UK Aims to Repay Chinese Victims of $7 Billion Bitcoin Fraud

Prosecutors in the U.K. are planning to repay the victims of a nearly $7 billion Bitcoin fraud in China, despite the U.K. government previously signaling its intention to keep most of the funds.

In September, Chinese national Zhimin Qian pleaded guilty to acquiring and possessing criminal property in the form of Bitcoin valued at $6.8 billion. Qian gained the funds through a fraudulent investment scheme that duped upwards of 128,000 individuals in China between 2014 and 2017. Over the years, Qian converted the illegally obtained funds into Bitcoin and attempted to launder the assets. The Metropolitan Police seized the stolen Bitcoin from 2018 to 2021 after Qian fled China and entered the U.K. with false documentation.

Over the last few weeks, questions have abounded over what the U.K. government plans to do with the nearly $7 billion Bitcoin stash. Germany, for instance, sold billions of dollars’ worth of Bitcoin last year that had all been seized from various investigations. By contrast, the U.S. government still holds $37 billion worth of seized assets, per Arkham Intelligence, and lawmakers in the country aim to use them to create a digital asset stockpile.

After initially signaling an intention to keep most of the Bitcoin, prosecutors in the case today said during a court hearing that they are planning a victim compensation plan, according to Bloomberg. Several investors have reportedly applied to the court to reclaim their money.

Some investors “have suffered huge personal loss in the form of lives, marriages, fracturing families and businesses,” William Glover, a lawyer for a group of victims, told Bloomberg.

Prosecutors have yet to provide specific details on how the compensation scheme will work. “Given the unprecedented scale of the seizure and public debate about any potential surplus, our position is clear: victims’ restitution must come first,” Jackson Ng, a lawyer representing a set of investors, told Bloomberg.

Nick Harris, CEO of U.K.-based crypto asset recovery firm CryptoCare, warns, however, that victims could be disappointed by the final result.

“The U.K. could still retain the seized Bitcoin under the Proceeds of Crime Act rather than redistributing it directly,” Harris told Decrypt. 

“Typically, confiscated assets are channeled into the Treasury or law enforcement budgets through the Asset Recovery Incentivization Scheme, a system mirrored in the U.S. and Australia, where victim restitution isn’t always prioritized,” he said.