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The UK has proposed establishing a compensation scheme for victims of a Chinese investment fraud that could allow the Treasury to retain much of a £5bn bitcoin fortune.
The crypto haul is at the centre of a battle at the High Court in London between UK authorities and thousands of Chinese investors who were cheated and who contend the British state should not benefit.
The court heard on Wednesday that the director of public prosecutions, Stephen Parkinson, told victims about the possibility of establishing such a scheme, although details were not provided.
In 2018, police seized 61,000 bitcoin from devices at a mansion in Hampstead, north London. The government is now trying to keep the majority of the haul, which has soared in value in the past seven years and is currently worth about £5bn.
Zhimin Qian, 47, also known as Yadi Zhang, who was wanted by Chinese authorities for masterminding an investment fraud, fled the country after converting much of her investors’ cash into bitcoin.
She and her Malaysian assistant Seng Hok Ling, 47, pleaded guilty to money laundering charges last month at Southwark Crown Court in London. They are due to be sentenced next month.
UK authorities recently obtained access to additional cryptocurrency assets worth about £67mn, the court was told.
Counsel for the CPS, led by Martin Evans KC, said in written submissions that Zhang had last month 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,” the written submission said.
Evans told the court that the compensation scheme proposal would provide “adequate protection” for victims.
In a statement following the hearing, William Glover, director at law firm Fieldfisher, representing a group of victims, said: “While there is likely still some distance to go in the proceedings, we are pleased with the outcome of the hearing.
“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,” he added.
The CPS said it had maintained throughout the course of 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.
It would consider how all victims could be compensated, not just those participating in the UK legal proceedings.
The bitcoin spoils are so large that some Treasury officials have privately queried whether they could help chancellor Rachel Reeves plug the UK’s fiscal gap — estimated at up to £30bn by 2029 — at her Budget in November.
However, other government officials have cautioned that the haul is likely to be subject to a protracted legal battle, and the Treasury has been told it cannot use it in their calculations.
