Introduction
The approximately 61,245 BTC that the UK Treasury plans to sell is not a random government asset. This digital fortune has its origins in a large-scale Ponzi scheme that operated in China in the late 2010s.
Starting Point: Tianjin Lantian Gerui and Investment Promises
Between 2017 and 2018, the so-called “Tianjin Lantian Gerui” investment company operating in China raised funds from thousands of people with the promise of high profits. The invested funds were used to cover the returns of previous investors, as in a classic Ponzi scheme. But when the system collapsed, hundreds of millions of dollars in funds disappeared.
Transferring Funds to BTC
As Chinese authorities deepened the investigation, it was determined that the fraudulently obtained funds were taken out of the traditional banking system and converted into cryptocurrencies. The main motivation was to move the funds without leaving a trace and avoid international sanctions. Most of this money was managed by a Chinese individual named Jian Wen. Wen, who is based in London, held a total of approximately 61,245 BTC through various digital wallets.
Intervention
Jian Wen attracted attention when he tried to turn his crypto fortune into luxury real estate investments in London. In 2021, the UK’s Financial Crimes Unit began monitoring his digital movements in response to requests from Chinese authorities.
Blockchain analytics tracked Wen’s wallets and transactions. Bitcoin movements were analyzed chain by chain and it was determined that it was based on fraud revenues. In 2022, UK police seized 61,245 BTC from Wen’s digital wallet.
“U.K. Goverment – named image to be added”
Legal Status
The UK has not yet officially sold the seized BTC. This is primarily due to the ongoing legal proceedings concerning the ownership of these assets. Both Chinese victims and the Chinese government argue that the assets should be returned to the defrauded investors.
However, in a preliminary ruling in 2023, the UK court recognized that the BTC constitutes property subject to money laundering offenses, granting the state the authority to confiscate them. Despite this decision, the final approval required for sale from the High Court has not yet been granted.
UK High Court Process: The Legal Battle for Ownership of BTC
The High Court of Justice is one of the highest courts in the judicial system of England and Wales, hearing serious civil and commercial cases.
This court, in particular:
- Property disputes,
- International litigation,
- It is the final decision-maker on complex issues such as the legal status of assets seized by the state.
In a nutshell: Even if the government seizes assets (such as BTCs), it is only through a High Court decision that it can be established that these assets officially belong to the state.
The reason why the sale of BTCs is subject to a High Court decision is that the Chinese government and thousands of fraud victims argue that the Bitcoins in question should be returned to them, while the UK prosecutor’s office argues that BTCs are subject to money laundering offenses and can therefore be transferred to the state treasury.
In this conflict, it is for the High Court to decide.
Process operation
The High Court process usually consists of 4 stages,
- Presentation of evidence
- Judicial Inquiry and Investigation
- Evaluation of International Claims
- Final Ruling
These stages can span several months. Until the court issues a final ruling, no sale or transfer of the BTC can legally occur, as doing so might trigger irreversible legal disputes at both domestic and international levels.
For this reason, the British Treasury and the Financial Crimes Unit have stated that no action regarding the BTC sale will be taken until a final decision from the High Court is reached.
Current Status of the High Court Process
- The Crown Prosecution Service sought formal permission from the High Court to transfer full ownership of the seized 61,245 BTC to the UK Treasury.
- Chinese victims and the Chinese government appealed on international law grounds, arguing that the BTC should be returned.
In the process, the High Court hearings are still not complete. The court is evaluating the evidence in the case: blockchain records, fund movements, claims by Chinese parties.
Possible Continuation of the Process
Evidence Presentation and Defense: The CPS puts its arguments on the table for the transfer of BTC to the state, arguing that it is money-based. Victims, on the other hand, lay the legal grounds for restitution.
Court Hearings: Judges evaluate the documents submitted by the parties and examine international obligations.
Final Judgment: The High Court can decide whether the BTCs should be transferred to the state or returned. This decision is usually based on civil law and the “standard of proof” is broader.
Appeals Process: If a party challenges the court’s decision, the process can be appealed. This can prolong the process for months.
Disclaimer
This article is for informational purposes only and does not constitute legal or investment advice. The details presented are based on publicly available sources and ongoing judicial proceedings. Cryptocurrency-related legal disputes can be complex and jurisdiction-specific. Always consult a qualified legal expert before forming conclusions or making decisions based on such matters. Darkex does not assume any legal responsibility for interpretations or developments arising from this report.
