- Jian Wen was convicted of money laundering in London in March.
- The source of the funds was theft from an investment scheme in China that was subsequently turned into Bitcoin.
- The investment scheme victims want UK authorities to return the seized funds.
Crypto fraud has become a scourge on the digital asset industry, undermining trust and hindering mainstream adoption. Estimates show billions of dollars are lost annually to nefarious actors exploiting the nascent and largely unregulated crypto ecosystem.
In a high-profile case highlighting these concerns, thousands of Chinese investment fraud victims have called on Beijing to negotiate the return of over £3 billion ($3.8 billion) of Bitcoin seized by UK authorities. The calls come following the conviction in London last month of Jian Wen, who was found guilty of helping launder a portion of the illegally obtained cryptocurrency.
Crypto Fraud Spanning UK and China
The victims of the Tianjin Lantian Gerui wealth management fraud have now petitioned the Chinese government to negotiate with UK authorities to return what remains of the illegally stolen funds. The scam managed to ensnare over 128,000 investors between 2014 and 2017, siphoning the equivalent of £5 billion ($6.3 billion) from unsuspecting victims.
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UK prosecutors stated that Jian Wen was a cog in the broader fraud scheme her employer, Zhimin Qian, orchestrated. Zhimin Qian, who remains at large with her whereabouts unknown, is alleged to have stolen funds from the investment scheme, converting the proceeds into Bitcoin before arriving in the UK under a false identity in 2017.
During a raid on the Hampstead mansion shared by Jian Wen and Zhimin Qian in 2018, London’s Metropolitan Police seized devices containing 61,000 Bitcoin, valued at more than $4.3 billion at the current Bitcoin price. The seizure counts among the largest cryptocurrency hauls ever recovered by law enforcement worldwide.
However, UK authorities have not clarified how they intend to proceed with the seized Bitcoin. The Metropolitan Police stated that Chinese officials had not contacted them regarding the potential repatriation of the funds to the defrauded investors, adding to the uncertainty of the matter.
Murky Cryptocurrency Property Rights
The uncertainty around what will happen to the seized Bitcoin highlights the lack of legal precedent surrounding crypto fraud spanning multiple jurisdictions. This jurisdictional complexity is further compounded by the murky status of cryptocurrency property rights in different countries.
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In September 2023, a landmark ruling by the People’s Court in China’s Fujian province established that virtual assets, including cryptocurrencies, should be legally classified as property. The court acknowledged that crypto-related crimes pose unique challenges, as such assets cannot always be easily confiscated or restored.
However, the court asserted that these cases must still be addressed using existing civil and criminal laws that safeguard individual property rights and the public interest.
In contrast, the legal classification of crypto assets remains in an unusual limbo state under English law. While the UK does recognize cryptocurrencies as a form of property, a recent University of Bristol study noted that “there are no possessory rights in cryptoassets because they are intangible.”
The uncertainty regarding ownership and the transfer of ownership under English law creates a gray area for Chinese fraud victims. Furthermore, under this situation, it may be lawful for UK authorities to assert no individuals own the Bitcoin, potentially enabling them to keep the BItcoin rather than return the funds to the defrauded victims.
On the Flipside
- The UK has condemned eroding freedoms in Hong Kong following crackdowns on pro-democracy supporters.
- On the diplomatic front, the UK and China remain respectful and cooperative with one another.
- Crypto critics would highlight the role of Bitcoin in facilitating crime.
Why This Matters
The resolution of this case will set a crucial precedent for how crypto-related property rights are treated in cross-border financial crimes. The moral and just solution would be to hand over the seized BTC to the defrauded victims. However, the legal landscape surrounding cryptocurrency ownership and asset forfeiture in the UK remains unclear.
Learn more about China’s cross-border blockchain initiative here:
How China Will Use Blockchain in Its Belt and Road Initiative
Find out why Jameson Lopp wants Bitcoin miners to slow down block production here:
Bitcoin Miners Urged to Slow Production for 4/20 Halving
