The decision could limit how much of bitcoin's huge price rise the victims of a Chinese investment fraud get back.
One of the largest crypto seizures ever is now tangled in a cross-border legal fight. On Monday, Oct. 12, London's High Court ruled that Chinese law, not English law, will govern whether victims of a Chinese investment fraud have ownership rights in about 61,000 bitcoins seized by British authorities. At current prices, that bitcoin is worth more than $5 billion, according to CoinGecko data cited by Cointelegraph.
The background
The bitcoin is tied to an investment fraud run by Zhimin Qian in China from 2014 to 2017. More than 128,000 investors were reportedly affected. Much of the money was later converted to bitcoin, which British authorities seized during a money-laundering investigation.
Because bitcoin's price has soared since then, the coins are now worth far more than the victims originally lost. That has set up a fight over who should benefit from those gains: the victims, the British government or others.
What the judge decided
Justice Mark Turner ruled that Chinese law applies when deciding whether the victims have property rights in the bitcoin. "The relevant damage occurred in China," he wrote, noting that the victims paid their money and signed their contracts there. He rejected arguments for applying English law or a mix of the two.
The ruling matters because the victims wanted English law, which could have let them claim direct ownership of the bitcoin itself, and with it the price gains, rather than simply being repaid as creditors for what they lost. Earlier this year, victims challenged a proposed compensation plan involving a Chinese redress scheme, arguing it could leave British authorities with much of the gains. Prosecutors have argued that some claims could let a smaller group of victims and their litigation funders recover more than they actually lost.
The court did not decide who owns the bitcoin or whether the victims' claims are valid. A further hearing will look at how Chinese law applies, and Fieldfisher, a law firm representing some claimants, is pursuing an appeal, according to the Financial Times.
What this means for your wallet
Most readers will never be part of a case like this, but it carries a few practical lessons. First, investment fraud is common, and getting money back is slow and uncertain, even when authorities seize the assets. This case involves a scheme that ended almost a decade ago, and victims still don't know what they'll recover.
Second, be wary of investments that promise high, steady returns, especially through unfamiliar platforms or overseas companies. Check whether the firm and the person selling it are registered with regulators. In the U.S., you can look up brokers and advisers on FINRA's BrokerCheck and the SEC's adviser search.
Finally, if you're the victim of fraud, report it quickly to local police and, in the U.S., to the FBI's Internet Crime Complaint Center and the Federal Trade Commission. Keep records of every transaction. And be careful of "recovery" services that promise to get your money back for an upfront fee, since they're often a second scam.
This article is for education only and is not financial advice. Everyone's situation is different.
Content on The Evergreen Edit is for educational and informational purposes only and is not individualized financial, investment, tax or legal advice. Learn more.
This article is for educational purposes only and isn't personalized financial, tax or legal advice. Consider talking with a qualified professional about your situation.
Kiara Miller — Founder & Editor
Kiara Miller is the founder and editor of The Evergreen Edit. He has been doing independent finance research for two decades and reviews every article before it's published.
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