Chinese victims of convicted 'Bitcoin Queen' may have trouble getting their $7.3 billion back from UK government — lawyers predict a lengthy cross-border ordeal for 130,000 investment scheme victims

The seizure of $7.3 billion in bitcoin from Chinese "Bitcoin Queen" Qian Zhimin by the UK's Metropolitan Police set the record for the largest cryptocurrency seizure ever recorded. However, the 130,000 Chinese victims of Qian's scams may face difficulties attempting to recover their stolen funds from the UK government, claims Nikkei Asia.

When Qian pled guilty to criminal charges of illegally acquiring and possessing the cryptocurrency in September, the UK government seized all 61,000 bitcoins from the accused con artist. However, due to a variety of messy complications, the hundreds of thousands of victims of Qian's schemes will face an uphill battle in getting their full stolen funds returned to them in China, not least because the UK government may reportedly desire to keep hold of the funds for itself.

Qian ran a Ponzi scheme from 2014 to 2017 in China, operating a fake wealth management firm promising dividend payouts to investors and customers in the company. Tianjin Lantian Gerui Electronic Technology, Qian's company, collected over 43 billion yuan ($6 billion) during its three years of activity.

Qian then fled China on falsified documents, escaping to the United Kingdom seeking "refuge from persecution by the Chinese authorities" for the crime of being a successful cryptocurrency businessperson. Of course, Qian was not a bitcoin whale at the time of her escape into the UK; she converted the stolen funds, originally collected in yuan, into bitcoin as part of a massive money laundering effort begun in 2017 with the help of the also convicted Wen Jian.

"Since commencing work on the case last year, we have requested clients to prepare their evidence. However, some materials lack sufficient information to establish a clear connection," says Jack Ding, partner at Duan & Duan, a Beijing-based legal firm representing a large number of victims of the heist.

Legal Struggles and Mounting Challenges

The money laundering aspect of the theft has made returning stolen funds to victims a struggle for lawyers. "It remains challenging to demonstrate that funds transferred from one victim to another bank account were, in fact, under the control of Tianjin Lantian Gerui, and tracing such funds to bitcoin held by U.K. authorities has proven not very easy," Ding said.

Beyond tracing the paper trails proving the reclaimed bitcoins were originally yuan held by Chinese victims, returning stolen funds is a challenge of its own. "Any liquidation of the seized bitcoins would have to go through licensed intermediaries. Monetizing such a vast amount of bitcoins while preserving value is no simple task; it could take years," said Yang Yuhua, a lawyer at Thornhill Legal, also representing many of the victims.

Collecting the information of the victims to ensure restitution is also a difficult task for lawyers. According to Ding, most victims are individuals who "may have limited experience with computers or completing required forms. Effective communications are challenging, as a significant portion of this group has not received formal education."

And of course, the entirety of the $7.3 billion crypto seizure will likely not return to China even if all affected parties are able to be contacted. Ding shared that the United Kingdom may attempt to keep the majority of the bitcoins within the government's coffers. As the original principal investments of defrauded clients in China are estimated at £640 million ($850 million), much less than the incredible $7.3 billion crypto sum, legal loopholes would enable UK lawyers and judges to return a very low dollar amount to affected persons.

According to Yang, while lawyers may argue that clients are entitled to their personal share of the massive current-day investment based on the appreciation of bitcoin's value, precedent dictates that courts will focus on "restitution of the principal, and possibly reasonable interest, rather than any speculative or market-driven gains." The nearly 10x return on investment, possible largely via the growth in value of bitcoin over the last eight years, is not likely to make its way across the Eurasian continent back into the pockets of defrauded Chinese individuals.

The sentencing of Qian Zhimin is expected around November 10. The Metropolitan Police's statement and more details on the seizure of 61,000 bitcoin can be found in our original coverage of the event. While a few orders of magnitude less than this queenly sum, a still-unrecovered $1.8 million in bitcoin has been recently pinned on a recently arrested Las Vegas youth by local police, who allege his involvement in a Vegas Strip cyberheist responsible for over $115 million in damages.

Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.