Chinese Bitcoin Fraud Victims Lose Key Legal Ruling

Chinese fraud victims seeking to recover 61,000 Bitcoin seized by British authorities have lost a key legal battle after the London High Court ruled that Chinese law must govern their claims to the assets.

Justice Mark Turner rejected arguments that English law, or a combination of English and Chinese law, should apply to the victims’ ownership claims. The ruling does not determine who owns the Bitcoin. The claimants must establish their property rights under Chinese law in later proceedings.

“The relevant damage occurred in China. The Applicants parted with their money in China,” Turner wrote in his decision. “The contractual relationships thereby induced were entered into in China.”

The dispute stems from an investment fraud scheme allegedly organized by Zhimin Qian between 2014 and 2017. British authorities seized the Bitcoin during a money-laundering investigation. The holdings are now worth more than $5 billion, according to CoinGecko.

The victims had sought to apply English law because it could allow them to claim direct ownership of the Bitcoin. Under the alternative approach, they could be treated as creditors seeking compensation through a Chinese redress scheme.

In March, the claimants challenged a proposed compensation arrangement, arguing that it could leave British authorities with a large share of the gains from the Bitcoin’s rise in value.

Fieldfisher, the law firm representing the claimants, is pursuing an appeal against Turner’s ruling. The case will remain in the High Court in London rather than being transferred to a Chinese court. The next stage is expected to include expert evidence on Chinese law and its effect on the victims’ ownership claims.

The Crown Prosecution Service has indicated that a later hearing will examine how Chinese law applies and whether any victims can establish an interest in the seized assets.

The fraud reportedly affected more than 128,000 investors. Candey, another law firm involved in the case, previously said it represented about 5,700 victims. Prosecutors have argued that some claims could allow a smaller group of victims and litigation funders to recover more than their losses.

The High Court ruling addresses the law that will be used to assess the claims. It does not determine how the seized Bitcoin will be distributed or whether victims will receive compensation.