British Court Ruling Deals Major Blow to Victims Pursuing 61,000 BTC Recovery
A significant legal defeat for fraud victims from China attempting to reclaim 61,000 Bitcoin held by UK authorities, as the High Court determines Chinese jurisdiction applies to their recovery efforts.
Victims of fraud in China who are attempting to reclaim 61,000 Bitcoin confiscated by British authorities have suffered a critical legal defeat following London's High Court decision that Chinese law, not English law, must be applied to determine ownership claims over the digital assets.
Justice Mark Turner on Monday dismissed legal arguments advocating for the application of English law or a hybrid approach combining English and Chinese law to the victims' property claims. The ruling establishes that Chinese law will be the determining factor in assessing whether the claimants possess legitimate property rights to the confiscated Bitcoin, with the actual validity of these claims to be evaluated in future legal proceedings.
"The relevant damage occurred in China. The Applicants parted with their money in China. The contractual relationships thereby induced were entered into in China."
Justice Mark Turner
The legal battle originates from a fraudulent investment operation run by Zhimin Qian spanning from 2014 to 2017, with UK authorities confiscating the cryptocurrency holdings as part of an investigation into money-laundering activities. Last March, the victims mounted a legal challenge against a proposed compensation framework that involved a Chinese redress scheme, contending that such an arrangement might result in British authorities retaining a substantial portion of the profits generated by Bitcoin's significant value increase.
The fraud victims had pushed for English law to be applied because it potentially would have enabled them to assert direct ownership rights over the Bitcoin, as opposed to simply pursuing compensation in the capacity of creditors. Nevertheless, the UK court's decision does not make a final determination regarding who holds ultimate ownership of the confiscated assets, as the victims' property rights according to Chinese law remain subject to evaluation.
Fraud victims plan to appeal Bitcoin ruling
As reported by the Financial Times, the legal firm Fieldfisher, representing claimants in this legal battle, is moving forward with an appeal challenging Turner's decision.
Notwithstanding the court's ruling, the case will continue to be heard before the High Court in London instead of being moved to a Chinese judicial venue. The Financial Times reported that the subsequent phase will require expert testimony regarding Chinese law to establish whether the victims can demonstrate legitimate ownership interests in the Bitcoin holdings.
In a statement to the FT, the Crown Prosecution Service confirmed that an additional hearing will be conducted to examine the application of Chinese law and assess whether any victims can successfully establish an interest in the confiscated cryptocurrency assets.
The legal dispute encompasses more than 128,000 investors who were reportedly impacted by the fraudulent scheme, based on prior Cointelegraph reporting. In March, Cointelegraph reported that the law firm Candey represented about 5,700 victims.
Government prosecutors had previously contended that certain legal claims might enable a more limited group of victims and litigation funders to obtain recoveries exceeding their actual financial losses.
According to CoinGecko, the confiscated Bitcoin currently holds a value exceeding $5 billion.