Qingdao court classifies Bitcoin as property in 107 BTC theft

The Licang District People’s Court in Qingdao sentenced a man identified as Zhang to 10 years and nine months in prison and fined him 100,000 yuan after finding he took control of a victim’s wallet and transferred 107 Bitcoin, according to a case summary posted by the Supreme People’s Procuratorate on its official WeChat account.

The incident dates to July 2023, when the victim, identified as Feng, asked Zhang-an acquaintance who had previously helped with Bitcoin transactions-to assist in cashing out 117 Bitcoin. Feng wrote down the wallet’s 12-word recovery phrase during setup while Zhang was present. Prosecutors say Zhang memorized 11 words and later reconstructed the final word to gain access and move 107 Bitcoin out of the wallet.

Feng reported the missing funds and investigators traced blockchain records and electronic transaction logs to link transfers to Zhang. Zhang admitted transferring the Bitcoin but told authorities he had been protecting the assets and later lost money speculating. Prosecutors presented electronic records showing Zhang converted holdings and obtained proceeds greater than $97,000.

The court classified Bitcoin as property under criminal law, making the transfers subject to theft and conversion charges. The court imposed the prison term and the 100,000 yuan fine.

Alvin Kan, chief operating officer at Bitget Wallet, commented that wallet security threats often stem from people rather than technical flaws. He noted 12-word recovery phrases are computationally secure against brute-force attacks and that 24-word phrases increase protection. He warned that sharing recovery phrases with helpers can lead to theft because brief exposure can be enough.

Chinese regulators have banned cryptocurrency mining and most forms of trading in recent years. Prosecutors and courts have treated certain digital tokens as assets that can be protected under property and criminal laws, allowing prosecutions for theft and conversion.

Investigators connected transfers from the victim’s wallet to accounts under Zhang’s control through blockchain tracing and electronic evidence. The court rejected Zhang’s claim he was safeguarding the funds and found sufficient proof of unlawful appropriation and conversion.