Analysis: Qian Zhimin Bitcoin Case ― Victims and State Diverge on Applicable Law

1. The English High Court has appointed litigation receivers over Lantian Gerui, a Chinese company implicated in the Qian Zhimin Bitcoin case, after a closely contested hearing on February 16-17. This appointment is procedural and does not indicate any entitlement to the seized cryptoassets. The hearing primarily addressed three key issues: the receivership application, representation among Section 281 applicants, and preparation for a pivotal July hearing on the applicable law. The value at stake is substantial, with over 61,000 Bitcoin currently worth around £3 billion, following recent declines in cryptocurrency markets. [para. 1][para. 2][para. 3]

2. Lantian Gerui was established in China in 2014 and later became associated with one of the largest illegal fundraising schemes in the country, which collapsed in 2017. Qian Zhimin was convicted in the UK for money laundering connected to this scheme. While the criminal verdicts are final, civil recovery proceedings continue under the UK’s Proceeds of Crime Act 2002 (POCA) before the English High Court, in parallel with separate winding-up (insolvency) proceedings in the Chancery Division. Any liquidation decision would be handled by the insolvency court, not within the current POCA process. [para. 4][para. 5][para. 6]

3. The litigation receiver was appointed under Section 37 of the Senior Courts Act 1981 following a request from Wang Wu, the winding-up petitioner. The appointment empowers receivers to consider whether Lantian Gerui could pursue a proprietary claim under Section 281 POCA, allowing third parties to assert an ownership interest in the recoverable property. Individual victims have already made such claims, but it remains uncertain if the company itself can do so. Opponents, including the Director of Public Prosecutions (DPP) and some Section 281 applicants, argue that Lantian Gerui was itself the instrument of the fraud and cannot be considered a victim. Wang’s counsel, however, argued that under Chinese law, transactions from the illegal fundraising are likely invalid, potentially obligating the company to repay funds and making investors creditors. Despite legal challenges, the receivership was granted by a slim margin to allow arguments at a full hearing. If recipients do not act before the procedural deadlines, the receivership will be discharged. [para. 7][para. 8][para. 9][para. 10][para. 11][para. 12][para. 13][para. 14][para. 15][para. 16]

4. The hearing also dealt with how to manage the increasing number of Section 281 applicants—now over 10,000 investors. Concerns about redundancy and rising legal costs led the Court to impose procedural structure ahead of the July hearing, which will address whether English or Chinese law governs the proprietary interest question. Parties must register claims by May 22 and provide financial information by June 18. Only one legal team will speak for applicants at the hearing to avoid duplication. The deadlines are strict, and latecomers will be excluded from the case. [para. 17][para. 18][para. 19][para. 20][para. 21][para. 22][para. 23][para. 24][para. 25]

5. The crucial July hearing will decide if Section 281 applicants can establish ownership in the Bitcoin under English or Chinese law. English law allows claimants to trace assets into substitutes, like crypto, using equitable principles that may grant proprietary claims. If accepted, applicants could receive proportionate interests in the actual Bitcoin, including any appreciation. Under Chinese law, ownership in such cases typically passes to the company—claimants become mere creditors, not owners. Under POCA, creditor status alone is insufficient for success. Thus, individual victims favor English law, while DPP and the winding-up petitioner support Chinese law, which could limit successful proprietary claims and preserve more assets for broad recovery or state-run compensation schemes. [para. 26][para. 27][para. 28][para. 29][para. 30][para. 31][para. 32][para. 33][para. 34][para. 35][para. 36][para. 37][para. 38]

6. The case has evolved in complexity, now involving individual claims, a possible corporate claim via receivers, the DPP’s civil recovery attempt, and parallel insolvency actions. The February hearing did not resolve ownership but set out procedures and preserved legal pathways for the July hearing, which may ultimately decide whether recovery takes place individually, corporately, or through a larger state-led resolution based on the applicable law. [para. 39][para. 40][para. 41][para. 42][para. 43][para. 44][para. 45]

7. The article concludes by noting the professional affiliations of the writers and clarifies that their views do not represent the official stance of Caixin, the publisher. [para. 46][para. 47]