Bitcoin Recognized as Legal Property by Chinese Court in 107 BTC Theft Conviction
An individual from China's eastern region received a prison sentence exceeding 10 years for the theft of 107 Bitcoin, accomplished by committing to memory nearly all words from a victim's 12-word wallet recovery phrase.
In the eastern Chinese municipality of Qingdao, a district court handed down a sentence of 10 years and nine months imprisonment to an individual for the theft of 107 Bitcoin, which he accomplished by committing to memory the majority of a victim's 12-word wallet recovery phrase.
According to a case summary released through the Supreme People's Procuratorate's official WeChat account, the Licang District People's Court convicted the offender, named Zhang, imposing both a prison term and a monetary penalty of 100,000 yuan (approximately $14,700) after determining he had seized control of the victim's cryptocurrency wallet and subsequently converted over $97,000 to cash.
In July 2023, Feng requested assistance from Zhang, someone he knew who had previously provided help with Bitcoin-related transactions, to aid in cashing out 117 Bitcoin. During the wallet setup process, while Feng documented the wallet's 12-word seed phrase in writing, Zhang committed 11 of these words to memory and subsequently deduced the remaining word, enabling him to transfer 107 Bitcoin.
Over recent years, China has enacted multiple prohibitions related to cryptocurrency activities, encompassing restrictions on both mining operations and trading activities. Nevertheless, prosecutors maintained that Bitcoin satisfies the legal criteria for "property" and is therefore subject to theft charges under the nation's criminal code.
Electronic evidence and legal classification
After Feng noticed the Bitcoin had gone missing and filed a theft report with authorities, law enforcement officials tracked the blockchain transactions and connected them to Zhang.
Zhang confessed to the transfer of the Bitcoin but maintained he had been "safeguarding" the digital assets and had not gained financially, contending he subsequently lost funds through price speculation activities.
According to prosecutors, digital records demonstrated that Zhang had liquidated the assets and obtained proceeds exceeding $97,000.
In comments to Cointelegraph, Alvin Kan, chief operating officer at Bitget Wallet, stated that this case demonstrates wallet security vulnerabilities are frequently human-based rather than stemming from technical weaknesses.
Although 12-word seed phrases offer computational security against brute-force attack methods, Kan noted that 24-word phrases "raise the ceiling further," presenting a "reasonable case" for broader industry adoption of the longer format.
Kan further emphasized that this incident underscores the dangers associated with exposing recovery phrases in "trusted helper" situations, where social engineering tactics can result in wallet breaches. While most users refrain from taking screenshots, they seldom think about who might be physically nearby during wallet creation, despite the fact that "momentary exposure is still exposure."