The Memo: The Treasury enters the fight for BitQueen’s £5 billion...

As the Treasury gets increasingly desperate in its efforts to dig out any remaining loose change from the back of the sagging national sofa, it may just have stumbled upon an unlikely saviour: a Chinese crypto conwoman. However, a complex legal battle looms before it can access her potential windfall.  

When news broke late last month that ‘BitQueen’ Zhimin Qian was pleading guilty to money laundering charges, it marked the culmination of a seven-year criminal investigation. Having defrauded over 100,000 Chinese victims of their savings through assorted Ponzi-esque schemes, Zhimin had converted the proceeds into cryptocurrency and fled the PRC in response to a government crackdown in 2017. The UK authorities have been in possession of this crypto wallet – containing 61,000 bitcoins – ever since raiding her Hampstead residence a year later, and now that she has confessed to its criminal origins, they would quite like to keep it. For context, with the crypto market booming, that amount of bitcoin is today worth a cool £5 billion, or well over twice the state’s annual spend on the asylum hotels dominating recent headlines. 

Unsurprisingly, other parties are also interested in the money, and their claims will now be considered in a case that raises a number of delicate questions. One key issue is whether the victims of the fraud should be compensated according to the value of their original losses (cumulatively estimated at £640 million) only, or the much higher current value of the bitcoin trove. The High Court will have to rule on this, although some recent precedents suggest that judges tend to prefer the former approach. 

There are also extra complications stemming from the crime’s convoluted multi-jurisdictional context. To access compensation under UK procedures, many fraud victims will seek to make claims under Section 281 of the 2002 Proceeds of Crime Act. Meeting the law’s evidentiary standards for proving a watertight link to their original lost assets may be challenging, however, as Chinese government agencies operate in a very different legal context and could struggle to supply claimants with the necessary paperwork. For example, the country has no direct equivalent of England’s ‘civil recovery’ system, a legal process by which unlawfully acquired assets can be reclaimed without a criminal conviction. Beijing is reportedly engaging its own lawyers to look into the matter, and the results will prove an interesting test case for cross-border co-operation – or conflict – between two very different jurisdictions. 

The Treasury thus has reasons for cautious optimism. However, the story could still have a sting in its tail. Bitcoin may have skyrocketed in price since Zhimin’s original grift, but it is notoriously volatile, and the projected multi-year legal proceedings leave plenty of time for more crashes like the one that wiped out three quarters of its value in 2021-22. It would be a truly Dickensian twist if the government were to finally win its prize in the courts, only to find it worth barely anything at all.