UK Considers Keeping Billions From Seized Bitcoin After $6.7B Chinese Fraud Case

Debate over whether victims should receive full Bitcoin value or only original losses 

TL;DR:

• UK seized 61,000 BTC tied to a $6.7B Chinese investment fraud, now worth $7.24B.
• Officials split on whether to repay victims’ original £640M or give them the full Bitcoin windfall.
• Legal and diplomatic battles loom as China pushes for restitution to 128,000 defrauded victims.

UK authorities are weighing whether to distribute the full value of Bitcoin seized from one of the country’s largest crypto-related fraud cases to victims or keep billions in gains for the state. The case centers on 61,000 BTC confiscated in 2018 from devices found at a Hampstead property linked to Zhimin Qian, also known as Yadi Zhang, who pleaded guilty on September 29, 2025, to laundering proceeds from a Chinese investment scam that defrauded 128,000 people between 2014 and 2017. At the time of seizure, the stash was worth roughly £5 billion, but the original funds invested by victims amounted to about £640 million, raising the question of whether repayment should reflect the initial losses or today’s dramatically higher crypto price.

The seized Bitcoin, now valued at approximately $7.24 billion, has turned into a political and financial dilemma. Government insiders told the Financial Times that discussions are ongoing over whether the windfall should go to victims or be absorbed into public finances, though the Treasury has been instructed not to factor the potential gain into official projections. The crypto price index has made the disparity starker, with Bitcoin’s growth since the seizure producing an excess gain of about $6.4 billion. Officials are concerned that keeping the profits could trigger years of litigation and strain relations with Beijing, as Chinese authorities are pressing for restitution on behalf of citizens who lost their savings in yuan rather than Bitcoin.

The Crown Prosecution Service has applied to the High Court to retain the crypto holdings, with a hearing scheduled for January 2026. Under the UK’s Proceeds of Crime Act 2002, seized assets are typically split between the Home Office, law enforcement agencies, and the courts, though some restitution to victims is possible. Freddie New, head of policy at Bitcoin Policy UK, noted that the situation presents a “diplomatic wrinkle,” since the victims did not invest in Bitcoin directly but in fiat that was later converted. This fuels the debate over whether restitution should be paid in kind or only for the sum lost, without factoring the explosive rise in crypto price.

The case has further drawn attention to how governments handle seized crypto assets at scale. Earlier this year, reports surfaced that officials had considered selling up to $6.7 billion of Bitcoin to ease budget pressures, though no move has been made while litigation continues. A £40 million tender for a “crypto storage and realisation framework” was even launched and later canceled after failing to attract viable bids, underscoring the challenges of managing such massive digital holdings. Critics, including Susie Violet Ward of Bitcoin Policy UK, warned that premature discussions of sales amounted to “sensationalism over substance,” stressing that no liquidation is possible while claims remain contested.

The scandal’s reach extends beyond finances into diplomatic and legal precedent. Should the UK decide to withhold the surplus gains, it risks establishing a global example of governments profiting from seized assets, potentially eroding confidence in how courts treat restitution when coin market cap valuations balloon. Supporters of distributing the current market value argue that failing to return the full amount would amount to revictimizing those already defrauded. For now, the 61,000 BTC remain frozen, awaiting the High Court’s ruling on whether the multi-billion-dollar difference will belong to victims or be absorbed into the UK’s coffers.

This article has been refined and enhanced by ChatGPT.