Analysis: Qian Zhimin Bitcoin Case ― Victims and State Diverge on Applicable Law 

（ This article published on Caixin  on 📅04/03/2026 ）

The English High Court has appointed litigation receivers over Lantian Gerui, the Chinese company at the centre of the Qian Zhimin Bitcoin proceedings, following a two-day hearing on 16 and 17 February.

The appointment was granted “by a fine margin,” as Mr Justice Turner made clear, and does not indicate any substantive entitlement to the seized cryptoassets. Instead, the hearing primarily addressed (1) the receivership application, (2) representation management among Section 281 applicants, and (3) procedural preparation for the July hearing on the applicable law.

At stake are more than 61,000 Bitcoin seized in the United Kingdom — currently valued at approximately £3 billion following the recent decline in crypto markets.

Background

Lantian Gerui was incorporated in China in 2014 and later became associated with one of China’s largest illegal fundraising schemes, which collapsed publicly in 2017. Qian Zhimin was subsequently convicted in the United Kingdom for money laundering linked to the proceeds of that scheme.

While the criminal proceedings have concluded, the civil recovery proceedings under the Proceeds of Crime Act 2002 (POCA) continue before the King’s Bench Division of the English High Court.

Separate winding-up proceedings against Lantian Gerui are pending before the Chancery Division. Any liquidation order would fall within the jurisdiction of the insolvency court, not within the current POCA proceedings.

Litigation Receiver Appointed — But Merits Undecided

The receivers were appointed pursuant to Section 37 of the Senior Courts Act 1981 on the application of Mr Wang Wu, the winding-up petitioner.

This is not a liquidation order. Nor does it validate the company’s potential claim. The purpose of the appointment is to empower the receivers, if advised, to consider whether Lantian Gerui should pursue a claim under Section 281 POCA.

Section 281 permits a third party to assert a “proprietary interest in the recoverable property.”

Individual victims have already brought such claims. The question now is whether the company itself may attempt to do so.

The Director of Public Prosecutions (DPP) and existing Section 281 applicants opposed the receivership application, arguing that Lantian Gerui was the vehicle deployed to carry out the Ponzi scheme and was therefore not a victim.

However, Mr Wang’s counsel advanced a different legal pathway. Even if the company operated as the vehicle of fraud, transactions arising from unlawful fundraising arrangements are likely to be invalid under Chinese law. If so, the company would be obliged to repay funds received. That obligation would render investors creditors of the company.

The argument — though facing significant doctrinal difficulty — is that the company may, through receivers, seek to assert rights in relation to assets derived from those funds.

Mr Justice Turner recognised that the company faces formidable challenges. But he emphasised that the February hearing was not a mini-trial on the merits. Refusing the appointment would have prevented the company from ventilating its arguments at a full hearing. On that basis, and “by a fine margin,” he exercised discretion to appoint receivers.

Importantly, the judge stated that if the receivers do not pursue a Section 281 claim before the procedural deadline, or fail to obtain recognition as a Section 281 applicant, the receivership should be discharged forthwith.

The appointment preserves a procedural possibility — it does not resolve substantive entitlement.

Representation and Procedural Control Ahead of July

The hearing also addressed how the increasing number of Section 281 applicants should be managed. It seems the number has exceeded 10,000 investor victims who are proceeding with s 281 applications.

The case now involves multiple law firms and a number of senior barristers, including several King’s Counsel. The court expressed concern about duplication of submissions and escalating costs.

The judge therefore imposed structure ahead of the July hearing, which will determine whether English law or Chinese law governs the proprietary interest question.

For that hearing:

• By 22 May, any party wishing to pursue a Section 281 claim must notify the court via registration with the lead solicitors, Fieldfisher — described by counsel and judge as securing a “foot in the door.”
• By 18 June, the necessary financial information must be provided.

Barristers referred to the May deadline as a “guillotine.” The judge made clear that the proceedings will not remain indefinitely open to new entrants.

For the July hearing itself, one legal team will lead submissions on behalf of Section 281 applicants on the applicable law issue. Other firms may provide input internally but will not address the court separately on that point.

July: English Law or Chinese Law?

The July hearing will determine the applicable law governing whether Section 281 applicants can establish a “proprietary interest in the recoverable property.”

This is not an academic exercise.

If English law applies, claimants may rely on equitable tracing and following principles. English equity allows property to be traced into substituted forms, including cryptoassets. Constructive trust doctrines and mixed fund principles may support proprietary claims over assets derived from misappropriated funds.

If successful, applicants could potentially claim proportionate interests in the Bitcoin itself, including appreciation.

If Chinese law applies, the analysis may differ materially.

Under traditional Chinese civil law principles, once funds are transferred pursuant to an investment or contractual arrangement — even if induced by fraud — ownership typically passes. The company would be obliged to repay funds, rendering investors creditors rather than continuing proprietary owners.

Under POCA, creditor status alone is insufficient to succeed under Section 281.

This divergence explains the alignment of positions:

• The individual Section 281 applicants intend to argue for English law in July.
• The DPP and the winding-up petitioner both contend that Chinese law should apply.

For the DPP, applying Chinese law could significantly narrow — if not eliminate — successful proprietary claims, thereby preserving a larger pool of assets for civil recovery, potentially accompanied by a provision for a compensation scheme.

During the February hearing, reference was made to a Home Office letter. The judge treated it as a possibility rather than a guaranteed arrangement. The DPP retains liberty to apply if any political or intergovernmental solution crystallises.

A Structurally Complex Dispute

The proceedings are no longer a simple contest between the DPP and individual investor victims.

They now involve:

• Individual proprietary claims under Section 281
• A potential corporate claim advanced through litigation receivers
• The DPP’s civil recovery application
• Parallel insolvency proceedings in the Chancery Division

The case sits at the intersection of civil property law, corporate law, insolvency law, conflict of laws and equitable tracing principles in a cross-border context.

The February hearing did not determine ownership of the Bitcoin.

It clarified procedure, preserved competing pathways, and positioned the case for a decisive legal test in July.

The applicable law ruling may ultimately determine which structural route — individual proprietary recovery (s 21), corporate-based claim, or state-to-state solutions — prevails.

Independent observer note

This article is written from the perspective of an independent legal observer, based on the author’s attendance at and observation of the public case management hearing on 21 January 2026, together with information placed on the public record. The author is not acting for any party in the proceedings and does not have access to non-public court papers or confidential materials.

In preparing this article, the author has taken into account publicly available information and, where appropriate, factual clarifications provided on a voluntary basis by certain legal representatives involved in the proceedings, to the extent that such information was consistent with what was ventilated in open court and did not engage any confidentiality or privacy restrictions. Any analysis, commentary or characterisation of procedural developments remains the author’s own and does not reflect the position, strategy or views of any particular law firm, claimant group or authority.