The High Court has decided a preliminary issue in Director of Public Prosecutions (“DPP”) v Zhimin Qian,[1] the high-profile case about who is entitled to over 61,000 Bitcoin (and other assets) seized by the Metropolitan Police from Ms Qian in London. The Bitcoin represents the proceeds of a large-scale investment fraud that Ms Qian carried out in China before she fled to England. It is currently worth £3.8 billion.
The DPP has brought the proceedings to recover for the State the Bitcoin under Part 5 of the Proceeds of Crime Act 2002 (“POCA”) on the basis it is, or represents, property obtained through unlawful conduct. However, under s.281 POCA, a person who claims that property alleged to be recoverable property in fact “belongs to” them can apply for a declaration to that effect. Many thousands of Ms Qian’s alleged victims (the “Applicants”) have made such applications, asserting they have a proprietary interest in a share of the Bitcoin.
Because the fraud took place in China, but the Bitcoin and other assets are now in England, a preliminary issue has arisen in these applications: which country’s laws should decide whether the Bitcoin “belongs to” the Applicants (i.e. what is the lex causae)? Following a three-day hearing and written submissions, Mr Justice Turner has decided that Chinese law applies.
This will be a blow to the Applicants, who hoped to establish their proprietary interest in the Bitcoin using English law equitable principles. Unless Mr Justice Turner’s judgment is successfully appealed, the Applicants will now need to assess whether they can establish a proprietary interest under Chinese law and, if so, present evidence of this to the High Court.
Background
The parties agreed a statement of assumed facts to assist the court. On those facts, between 2014 and 2017, Ms Qian designed and orchestrated Ponzi schemes in China, mostly implemented through a Chinese company she controlled. The schemes were promoted across China and at least 128,409 investment contracts were entered into (some with Chinese governing law provisions, others with no governing law provisions). The known victims are Chinese, were resident in China when they were defrauded, and made payments into the schemes in Renminbi.
Victims paid a total of approximately RMB 40.2 billion (approximately £4.1 billion) into the schemes, of which RMB 31.4 billion (approximately £3.4 billion) was paid back to victims as part of the schemes. Some of the remaining funds were converted into assets including Bitcoin.
Ms Qian fled China in 2017, following discovery of the fraud, and has since lived in London. In 2018 and 2024, the Metropolitan Police seized assets from Ms Qian, including devices and keys giving access to over 61,000 Bitcoin. The seized assets have been frozen.
The Bitcoin is currently worth over £3.8 billion, significantly more than the other seized assets. The parties therefore focused their attention on the Bitcoin when developing their arguments on lex causae.
The issue and approach
The parties agreed that the law applicable to the question of whether the Bitcoin “belongs to” the Applicants for the purposes of s.281 POCA was to be determined by applying the relevant English private international law rules on the conflict of laws. However, the DPP asserted that the applicable law was Chinese law and the Applicants asserted it was English law.[2]
Mr Justice Turner noted the following points on the English conflicts of law approach to determining the applicable law:
- It required him to proceed issue by issue: first to ‘characterise’ each issue, second to determine which provisions or principles of conflicts of law are relevant to that type of issue, and third to apply those provisions or principles to reach a conclusion as to the applicable law for that issue.
- The proper approach to the determination of the applicable law needed to involve a “taxonomical analysis” of the relevant legal categories arising from the operation of European Regulation (EC) No 583/2008 (“Rome I”) and Regulation (EC) No 864/2007 (“Rome II”), as they are now assimilated into English law. Rome I concerns the law applicable to contractual obligations, and Rome II concerns the law applicable to non-contractual obligations. Issues needed to be characterised by reference to the meaning of Rome I and Rome II themselves, not by how English law would label them.
- Th English law common law rules of private international law would only apply to the extent Rome I and Rome II did not apply, otherwise those regulations could not achieve consistency between the approaches of the different states that had adopted them.
The parties also agreed that Bitcoin is property (applying AA v Persons Unknown, D’Aloia v Persons Unknown[3]). However, Mr Justice Turner noted that this was “not a conceptual trump card giving rise to a determination, or even a presumption, that the applicable law to any given issue must be that of the location of such property at the given time (the lex situs)”. In other words, the fact that the Bitcoin was property located in England did not locate to a determination or presumption that English law applied to the question of whether it “belonged to” the Applicants.
The claims
The Applicants asserted four bases of claims to a share of the Bitcoin, as follows:
- Claim 1: Under English law, they were entitled to trace a constructive trust/rescission trust interest into the Bitcoin because they had rescinded their investment contracts and the recipients of their payments into the schemes therefore held those payments (or their proceeds) on constructive/rescission trust (applying NCA v Robb, Shalston v Russo[4]).
- Claim 2: Under English law, they were entitled to trace a constructive trust interest into the Bitcoin because the investment contracts were fraudulent and therefore the recipients of their payments into the schemes held those payments on constructive trust (applying Westdeutsche Landesbank Girozentral v Islington Borough Council, Martin J Halley v Law Society, D’Aloia v Persons Unknown[5]).
- Claim 3: They were entitled to trace into the Bitcoin following principles in ss. 305 and 306 POCA, which allow tracing into property obtained through unlawful conduct for the purpose of identifying property as recoverable.
- Claim 4: To the extent any obligations on Ms Qian (or others perpetrating the fraud) were governed by foreign law, English law (as the lex situs of the Bitcoin) would regard them as giving rise to a proprietary interest in equity such that the Applicants were entitled to trace into the Bitcoin.
Legal Analysis
Claim 1
Mr Justice Turner considered that whilst Claim 1 was ultimately directed to the recovery of what the Applicants claimed to be their share of the Bitcoin, it depended on a number of distinct contractual issues. These included the nature and effect of the transactions pursuant to which moneys were paid into the scheme, whether they were void or voidable, whether any right of avoidance was effectively exercised, and what consequences would flow from such avoidance. He considered these issues fell within Rome I. It was not disputed that if Rome I applied, as Mr Justice Turner considered it did, the applicable law was Chinese law.
In case he was wrong about Rome I, Mr Justice Turner considered the alternatives. He found that if Claim 1 instead depended on non-contractual issues, those issues fell within Rome II. He focused on Article 4, which provides that the law applicable to a non-contractual obligation arising out of a tort/derelict shall be the law of the country in which the damage occurs, finding that the damage occurred in China.
If he was wrong about Rome I and Rome II, Mr Justice Turner considered the position under the common law rules of private international law. Under those rules, the central task was to identify the lex situs in respect of the proprietary issues that arose. Mr Justice Turner found that those proprietary interests were to be traced back to the original dealings between the Applicants and the operators of the schemes, which were overwhelmingly centred in China. As such, Chinese law was the lex situs.
Claim 2
Mr Justice Turner found that Claim 2 pointed even more firmly to China than Claim 1. On the Applicants’ case, the trust arose from the moment their payments into the schemes were received. This occurred entirely in China.
Claim 3
On Claim 3, Mr Justice Turner found that the tracing rules in POCA were not intended to determine ownership under s. 281. Instead, they were intended to enable the State to recover property derived from unlawful contact notwithstanding substitutions, dispositions or mixing. He found that Claim 3 provided no basis for displacing the conclusion that the relevant issues were governed by Chinese law.
Claim 4
Mr Justice Turner found that Claim 4 did not identify an independent source of rights. Rather, it sought to re-characterise rights arising under the applicable foreign law by the application of English equitable concepts. He found that the Rome regulations required the court to apply the substantive law identified by their provisions and did not permit the court to supplement it by importing additional proprietary consequences derived from English law.
As such, it falls to the Applicants to show, if they can, that they have a proprietary interest in the Bitcoin under Chinese law.
Commentary
The matter of whether the English court has jurisdiction has always been one that is distinct from whether English law is applicable to the dispute. Questions of governing law and jurisdiction are, however, particularly acute in disputes relating to cryptocurrencies given its borderless nature and the speed at which it can travel between jurisdictions before a victim can mobilise to seek appropriate remedies from the court. This case provides helpful clarity and certainty that whilst the English court can be an appropriate forum for seeking remedies, the English court will be methodical and rigorous in ensuring that it is applying the appropriate governing law in reaching its decision. There will be winners and losers in that process.
[1] Director of Public Prosecutions (“DPP”) v Zhimin Qian [2026] EWHC 2509 (KB) (link)
[2] The position that Chinese law applied was also taken by receivers appointed over the (defunct) Chinese company by one of the victims, who also claim the Bitcoin.
[3] AA v Persons Unknown [2020] 4 W.L.R. 35, D’Aloia v Persons Unknown [2025] 1 W.L.R. 821.
[4] NCA v Robb [2015] 3 W.L.R. 23, Shalston v Russo [2005] Ch. 281.
[5] Westdeutsche Landesbank Girozentral v Islington Borough Council [1996] AC 669, Martin J Halley v Law Society [2003] EWCA Civ 97, D’Aloia v Persons Unknown [2024] EWHC 2342 (Ch).
