Will the UK decide to sell 61,000 BTC or compensate victims with the profits?
The United Kingdom finds itself in possession of 61,000 Bitcoin, valued at around $7.2 billion, following a fraud conviction. An upcoming High Court ruling in January will determine who will benefit from the seized assets from 2018.
Zhimin Qian, also known as Yadi Zhang, admitted guilt on September 29 at Southwark Crown Court for his involvement in a long-term investment scam that impacted over 100,000 individuals in China. Authorities had previously recovered 61,000 BTC from a property in Hampstead back in 2018.
According to the Financial Times, prosecutors are working on a High Court resolution to determine whether victims should be compensated based on the initial losses, estimated at £640 million, or at the current market value, approximately £5 billion. Treasury officials are unable to factor any proceeds into the upcoming November Budget.
This decision will have significant implications on both the market and legal fronts. Compensating victims based on the original loss would result in a smaller sum being returned to victims, with a surplus going to the state. On the other hand, compensating at current market value would direct the full value to victims, reducing any potential fiscal gains for the government.
The legal framework is crucial.
Under the Proceeds of Crime Act 2002, courts are mandated to confiscate criminal proceeds and enforce against available assets, which now include digital assets. Compensation orders under the Sentencing Act 2020 prioritize victim restitution over fines and confiscation when the offender cannot fully satisfy all obligations.
Appeals can delay distribution, even if liquid assets are ready for dispersal. The Home Office has updated its seizure and realization powers concerning cryptocurrencies, allowing for their conversion and sale under court supervision. In 2025, the government transitioned to a national custody and realization framework for standardized procedures.
Recovered funds are managed through the Asset Recovery Incentivisation Scheme, with net proceeds divided between the central government and operational partners such as law enforcement and prosecutors.
The immediate concern revolves around the valuation date and distribution method. If the High Court opts for compensating victims based on the original loss, they would receive approximately £640 million, with the remainder being confiscated.
Under the ARIS, any surplus would be shared between the Exchequer and asset recovery agencies, after deducting fees and expenses. Alternatively, if the court mandates payment at the current market value, the proceeds would go to the victims, either in cash post-realization or in the form of BTC or its equivalent, a more complex operation due to cross-border verification.
Officials have discussed the windfall implications but cannot incorporate the proceeds into the November fiscal event. Any distribution will be contingent on court orders, appeals, and the receiver’s schedule.
The market perspective hinges on timing, not just the size.
Recent data shows U.S. spot Bitcoin ETFs attracting over $1.6 billion in net inflows within the past week, indicating the market’s ability to absorb significant demand or supply shocks.
At an approximate price of $119,000 per BTC, the 61,000 BTC translates to about $7.2 billion, equivalent to 18 to 29 days’ worth of heavy ETF outflows if sold in one go. However, actual market programs rarely execute in a single session, and liquidity studies suggest that U.S. venues offer deep order book depth for BTC pairs.
The method of realization is another critical decision. Government entities have two common strategies at their disposal.
One approach involves block trades through prime brokers and OTC market makers, minimizing impact on exchanges and smoothing price movements. The U.S. has utilized this method when transferring government-owned Bitcoin to Coinbase Prime before sales.
Alternatively, auctions or controlled exchange programs can be used, a model previously adopted by UK law enforcement for smaller asset lots through commercial auction houses.
The new national custody and realization framework signals a shift towards a more structured approach for larger cases, incorporating compliance protocols and oversight mechanisms aligned with existing legislation.
Victims and taxpayers face differing outcomes based on timing.
Compensating victims at the original loss, followed by confiscation of any surplus, suggests a quicker route to cash for victims once appeal periods conclude, as the receiver can leverage a well-established framework to sell in a liquid market.
On the other hand, a mark-to-market compensation scheme presents a more complex scenario, as paying in BTC would distribute market risk among many recipients, while cash payments would concentrate execution with the receiver.
Regardless of the chosen approach, the timing of the January hearing and any subsequent appeals will dictate the commencement of distributions, preventing the state from incorporating the value into immediate fiscal plans.
To address the supply question practically, a structured program that aligns with recent ETF flow patterns could involve:
| Sale Method | Daily BTC | Daily Value | Days to Sell 61,000 BTC |
|---|---|---|---|
| Gradual Sales | 250 | $30,000,000 | 244 |
| Staggered Sales | 500 | $60,000,000 | 122 |
| Rapid Sales | 1,000 | $120,000,000 | 61 |
| Weekly Waves | 5,000 | $600,000,000 | 12 waves |
These figures fall within the capacity of ETFs and major OTC counterparts, spread across multiple sessions to mitigate any disruptive impact on the market. The comparison helps gauge the size relative to observable trading flows, rather than predicting price movements.
Looking at historical examples, countries like Germany and the United States have successfully managed the sale of seized assets through structured approaches, maintaining market stability. The UK’s situation, however, presents unique challenges due to the legal considerations that must balance compensation and confiscation under existing laws.
The unresolved aspect revolves around whether victims should be compensated at the original cost or the current value. Guidance from the CPS and policy summaries from the Home Office suggest a focus on restoring losses, favoring the original loss as the basis for compensation, while confiscation aims to eliminate criminal gains, redirecting any residual value to the state via ARIS post-compensation.
According to reports, officials are aligning arguments with this framework, with the hearing outcome shaping distribution plans, fiscal implications, and subsequent sales strategies.
A decision tied to the original loss would leave surplus funds for the state to realize under supervision, subject to appeal restrictions, with proceeds shared between the government and operational partners.
Opting for a current value approach would allocate most of the BTC’s value to victims, with the realization process varying based on cash or asset distribution methods.
The plea has been entered, the coins secured, and all eyes are on the January valuation assessment.
