UK Mulls Over Distributing Current Value of Seized Bitcoin to Fraud Victims

UK officials are considering whether to retain approximately $6.4 billion in profits from Bitcoin seized during a Chinese fraud case from 2018, instead of distributing the current value to the victims.

As reported by the Financial Times on a Thursday, the UK High Court might only reimburse the original investment value of around 640 million British pounds ($862 million) to victims of the scam. This contrasts with the seized 61,000 Bitcoin, currently valued at nearly $7.24 billion, creating a discrepancy of about $6.4 billion.

The Bitcoin was confiscated in London from fraudsters who deceived 128,000 investors in China. Some Treasury officials have privately discussed whether the windfall could alleviate a budget deficit nearing 30 billion pounds ($40.5 billion). Following existing regulations, the assets seized under the Proceeds of Crime Act are typically allocated to the Home Office or the Treasury Consolidated Fund, with court-mandated compensation when necessary.

Reports indicate that other government officials are advising caution, as any decision may spark a protracted legal dispute over the Bitcoin proceeds. Meanwhile, the Treasury has been directed not to consider these funds in its budget calculations.

UK Treasury Headquarters Source: Wikimedia

The Largest Crypto Seizure in History

The confiscated assets were taken from Zhimin Qian, a Chinese national, and her Malaysian assistant, Seng Hok Ling, who both pleaded guilty recently. The London Metropolitan Police stated they had successfully executed what is believed to be the largest cryptocurrency seizure globally.

This seizure was a result of a seven-year probe by the London Metropolitan Police’s Economic Crime team into international money laundering activities. Qian admitted to obtaining and holding criminal property, while Ling pleaded guilty to transferring such property.

From 2014 to 2017, Qian orchestrated a widespread fraud scheme in China, extracting money from over 128,000 victims. The stolen assets were converted into Bitcoin after she escaped China, utilizing forged documents, and entered the UK.

In 2018, Qian attempted to launder the illegally obtained funds by purchasing property. Her location was eventually tracked using surveillance on Ling, leading to their capture in April 2024 along with the confiscation of encrypted devices, cash, gold, and cryptocurrencies.

Current Landscape of Crypto Seizures

Recently, Canadian police seized $40 million in cryptocurrencies from TradeOgre, with many critics deeming the action excessively severe amid inadequate Know Your Customer checks.

Earlier in August, the US Justice Department approved the seizure of over $2.8 million in cryptocurrency and additional assets in a criminal case against an alleged ransomware operator. Additionally, the US Secret Service reported nearly $400 million in digital assets seized over the past decade.

In June, the US crypto exchange Coinbase assisted the Secret Service in seizing $225 million in crypto, marking the agency’s largest crypto confiscation to date.