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The United Kingdom is weighing whether to fully compensate China fraud scheme victims after seizing 61,000 Bitcoin from one of the world’s largest crypto frauds. According to a Financial Times report published Thursday, the UK High Court may only return the original value of the defrauded assets around £640 million ($862 million) instead of the current market value, which has swelled to more than $7.24 billion.
This decision would leave an excess of nearly $6.4 billion, raising questions about whether the government should retain the windfall or distribute it to investors. The Bitcoin was confiscated in north London in 2018 during an investigation into a scheme that defrauded 128,000 individuals in China.
Treasury officials have reportedly debated whether the surplus could be used to offset a £30 billion ($40.5 billion) budget shortfall. However, under the Proceeds of Crime Act, seized assets are typically funneled into the Home Office or Treasury Consolidated Fund, with courts ordering compensation as appropriate.
The unprecedented case has sparked intense debate within government. Some officials argue that returning only the original sums to China fraud scheme victims aligns with existing restitution standards. Others warn that keeping billions in profit from seized Bitcoin could trigger years of legal challenges.
The Treasury has been instructed not to include these funds in budgetary planning until a legal resolution is reached, a government source familiar with the matter told the Financial Times.
The situation reflects the growing complexities surrounding cryptocurrency seizures, where asset values can multiply dramatically over time. For the China fraud scheme victims, the difference between original restitution and current market value amounts to billions of dollars.
The assets were confiscated from Zhimin Qian, a Chinese national, and her Malaysian associate, Seng Hok Ling, both of whom pled guilty earlier this week. According to the Metropolitan Police, the seizure marks “the single largest cryptocurrency seizure in the world.”
Between 2014 and 2017, Qian orchestrated a fraud operation in China that siphoned funds from more than 128,000 victims, later converting the proceeds into Bitcoin. She fled to the UK using false documents, storing the stolen assets across encrypted devices, property, and gold.
Police surveillance of Ling eventually led to Qian’s arrest in April 2024. She pled guilty to acquiring and possessing criminal property, while Ling admitted to transferring criminal property.
Detectives described the case as a milestone for international anti-money laundering cooperation. But for China fraud scheme victims, the ultimate question remains whether they will receive restitution based on the original sums lost or the vastly appreciated Bitcoin value.
The UK case underscores a broader global surge in cryptocurrency enforcement actions. Earlier this month, Canadian police seized $40 million in digital assets from the TradeOgre exchange, a move criticized by some users as excessive due to the platform’s lack of Know Your Customer checks.
In August, the U.S. Department of Justice authorized the seizure of more than $2.8 million in crypto linked to a ransomware operation. Meanwhile, the U.S. Secret Service has seized nearly $400 million worth of digital assets over the past decade, according to Bloomberg.
Sweden has also stepped up enforcement, with its justice minister calling for larger-scale asset crackdowns, particularly targeting cryptocurrencies. And in June, Coinbase confirmed it had helped U.S. authorities seize $225 million in stolen crypto, marking the Secret Service’s largest seizure to date.
These cases raise a consistent issue: should governments hold, liquidate, or return volatile digital assets? For the UK, the choice carries extraordinary implications given the scale of value growth affecting China fraud scheme victims.
The UK’s decision on how to handle the seized 61,000 Bitcoin could set a global precedent for managing digital asset restitution. While the High Court must balance legal obligations with fiscal considerations, the stakes are especially high for China fraud scheme victims, who face the possibility of losing billions in potential compensation.
As the debate unfolds, the case underscores how cryptocurrency’s volatility complicates traditional justice frameworks. Whether the government chooses to reimburse only the original losses or return the appreciated value, the outcome will resonate far beyond London shaping how states worldwide respond to the rising tide of crypto-related fraud.
