The UK High Court has ruled that Chinese law must apply to determine ownership rights in a case involving 61,000 seized Bitcoin ($BTC). The decision affects roughly 16,000 victims of a large
The UK High Court has ruled that Chinese law must apply to determine ownership rights in a case involving 61,000 seized Bitcoin ($BTC). The decision affects roughly 16,000 victims of a large Chinese investment scam that raised about 40.23 billion yuan, and it leaves the question of who owns the coins unresolved.
In the judgment, Mr Justice Turner held that whether victims of the Tianjin Lantian Gerui fraud have rights in the bitcoin held in England is governed by Chinese law. The judge was asked to decide a single, preliminary question: whether English law, Chinese law or a combination of the two would govern the victims' claims.
The Director of Public Prosecutions argued that Chinese law applied "on any analysis." The individual applicants argued that English law, or a mix of both, should apply because the Bitcoin is now held in England. Chinese law applies because the fraud, investment contracts and victims' payments all occurred in China.
The court has not yet decided whether investors have ownership rights over the Bitcoin itself. The content of Chinese law and how it applies to the claims will be decided later, and lawyers for the victims plan to appeal.
The practical effect is that claimants may be shut out of the gains in Bitcoin's price. Under the ruling, about 16,000 Chinese victims in the UK claims process may not share in Bitcoin's price surge and can recover at most their principal and interest. Caixin reported that Bitcoin was around RMB 560,000 as of October 12, roughly 200 times the average price Qian paid.
English law had been seen as more favourable. The Financial Times reported it could have let victims argue the Bitcoin belonged to them. Under the Proceeds of Crime Act, each applicant must show a proprietary interest in the coins, because the law creates no broader compensation scheme for crime victims.
The ruling also improves the UK government's position. The Bitcoin is worth about $5 billion at around $83,200 per coin, per CoinGecko data. The Financial Times reported last year that unnamed Treasury officials privately raised whether the seized Bitcoin could help fill a shortfall in UK public finances. The government has not secured an outright claim to the coins, however.
Qian was jailed for more than 11 years after pleading guilty to fraud and money laundering charges over a Ponzi scheme that defrauded investors in China between 2014 and 2017. According to the ruling, at least 128,409 investment contracts were entered into, and victims paid in about RMB 40.2 billion. The Bitcoin was seized by the Metropolitan Police during its investigation into Qian.
Further hearings will review expert evidence on how Chinese law applies, so the final split of the Bitcoin remains open.
Decrypt: UK Moves Closer to Keeping $5B Bitcoin Haul After High Court Ruling
The Crypto Times: UK High Court Rules Chinese Law Governs Victims' Claims to 61,000 Seized Bitcoin
Duan & Duan: Blue Sky bitcoin, High Court rules that Chinese law governs victims' claims
