UK may return £640M to fraud victims but keep $6.4B gains from seized Bitcoin, sparking debate. Largest crypto seizure ever: 61,000 BTC worth $7.24B confiscated in UK fraud case. Officials warn legal battles could delay victim payouts if UK keeps Bitcoin windfall.

United Kingdom officials are considering whether to retain billions of dollars in profits from a record-breaking Bitcoin seizure tied to a massive international fraud scheme, rather than fully redistributing the assets to victims, according to a report from the Financial Times.

The debate centers on roughly 61,000 Bitcoin confiscated in 2018, now worth nearly $7.24 billion, compared to an estimated £640 million ($862 million) originally defrauded from investors.

The case, involving one of the world’s largest crypto seizures, has sparked legal, financial, and ethical questions about how governments should handle recovered digital assets.

The UK High Court may ultimately decide whether victims of the scheme should be reimbursed only for the original value of their lost funds, around £640 million, or whether they are entitled to the full current value of the seized cryptocurrency.

If victims are reimbursed based solely on the original amount, the government would retain an excess of approximately $6.4 billion.

This potential windfall has led some Treasury officials to privately debate whether the gains could be used to offset a budget deficit of up to £30 billion ($40.5 billion).

Under existing rules set by the Proceeds of Crime Act, seized assets are typically transferred to the Home Office or the Treasury Consolidated Fund, with compensation payments made when ordered by courts.

However, officials have been warned that keeping the additional funds could trigger lengthy and complex legal battles, potentially delaying victim compensation for years.

The Treasury has also been instructed not to account for the seized Bitcoin in its budgetary planning at this stage.

Authorities seized the assets in 2018 from Chinese national Zhimin Qian and her Malaysian associate, Seng Hok Ling.

Both pleaded guilty earlier this week—Qian to acquiring and possessing criminal property, and Ling to transferring criminal property.

The London Metropolitan Police’s Economic Crime team, which conducted the investigation, described the seizure as the largest cryptocurrency confiscation ever recorded.

The operation followed a seven-year probe into Qian’s international money laundering activities.

Between 2014 and 2017, Qian orchestrated a massive fraud in China, defrauding more than 128,000 investors.

She converted the proceeds into Bitcoin before fleeing China under false documents and entering the UK.

In 2018, she attempted to launder the funds by acquiring property, but investigators were able to track her movements through Ling.

Their arrests in April 2024 led to the recovery of encrypted devices, cash, gold, and cryptocurrency.

The UK case adds to a growing list of major cryptocurrency seizures worldwide as law enforcement agencies increase scrutiny of digital assets linked to crime.

Earlier this month, Canadian police seized $40 million in crypto from exchange TradeOgre, sparking criticism from supporters of the platform.

In August, the US Justice Department authorized the seizure of $2.8 million in cryptocurrency in a ransomware case, while in July, Bloomberg reported that the US Secret Service had seized nearly $400 million in digital assets over the past decade.

Meanwhile, Sweden’s justice minister has urged authorities to prioritize crackdowns that could result in larger asset seizures.

In June, US-based exchange Coinbase announced its cooperation with the US Secret Service in seizing $225 million in crypto allegedly stolen by scammers—the agency’s largest seizure to date.

As governments grapple with the challenges of digital asset crime, the UK’s decision on how to handle the unprecedented $7.24 billion seizure is likely to set a precedent for future cases, raising questions over the balance between fiscal policy, legal fairness, and victim restitution.

The post UK officials debate fate of $7.24B seized Bitcoin in historic fraud case appeared first on CoinJournal.

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