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.
The Fraud and Seizure
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 [Zhang] was wearing at the time of her arrest,” according to written submissions by Martin Evans KC, counsel for the Crown Prosecution Service.
Compensation Proposal and Victim Response
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.”
However, lawyers for the victims face serious challenges in proving direct links between their clients’ investments and the confiscated coins.
Jack Ding, assistant managing partner at Duan & Duan, which represents around 10,000 victims, noted that “some materials lack sufficient information to establish a clear connection.”
Legal experts warn that victims are unlikely to recover Bitcoin’s appreciated value, as courts typically focus on returning principal amounts and reasonable interest rather than speculative gains.
Treasury Implications and Market Concerns
The Bitcoin spoils have drawn attention from UK Treasury officials, with some privately questioning whether the assets could help Chancellor Rachel Reeves address the country’s fiscal gap estimated at up to £30 billion by 2029.
However, other government officials have cautioned that the haul is likely subject to protracted legal battles extending potentially into 2027.
The Treasury has been advised it cannot include the seized assets in its fiscal calculations, as the Office for Budget Responsibility does not account for asset seizures in its forecasts.
Meanwhile, authorities face the practical challenge of liquidating such a large Bitcoin position without triggering major market disruption.
The UK government is attempting to retain over 61,000 Bitcoin that was seized from a Chinese national convicted in a massive investment fraud case. #UK #Cryptohttps://t.co/L7LPgA3fCW
— Cryptonews.com (@cryptonews) October 1, 2025
The case has sparked debate about cryptocurrency regulation and enforcement in cross-border fraud cases, with implications for how governments handle seized digital assets.
A civil recovery case filed in September 2024 will determine the final distribution of assets, with proceedings scheduled to continue through January 2026.
The outcome is expected to establish precedents for international cooperation in cryptocurrency-related financial crime cases and may influence how other jurisdictions approach similar seizures.
The coordination difficulties are compounded by the fact that many victims have limited experience with digital finance, making documentation and claim verification particularly challenging.
The post The UK Offers Bitcoin Fraud Victims Compensation – But Keeps Most of $7.2B Haul appeared first on Cryptonews.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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