He is looking for a way to hold on to most of the 7 billion USD Bitcoin seized from the scam in China.

The UK government is looking to hold onto the majority of the $7 billion worth of Bitcoin seized in an investment fraud case originating from China, after the ringleader was convicted this week.

At the Southwark Criminal Court on September 29, Zhimin Qian pleaded guilty to the charges of possession and transfer of criminal property, after her assistant Seng Hok Ling ( also known as Jian Wen ) was convicted on similar charges from last year.

The current issue revolves around who will have the right to own 61,000 BTC that the British authorities seized since 2018. More than 120,000 victims in China are demanding compensation for damages.

The Crown Prosecution Service of the United Kingdom (CPS) has initiated civil recovery proceedings at the High Court of England, with the next hearing scheduled for January.

Rights of Victims

Qian is said to have operated a large-scale investment fraud scheme from 2014 to 2017, subsequently converting the illegal funds into Bitcoin.

According to legal experts, victims have the right to claim compensation if they can prove the connection between the lost amount and the seized BTC. Lawyer Ashley Fairbrother ( at Edmonds Marshall McMahon ) argues that the Proceeds of Crime Act 2002 allows victims to make a claim against the frozen assets.

He stated that the court could apply the principle of allocation (pari passu), meaning that victims would be allocated shares based on their contribution ratio in the total amount defrauded.

However, Fairbrother noted that in many recent cases, the court only compensated victims according to the legal currency value of ( British pounds ) at the time of the loss, rather than calculating based on the current value of Bitcoin. This could allow the UK government to benefit significantly from the enormous price increase of BTC, while victims only receive the principal amount.

The price of BTC at that time was only a few hundred to a few thousand USD per coin.

Heated legal debate

A large group of victims, represented by the international law firm Fieldfisher (UK) in collaboration with GEN Law (China), asserts that the frozen Bitcoin does not belong to the UK government.

According to lawyers William Glover and Stephen Cartwright, many victims have lost their entire savings, including the elderly and vulnerable individuals. "The victims have been deprived of their assets for 10 years, and they have the right to reclaim from the Bitcoin that is currently frozen," they emphasized.

Will the UK government sell or hold BTC?

Even if the UK government gains the right to hold most of this Bitcoin, a big question arises: should it sell or hold?

According to Financial Times, some officials from the UK Treasury have held confidential discussions about the possibility of using seized Bitcoin to offset the budget deficit of 34–67 billion USD.

However, if the decision to sell is made, he may repeat the "gold mistake of 1999" by selling gold reserves at the price bottom, and then face heavy criticism when gold prices soared in the following years.

Given the complexity of the case and the enormous interests involved, observers predict that the legal process may take several more years, potentially until 2027.

Han Xin