Biggest bitcoin fraud trial could redefine crypto justice in the UK

A high-stakes criminal trial that could shape how British courts handle cryptocurrency-related crime compensation is set to open in London on September 29. The defendant, Chinese national Zhimin Qian, is accused of masterminding a cross-border investment fraud whose proceeds were converted into Bitcoin, now valued at about $7 billion.

Prosecutors say Qian ran a scheme in China that drew in nearly 130,000 people. Investigators allege she directed operations through Tianjin Lantian Gerui Electronic Technology Co., and, between 2014 and 2017, promoted a Ponzi-style product that promised eye-catching returns of 100% to 300%.

The plan unraveled in 2017 after China put in place a nationwide ban on crypto, and authorities say Qian fled to the UK that year and moved the scheme’s proceeds into Bitcoin.

Qian now faces her own criminal case in the UK. But legal specialists warn that the international character of the alleged wrongdoing may complicate efforts to secure a conviction.

“The cross-border nature makes the prosecution of Qian an uphill struggle for UK prosecutors,” said Yuhua Yang, a partner at London-based Thornhill Legal. Yang noted that the alleged fraud unfolded in China, with no UK companies or entities involved and no assets passing through British financial institutions.

“From the criminal perspective, the burden of proof rests on the prosecution for English proceedings,” she said as mentioned in a Decrypt’s report. “It can be challenging for the UK authorities to collect evidence from China, such as victim statements, financial records and company documents of Lantian Gerui, to prove the Bitcoins were derived from fraudulent fundraising in China.”

UK Prosecutors target crypto possession in Qian Case

The CPS has not charged Qian with fraud or money laundering. Instead, prosecutors say she unlawfully held and moved cryptocurrency, and that she acquired, used, or possessed criminal property. Some lawyers say this approach is simpler for a British jury.

“The State chose not to prosecute Zhang for the fraud against hundreds of thousands of Chinese investors because that conduct took place in China and had no direct link to England and Wales,” said Ashley Fairbrother, a Partner at EMM Legal. Fairbrother said that under the well-known Anwar principles, prosecutors do not need to prove the underlying fraud.

It is enough to show the assets came from criminal activity, “even if the precise offence cannot be established.”

Supreme Court may be final stop for crypto dispute

Fairbrother pointed to the Wen verdict as an indicator of how a jury may view evidence in Qian’s case. A UK jury has already found Qian’s associate guilty on a comparable charge, likely relying on similar material, he said. “The law itself is not unprecedented here and is well equipped to deal with this situation; what is unprecedented is the sheer scale of the money involved–comparable to the annual GDP of some countries.”

The huge cache of Bitcoin, estimated at roughly $7 billion, is now driving a major civil process over who should be repaid and how much. Civil recovery proceedings are in progress to decide how victims could be compensated.

“The Chinese investors will need to demonstrate that they have a legitimate proprietary claim to the funds,” Fairbrother said. “Given the size and complexity of the fraud, that will be a considerable challenge.”

Fairbrother said it is “very likely” the civil case will end up before the UK Supreme Court, signaling that questions around crypto-linked assets and cross-border fraud may be tested at the highest judicial level.

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