The UK government has proposed a compensation scheme for victims of a Chinese investment fraud while seeking to retain the majority of a £5 billion ($7.2 billion) Bitcoin fortune seized from the perpetrators.
The announcement came during a High Court hearing in London on Wednesday, where the Director of Public Prosecutions informed victims’ lawyers about the possibility of establishing such a scheme, though specific details remain undisclosed.
At the center of the dispute are 61,000 Bitcoin, worth $6.7 billion, seized by police in 2018 from devices found at a mansion in Hampstead, north London, now representing one of the largest cryptocurrency seizures in UK history.
The case has pitted British authorities against approximately 130,000 Chinese investors who lost money in the fraud and contend the UK state should not benefit from their losses.
Zhimin Qian, left, and Seng Hok Ling, right | Source: FT
Zhimin Qian, 47, also known as Yadi Zhang, masterminded an investment fraud in China between 2014 and 2017 that defrauded victims of 43 billion yuan ($6 billion).
She fled China after converting much of the investors’ cash into Bitcoin and settled in the UK under a false identity.
Qian and her Malaysian associate Seng Hok Ling, 47, pleaded guilty to money laundering charges last month at Southwark Crown Court in London. Both are scheduled for sentencing in November.
Bitcoin’s value has surged dramatically since the 2018 seizure, climbing from approximately $1.8 billion at the time to its current valuation of roughly $7.2 billion.
UK authorities recently obtained access to additional cryptocurrency assets worth about £67 million after Qian disclosed access codes and passwords for a ledger and two cryptocurrency wallets.
“The ledger had been found in a purpose-made concealed pocket within a pair of jogging bottoms which was wearing at the time of her arrest,” according to written submissions by Martin Evans KC, counsel for the Crown Prosecution Service.
Evans told the court that the proposed compensation scheme would provide “adequate protection” for victims.
The CPS stated it had maintained throughout legal proceedings that it intended to seek a civil recovery order to compensate victims for their lost investment, insofar as they have not otherwise been compensated.
The agency said it would consider how all victims could be compensated, not just those participating in the UK legal proceedings.
William Glover, director at law firm Fieldfisher representing a group of victims, said in a statement following the hearing that “the DPP has effectively accepted responsibility to create a form of compensation scheme for those who may be unable to seek redress through the existing statutory provisions.”
