A High Court judge in the UK has ruled that Chinese law must be used to assess victims’ claims to more than 61,000 BTC seized in London from assets linked to a large fraud run by Zhimin Qian. The decision resolves a key preliminary dispute in the case, but it does not decide who owns the bitcoin or whether any claimant will ultimately recover funds.

The case concerns cryptocurrency traced to an alleged investment scheme that raised about 40.23 billion yuan, roughly £4.1 billion, in China. Victims are seeking declarations under Section 281 of the Proceeds of Crime Act 2002 that the recovered property belongs to them, rather than simply arguing that they suffered losses.

Fraud allegations and bitcoin purchases

According to the judgment, Qian operated investment scams in China from 2014 until July 2017 through schemes linked to Tianjin Lantian Gerui Electronic Technology and other ventures. The offerings involved digital currencies, elderly care services and consumer products. Court materials said there were about 128,409 investment contracts, although that figure does not necessarily represent the number of individual victims.

The total amount collected was put at about 40.23 billion yuan. Much of the money was allegedly used to pay earlier investors, while part of it was converted into assets including bitcoin. The court heard that more than 100,000 BTC were bought through a Huobi account before Qian left China for Myanmar in 2017.

From China to London

Qian arrived in London in September 2017. The article says that after reaching the UK, she and an associate identified as Wen began converting bitcoin into other forms of property.

The Metropolitan Police later seized four devices containing more than 61,000 BTC. That cache became the focus of later civil claims by victims seeking to connect the recovered cryptocurrency to the money raised in China.

Why the governing law mattered

After Qian pleaded guilty at Southwark Crown Court to possession of criminal property in the form of cryptocurrency, victims began civil proceedings under Section 281. To succeed in that process, applicants must show a proprietary interest in the specific property recovered, not just that they were defrauded or are owed money.

The central issue before the High Court was therefore a conflict-of-laws question: should those alleged ownership rights be judged under English law, Chinese law, or a combination of both? The judge rejected four arguments for applying English law and held that the relevant contracts, investor payments and bitcoin purchases were rooted in China. He also found that the presence of the cryptocurrency in England did not by itself make English law the governing law.

What the ruling does and does not decide

The judgment says the applicants’ asserted proprietary rights must be examined under Chinese law. The court also made clear that English law should not be applied by default where Chinese law had been put before the court, and that the first step is to identify the applicable legal system before deciding what that law provides.

That means the ruling settles an important threshold question, but leaves the core recovery issue unresolved. The court has not yet decided whether any individual applicant has an ownership interest in the seized bitcoin under Chinese law, nor how much, if anything, may ultimately be returned through the Section 281 proceedings.

Source: cryptopotato.com