownership claim to the assets.
Mr Justice Mark Turner ruled on Monday that Chinese law should determine whether claimants hold a proprietary interest in the Bitcoin, which is valued at about £3.8 billion, or $5 billion, at the figures cited in the proceedings. The decision does not decide who owns the Bitcoin or whether victims will recover funds. It determines the legal framework the court will use to answer those questions.
The ruling came in civil recovery proceedings brought by the Director of Public Prosecutions under the Proceeds of Crime Act 2002. About 16,000 Chinese victims have joined the UK proceedings, according to Caixin, seeking a declaration that the seized property “belongs to” them.
Their challenge is now likely to turn on whether Chinese law gives victims of the underlying fraud a property right in the Bitcoin itself, rather than a right to repayment from the person who ran the schemes.
Court rejects arguments for English law
Lawyers representing victims had asked the High Court in July to apply English law, or a combination of English and Chinese law, to the ownership dispute. Prosecutors argued that Chinese law should govern because the alleged fraud, the victims, and the original acquisition of the funds were rooted in China.
Turner accepted the prosecution’s position.
The judge said applicants seeking relief under Section 281 of the Proceeds of Crime Act must demonstrate a proprietary interest in the seized Bitcoin. A personal claim against the fraudster, such as a creditor’s right to repayment, would not by itself establish that the Bitcoin belongs to the victims.
Duan & Duan, a law firm representing some of the claimants, said the distinction is central to the litigation. Victims may be able to show that they lost money in the Ponzi schemes, but the proceedings require them to connect those losses to a recognized ownership interest in the specific assets seized in the UK.
Fieldfisher, which represents individual claimants, told the Financial Times that it is pursuing an appeal against Turner’s ruling.
Bitcoin was linked to Chinese Ponzi schemes
The seized assets are connected to Zhimin Qian, who operated investment fraud schemes in China between 2014 and 2017, according to the case materials. The schemes reportedly affected more than 128,000 people across Asia.
Qian used fraud proceeds to acquire Bitcoin before leaving China for Myanmar in July 2017. The purchases included transactions through a Huobi account, now associated with the HTX brand, as well as over-the-counter trades in China. Additional Bitcoin was obtained through mining, according to the supplied account of the proceedings.
Qian later moved to London. Metropolitan Police officers seized devices capable of accessing the Bitcoin during searches conducted in October and November 2018.
She was sentenced last November to 11 years and eight months in prison after pleading guilty to money laundering offences. Her criminal sentence did not settle the civil question of whether the Bitcoin belongs to victims, the state, or another party with a valid legal interest.
That unresolved ownership question carries unusually large financial consequences because Bitcoin’s price appreciation has turned assets connected to a years-old fraud into one of the largest cryptocurrency recovery cases handled by UK authorities.
Recovery could be limited even if claims succeed
The Financial Times reported that Chinese law may present obstacles for victims trying to establish ownership of the Bitcoin. If the claimants cannot show a proprietary interest under the applicable law, their ability to recover directly from the seized assets could be constrained.
Even a successful claim may not automatically give victims exposure to the full increase in Bitcoin’s value since the purchases. Caixin reported that recovery could be limited to original contributions and interest, rather than a proportional share of the gains made by the seized Bitcoin.
That possibility creates a sharp divide between two values in the case: the money victims originally handed over to the alleged schemes, and the present market value of Bitcoin acquired with those proceeds. The High Court’s decision means Chinese law will help determine whether those values remain legally connected.
The ruling also avoids a broader conclusion that the UK government has already acquired the Bitcoin. Civil recovery proceedings still need to decide ownership, and the reported appeal could alter the legal route of the case. Any eventual state recovery would depend on later orders, not solely on Monday’s choice-of-law judgment.
UK holdings rank among the largest government Bitcoin reserves
Wallet addresses labelled by blockchain analytics platform Arkham indicate that the UK government controls about 61,245 BTC, valued at roughly $5.1 billion at the figures cited in the source material. The Qian-linked seizure represents the overwhelming majority of that estimated total.
Bitcoin Treasuries, an independent tracker of publicly reported Bitcoin holdings, ranks the UK third among governments. It estimates the United States holds 328,372 BTC, worth about $27.3 billion, while China holds 190,000 BTC, worth around $15.8 billion.
Such estimates should not be treated as a disposal plan. Governments can hold seized cryptocurrency for years while criminal cases, appeals and civil claims continue. Germany’s 2024 liquidation of nearly 50,000 BTC, which generated roughly $2 billion, shows the scale of sales that can emerge from enforcement actions, but it does not indicate that British authorities will sell the Qian-related Bitcoin in a similar manner.
For now, the case is moving from the question of which country’s law applies to the harder question of what that law says about ownership. The answer will decide whether thousands of victims can claim rights over one of the world’s largest known government-held Bitcoin caches, or whether the assets remain subject to UK civil recovery.
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