New Developments in the Blue Sky Ge Rui Case: Bitcoin Rises 200 Times, Can Victims Only Be Compensated at Original Price?

the assets were purchased with my money" and further demonstrate that "I still have rights to this asset."

The individual applicants in the Qian Zhimin case are following the path of confirming property rights.

They have submitted applications based on Section 281 of the UK Proceeds of Crime Act 2002 (POCA), hoping to exclude the assets that legally belong to them from the scope of civil recovery by the state.

Recovering Losses and Claiming Property Shares

The buyers in the Foskett case could share the insurance payout under an important premise: the purchase price was originally held in trust by the recipient, giving the buyer property rights over that money.

In the Qian Zhimin case, the key stages of investment and fund conversion occurred in China. Investors were solicited in China, paid in RMB, the money entered Chinese accounts, and was then converted into Bitcoin.

Now, to confirm whether there is a share of the coins that belongs to the investors, one must look back at what rights were formed after the payment was made. Once the money reached the UK, it cannot directly transform the original investment relationship into a trust relationship like in the Foskett case.

If the scammers later moved to the UK, treating all previously formed trading relationships in China according to UK law could change the rights associated with the same investment based on the scammers' whereabouts. The UK court did not accept the applicants' arguments for applying UK substantive law or a mixed application of Chinese and UK law, but chose to apply Chinese law for judgment. This is a choice of governing law and does not mean the case is transferred to Chinese courts; the UK court will still handle civil recovery and related applications according to its own procedures.

What the victims need to do next is to prove their rights under Chinese law, rather than just continuing to discuss what remedies UK law can provide. However, the ruling did not determine that everyone is left with only the principal debt; the specific content and effects of Chinese law remain to be seen in subsequent stages.

Why do reports say that victims may not receive substantial appreciation? First, let’s look at the common handling methods in domestic recovery and compensation.

The Supreme Court's regulations on the execution of property parts of criminal judgments require, on one hand, the recovery of property and income formed from the investment of the stolen money, and on the other hand, stipulate that compensation to victims should be calculated based on the actual losses determined by the criminal judgment. If the assets have appreciated, the recovered property can be worth more; however, the amount of compensation based on actual losses will not be calculated according to the multiple of the coin price increase.

Let’s assume you were scammed out of 100,000 yuan, and the assets have risen to 10 million yuan. If you can only claim that 100,000 yuan loss, then recovering 10 million yuan primarily means that it can be compensated, but it does not mean that the money owed to you has also turned into 10 million yuan. As for what other losses should be compensated, there must be corresponding legal basis. The market appreciation of Bitcoin cannot be directly considered as new losses for the victims.

To share in the appreciation, the applicants need to further prove that there is a legally owned share of property within these coins. If this property right is established, what they are claiming is the asset value corresponding to that share, and appreciation may then correspond to the share ownership. This is why the applicants referenced the Foskett case and hoped to apply UK law. Now that the UK court requires the use of Chinese law to determine this property right, the original arguments for claiming asset shares under UK law have been thwarted, and finding a basis under Chinese law has become the key moving forward.

However, domestic regulations on criminal compensation cannot directly dictate how the UK court will distribute this batch of coins.

Tianjin Initiates Confiscation Procedures, Can the Money Come Back?

According to The Paper, the Tianjin Second Intermediate Court has accepted the confiscation application submitted by the Tianjin People's Procuratorate Second Branch on September 28, which includes 61,896.41552945 Bitcoins, as well as other virtual currencies, cash, jewelry, and financial assets.

The prosecution's application disclosed that Qian Zhimin actually controlled Blue Sky Ge Rui, soliciting funds through fraudulent financial products, causing losses to over 102,000 fundraising participants. The prosecution claims that the related illegal gains, converted property, and profits should be included in the recovery, and that part of it should be returned to the damaged fundraising participants, in addition to applying for confiscation. This is the prosecution's application and accusation; the court has accepted the application but has not yet made a final confiscation ruling, nor is it a ready-made distribution plan.

Why is this procedure worth noting? The Criminal Procedure Law stipulates the confiscation procedure for illegal gains in cases where the suspect or defendant has fled or died. If the legal conditions are met, the property can be reviewed first without having to wait for the ordinary criminal trial of the suspect to be completed. This announcement corresponds to this special procedure. Qian Zhimin was sentenced in the UK for money laundering, and the handling of the property involved in her suspected fundraising fraud in China addresses different issues.

The term "confiscation" should not be understood as meaning that all the victims' money will be returned to the national treasury. Article 300 of the Criminal Procedure Law excludes the return of victims' property from confiscation, and the Tianjin prosecution's application also retains the return of part of the damaged fundraising participants. What truly needs to be examined is which properties should be recovered, which should be returned, which belong to the remaining confiscatable properties, and how to assess each participant's losses. Recovering assets, returning to victims, and confiscating remaining properties each have their own legal conditions.

Tianjin court accepts the case, will the British coins automatically return?

It still requires cross-border assistance and asset transfer. Articles 47 to 49 of the International Criminal Judicial Assistance Law stipulate the paths for requesting confiscation and return of involved property from foreign countries, including submitting requests, proof of ownership, legal documents, and negotiating the transfer of property. Domestic rulings can provide legal documents and factual basis for subsequent requests, but whether assistance can be obtained in the UK and how to connect with local recovery procedures still needs to be handled according to UK law and applicable assistance mechanisms. It cannot be directly stated that the domestic case has been filed and that the two countries have reached a return arrangement.

For the victims, this means distinguishing between two claims: participating in domestic clearance, focusing on proving their investment and unreimbursed losses; and in the UK, requesting confirmation of specific Bitcoin shares, while also proving the basis of property rights under Chinese law and how those rights extend from the original investment to the seized assets. Transfer vouchers can prove that as victims they have paid money, but they may not necessarily prove ownership of certain coins alone. Contract agreements, receiving accounts, amounts already recovered, and records of funds converted into Bitcoin may all affect the judgment. Both procedures also need to truthfully disclose the amounts already compensated, and the same loss cannot be counted multiple times.

The announcement also provided a very practical piece of information: damaged fundraising participants can apply to participate in the lawsuit through the WeChat mini-program "Tianjin Second Intermediate Court Stakeholder Litigation Platform"; not participating in the lawsuit does not affect receiving the returned funds from the recovery of the involved assets. The announcement period is six months, and after that, it will be legally reviewed. This domestic arrangement cannot be directly inferred to mean that the UK application does not need to be processed, nor can it guarantee full compensation after domestic registration.

For ordinary participants, what they should do now is perhaps to clarify the basis of property rights and the flow of funds under Chinese law, organizing investment, repayment, and past clearance records. "Principal and interest" need specific basis; the promised returns of illegal fundraising projects cannot be directly considered as interest to be compensated.

How much the coin price has risen is the market value of the assets; how much can be legally claimed is the problem that the law needs to solve.

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