London's High Court ruled on Monday that Chinese law governs the claims of victims seeking a share of the 61,000 Bitcoin seized from convicted fraudster Zhimin Qian — a decision that strengthens the UK government's hand as it seeks to keep the haul, the largest cryptocurrency seizure in UK history, for itself.

The Bitcoin is currently worth about $5 billion at its price of roughly $83,200 per coin, according to CoinGecko data. The full judgment has been published online by the UK's National Archives.

Qian was jailed for more than 11 years last year after pleading guilty to fraud and money laundering charges over a Ponzi scheme that defrauded investors in China between 2014 and 2017. According to the ruling, at least 128,409 investment contracts were entered into under the scheme, and victims paid in about RMB 40.2 billion — roughly £4.1 billion. About RMB 34.1 billion of that was paid back out to some victims.

Thousands of victims have since applied under the Proceeds of Crime Act — the UK's main legislation for recovering assets linked to criminal conduct — to have portions of the Bitcoin declared theirs. To succeed, each must demonstrate a proprietary interest in the coins — a claim to the property itself, rather than a personal claim for compensation — Justice Mark Turner wrote, because the law creates no broader compensation scheme for people who lost out to crime.

English law had been seen as substantially more favorable to the victims, the Financial Times reported, because it could have let them argue that the Bitcoin belonged to them. In cross-border asset recovery, the choice of governing law can determine whether victims are able to assert ownership of recovered assets at all — the fault line this case now turns on.

Chinese law applies

Turner sided with the Director of Public Prosecutions, who heads the Crown Prosecution Service and brought the case, finding that the fraud, the victims' payments, and the contracts all took place in China.

"The relevant damage occurred in China. The Applicants parted with their money in China," he wrote.

The judge reached the same answer under each of the legal routes he considered, concluding that the governing law "is Chinese law." Because the Bitcoin was bought in China, he added, tracing the coins in England cannot revive any property rights the victims lost under Chinese law when that purchase took place.

Monday's ruling does not settle who ultimately keeps the Bitcoin. Questions about the and proof of Chinese law are matters for a later stage, Turner wrote. Prosecutors have previously said victims could be compensated through a redress scheme run from China.

Unnamed Treasury officials have privately raised whether the seized Bitcoin — worth around $7 billion at the time of Qian's trial, when prices were higher — could help fill a shortfall in the UK's public finances, the FT reported last year.

Law firm Fieldfisher, which represents the claimants, said it is pursuing an appeal, according to the FT.

"There will be a further hearing to determine the application of the law and if any of the victims are able to establish an interest in the bitcoin," the CPS said.