U.K. and China Battle for Control of $7B in Bitcoin: Dump Incoming?

A woman who played a leading role in a crypto scam that defrauded 128,000 Chinese investors has pleaded guilty to money laundering — but the saga is far from over.

Yadi Zhang, also known as Zhimin Qian, ran fraudulent wealth schemes between 2014 and 2017, with most of the ill-gotten gains held in Bitcoin. Victims were promised returns of up to 300%, which was simply too good to be true.

After arriving in the U.K. on a bogus passport, she lived a lavish lifestyle — renting a $6.7 million mansion in an affluent part of London.

Her home was raided in October 2018 — and it took two-and-a-half years before specialists uncovered a staggering 61,000 BTC in wallets stored across several laptops.

While the haul was worth about $1.8 billion at the time, its value has ballooned since then — hitting $7 billion — justifying the Metropolitan Police’s claim that this was one of the world’s largest crypto seizures.

Shortly before Zhang was due to be questioned by detectives in 2020, she disappeared without a trace. Years passed before she was arrested in the Northern England town of York in April 2024.

While her guilty plea means a trial will no longer need to take place, there’s a bigger issue at play: what should happen to the Bitcoin that’s been seized.

What Happens Next?

To cut a long story short, there’s currently a dispute between the U.K. and China over who should take custody of this Bitcoin.

Those who were defrauded have pleaded with Beijing to engage in negotiations so they can be made whole.

But it’s fair to say that the British government has different ideas. There have been ongoing reports that it wants to liquidate this BTC for cash, and use the billions to plug a black hole in the country’s coffers.

While this would go a long way to alleviating the financial crisis facing the Chancellor Rachel Reeves — who may have to go back on earlier promises not to raise taxes — it could prove to be an unpopular decision for many reasons.

Beyond the potential backlash from the Chinese government, the sell-offs have the pressure to drag BTC prices down and potentially derail the bull market. The dump would also face fierce criticism from Reform UK, the right-wing political party that’s currently ahead in the opinion polls. Its leader Nigel Farage has been calling on Britain to follow in Donald Trump’s footsteps by creating a strategic Bitcoin reserve that would be funded by seized coins.

And inevitably, Reeves could open herself to accusations of being short-sighted — especially if Bitcoin’s value continues to rise. Last year, Germany ended up selling 50,000 BTC for $2.8 billion — crypto that was seized from a movie piracy platform. Fast forward to now and that stash would be worth $5.8 billion, meaning that taxpayers ended up missing out on astronomical sums of money.

The fate of this BTC remains unresolved, and at the moment, the High Court in London is deciding what should happen next. While British officials claim the proceeds should go to the Treasury, the Chinese government is also paying for a legal team to represent the victims of Zhang’s schemes — including entrepreneurs, bankers, and judges. In a rather unusual statement after the guilty plea, her lawyer Roger Sahota said:

“By pleading guilty, Ms Zhang hopes to bring some comfort to investors who have waited since 2017 for compensation, and to reassure them that the significant rise in cryptocurrency values means there are more than sufficient funds available to repay their losses.”

She has now been remanded in custody while she awaits sentencing at a later date. Jian Wen, an accomplice who had helped her launder the proceeds, was jailed for almost seven years in 2024.

Yuhua Yang from Thornhill Legal has said the High Court battle “will test the boundaries of cross-border financial crime enforcement, crypto asset recovery, and the judicial cooperation between China and the West in the digital currency era.”

Given how the victims were based in Asia, but the BTC was seized in Europe, this is far from an open-and-shut case. Make no mistake: the outcome of this legal fight will have international ramifications.

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