Chinese authorities are moving to confiscate nearly 62,000 bitcoins — worth approximately $5 billion at current prices — in connection with one of the largest fraud cases in the country's history, according to a report published last week by Shanghai-based news outlet The Paper.

Prosecutors allege that Qian Zhimin, the alleged controller of Tianjin Lantian Gerui Electronic Technology, recruited associates to sell fake wealth management products nationwide from 2014 to 2017. The products were marketed without financial regulatory approval and promised investors guaranteed returns, raising roughly RMB 40.3 billion ($2.8 billion) in total.

Rather than funding legitimate business operations — little of the money went toward them, prosecutors say — investors' cash was allegedly used to pay off earlier participants in Ponzi-style fashion, while substantial sums were channeled into bitcoin holdings, property, cars, and jewelry.

In July 2017, as the scheme unraveled, Qian fled to the UK carrying computers that held the bitcoin wallets. British authorities later seized the crypto assets and other property, including roughly 61,900 BTC along with cash, jewelry, and other cryptocurrencies. A haul of that size ranks among the largest quantities of bitcoin ever taken into government custody, equal to roughly 0.3% of bitcoin's fixed 21-million-coin supply.

The case took a significant turn when the UK High Court ruled that Chinese law — not UK law — applies to ownership disputes over the seized bitcoin. The coins have appreciated enormously since 2017, and the applicable law will determine whether victims entitled to share in those gains. The dispute underscores a recurring challenge in cross-border crypto enforcement: wallets can travel with a suspect across borders, leaving courts in different jurisdictions to weigh competing claims over the same assets.

The UK's Crown Prosecution Service has said victims may recover their losses through China's compensation mechanism. Representatives from Fieldfisher, the law firm acting for some of the victims, are considering an appeal. Further hearings will determine whether victims can prove their entitlement to the assets, and the appeal question stands as one of the case's key developments to watch.

Meanwhile, the Second Intermediate People's Court of Tianjin announced that it accepted the prosecution's application on September 28 to confiscate Qian's illicit assets. Victims can register to participate in the asset recovery proceedings through a WeChat platform, with a six-month notice period before the formal trial begins.

China maintains some of the world's strictest rules on crypto regulation. Its government banned digital asset trading and bitcoin mining in 2021, building on earlier restrictions from 2017, when regulators halted domestic crypto exchange operations and token sales. The fraud at the center of this case unfolded in the years before those restrictions took effect, when bitcoin trading was still legal in the country.

This article is based on reporting by Bitcoin Magazine.