The UK's largest Bitcoin money laundering case involves China's 40 billion illegal fundraising case: How did the money flow abroad?

Since the birth of cryptocurrency, characteristics such as "decentralization" and large price fluctuations have created convenience for organized criminals to transfer assets.

Recently, a money laundering verdict from a British court revealed a financial Ponzi scheme that occurred in China in 2017 - the BlueSky Green illegal absorption of public deposits. Nearly 130,000 investors were involved in this illegal absorption case, and they are actively seeking ways to get the British authorities to return the assets they seized. "It is obvious that this is Bitcoin bought with our money." One of the investors told Jiemian News.

These two major financial cases from different judicial systems have not only drawn people's attention to the inherent vulnerabilities in the cryptocurrency ecosystem, but will also affect the direction of international cooperation in combating transnational financial crimes.

Hit by "virtual wealth": an unfinished life of counterattack

On March 18, 2024, a jury at Southwark Crown Court in the United Kingdom found Jian Wen, a 42-year-old British Chinese woman, guilty of money laundering. During the investigation, the police seized 61,000 bitcoins, the largest ever seized in the country. Based on the price of $62,745 per bitcoin on April 19, the market value of this virtual currency is approximately $3.8 billion (about RMB 27.5 billion).

There is very limited public information about Wen Jian in China. According to the investigation reports of the British Crown Prosecution Service, the London Metropolitan Police and many local media, she was born in an ordinary family, has a university diploma in law, and met her future husband Marcus Barraclough in China. In 2007, she came to Halifax, West Yorkshire, England with her husband when she was seven months pregnant. Because her husband had a violent tendency, the two divorced in 2010, and then she moved with her son to Leeds, the third largest city in the UK and the capital of West Yorkshire, and lived a tight life.

In the summer of 2017, after sending her son back to China for education, Wen Jian went to Abbey Wood in southeast London to look for better job opportunities, working in a Chinese restaurant during the day and sleeping in a dark basement at night. Almost at the same time, after the Chinese public security department launched an investigation into Tianjin Lantian Green's illegal absorption of public deposits, the main culprit Qian Zhimin quickly left the country and entered the UK in September 2017 with a forged passport from Saint Kitts and Nevis, a member of the Commonwealth of Nations (alias "Yadi Zhang").

Qian Zhimin carried with him a black Lenovo laptop with an encrypted wallet containing bitcoins that had been transferred from his subordinates’ Huobi account. Based on the limited information and clues available, the police initially determined that Wen Jian had no connection with the case in China.

After Qian Zhimin fled to London, England via Laos, she gradually exchanged her Bitcoins for physical objects such as pounds and jewelry. She had been in a car accident in China and had difficulty breathing and walking. In addition to the language barrier, she urgently needed a local Chinese assistant. Wen Jian, who was under financial pressure, happened to find this job offer with a monthly salary of 4,000 pounds in a Chinese WeChat group, which brought her a turnaround in life.

She first moved into a mansion in Hampstead, a wealthy area in northern London, with her employer, who was "in the jewelry and real estate business." The place was full of literary and artistic atmosphere, and they paid the monthly rent of 17,300 pounds for six months in one lump sum. According to Wen Jian's recollection, this compatriot, who was four years older than her, stayed in bed for about 20 hours a day, playing games, shopping, and trading Bitcoin on a laptop.

Wen Jian's most important job was to convert Qian Zhimin's bitcoins into cash and then spend it on major purchases, including buying Mercedes-Benz cars and luxury homes, becoming a member of the luxury department store Harrods, and even taking her on a tour of Europe. In addition, Wen Jian also brought her son who was studying in China to London and arranged for him to attend the aristocratic school Hurstfield. The tuition fee per semester was 6,000 pounds, which was also paid by Qian Zhimin.

During this period, the UK Financial Conduct Authority began to crack down on criminal money laundering through crypto assets. In March 2018, the British government set up a special working group to conduct research on crypto assets. In the same year, due to failure to convert Bitcoin into pounds in time, Qian Zhimin and Wen Jian tried to directly use Bitcoin to buy a Hampstead mansion worth 23.5 million pounds. In the end, due to the unknown source of funds, the two failed to buy the house, but instead attracted the attention of the police.

In the early morning of October 31, 2018, veteran anti-money laundering expert Joe Ryan led a team to raid the couple's residence in Hampstead and seized laptops, tablets and USB flash drives. Qian Zhimin and Wen Jian were not detained, and the police did not realize that 61,000 bitcoins were hidden in these devices. They also returned the seized fake passport to Qian Zhimin six months later.

Over the next year, the two continued to exchange bitcoins for cash for consumption. Qian Zhimin found buyers online, and the latter met offline to collect cash, earning a total of 400,000 pounds. Wen Jian had a strong sense of anti-detection and specifically told the buyers to meet in a place without surveillance. With the cash, Wen Jian even went abroad to spend money, including looking for apartments and sea view houses in Dubai and Italy, and going to Switzerland to buy jewelry.

In May 2021, Wen was arrested, and Qian is believed to have left the UK. Police also cracked 61,000 bitcoins from the device, more than two years after the first search in 2018. As of the early hours of May 30, 2021, nearly 500 of them had been mined. Police also found a handwritten note in Wen's new home that read, "If they crack the Bitcoin code, I'm done." Wen explained in court that the pressure of being investigated made her want to commit suicide.

On March 18, 2024, at Southwark Crown Court, Wen Jian, who faced 13 charges, was found guilty of one count of money laundering and will face final judgment in May this year. She admitted in court that she participated in Qian Zhimin's handling of Bitcoins, but had no idea where they came from, and insisted that she was deceived by her employer. The British Crown Prosecution Service has obtained a freezing order against Wen Jian's property from the High Court and will hold a hearing on its disposal in September this year.

The mastermind behind the scenes has already fled. Wen Jian claimed that the last time she saw Qian Zhimin was on August 25, 2020. A 2018 diary seized by British police showed that Qian Zhimin planned to buy Liberland, a country on the west bank of the Danube that is not recognized by the international community, and obtain diplomatic immunity after becoming the head of state. There are also British media reports that she was included in the Interpol Red Wanted List, but Jiemian News did not obtain relevant information after inquiries.

Blue Sky Grey: Crazy Non-abuse Past

British court documents said the cryptocurrencies involved in the money laundering case were purchased with proceeds from a fraud committed in China by Qian Zhimin, who was born on September 4, 1978, and fled China after Chinese police began investigating the fraud. The fraud was the sensational Blue Sky Green case.

Blue Sky Green was a case of illegal absorption of public deposits investigated by the Chinese police in 2017. The police reported that the funds involved amounted to 43 billion yuan, involving 126,000 investors from 31 provinces, municipalities and autonomous regions. Blue Sky Green was established in Tianjin in 2014. The company used slogans such as environmental protection development, smart elderly care, and Bitcoin mining, and used zero risk and high interest rate as bait to sign investment agreements with the public and absorb social funds through product promotion meetings, broker development, and training courses.

In 2016, Zhang Ping, then 52, was still an employee of the Education Bureau of Tumote Left Banner, Hohhot, Inner Mongolia. He was recommended by a retired cadre named Wang Yun from the People's Procuratorate of Tumote Left Banner and came into contact with the investment project of BlueSky Green. In May of that year, Wang Yun brought more than a dozen people to a hotel in Fengtai District, Beijing to attend the new product launch of BlueSky Green. Most of the people in the large venue were middle-aged and elderly. The host displayed products such as elderly care robots and anti-smog masks on the stage. These were all gifts for purchasing financial products.

With the idea of ​​"retiring soon", Zhang Ping spent 60,000 yuan to buy a "Carnival" financial product. According to the rules, Lantian Green will return 4,000 yuan on the spot, 100 yuan a day for the next six months, 200 yuan a day for the second six months, and 500 yuan a day for the last six months, a total of 30 months. In addition to getting back the principal, Zhang Ping can make another 70,000 yuan. On the third day after the purchase, Zhang Ping began to receive daily rebates. Under the mechanism of getting a 20% bonus for purchasing 5 orders, she bought one for her daughter, brother, cousin and a friend, investing a total of 300,000 yuan.

A verdict shows that Lantian Green launched 10 financial products, including Lantian No. 1, Lantian No. 2, Youli Youbi, Chaosuan No. 1, Chaosuan No. 2, Life Ring Merchants, Carnival, and British Aisheng Digital Insurance. The investment period ranges from 6 to 30 months, and the stipulated investment amount is mainly concentrated between 6,000 yuan and 60,000 yuan, with no upper limit, and the rate of return is between 100% and 300%. None of these products have corresponding physical objects.

For investors, Qian Zhimin, the actual controller of BlueSky Green, also known as "Huahua", is a mysterious figure who claims to have connections with senior government officials and can bring "three generations of wealth" to investors. In October 2016, Zhang Ping attended a BlueSky Green promotion meeting. The host was introducing financial products on the stage when there was a sudden commotion from the audience, "Huahua is here!" Before Zhang Ping could react, he was pushed to the wall by the crowd. Surrounded by the crowd, a fat young woman entered the venue in a wheelchair.

"I will guarantee you three generations of wealth and prosperity." Qian Zhimin picked up the microphone and said only this one sentence, and the scene began to boil. Investors lifted Qian Zhimin and his wheelchair high up, and Zhang Ping was able to see clearly that Qian Zhimin's face was mysteriously covered with a pink and white veil. After walking around the stage and greeting the investors, Qian Zhimin left.

An investor told Jiemian News that only "big customers" who invested more than 6 million and enjoyed lifelong dividends were eligible to listen to Qian Zhimin's lectures. During the class, they were required to wear "painted faces" like Qian Zhimin, and their mobile phones were confiscated. The organizer called it a "special event." With this sense of mystery, many people worship Qian Zhimin as an investment god, saying that she is "famous in the world for playing Bitcoin", the founder of Bitcoin, and she also developed the Bitcoin.

A verdict shows that from April 2014 to August 2017, Lantian Green illegally absorbed a total of about 40.2 billion yuan, all of which were controlled by Qian Zhimin. Among them, more than 34.118 billion yuan was used to return funds to 128,000 fund-raising participants, more than 336.7 million yuan was used for the company's daily expenses and project operations, and the rest of the money was used to purchase real estate, jewelry, cars, etc. From 2015 to 2017, Qian Zhimin personally purchased 331 pieces of jade, diamonds and other jewelry, with a total price of about 167 million yuan. Qian Zhimin also invested 1.215 million yuan with his partner Ren Jiangtao to gild the statues of the Three Buddhas and cast many Buddhist instruments.

On the surface, BlueSky Green promoted the legal representative Ren Jiangtao. According to Ren Jiangtao's court statement, he met Qian Zhimin through playing online games. Because he completely obeyed Qian Zhimin's command in the game, Qian Zhimin asked him to be the legal representative of BlueSky Green, and agreed to give him 1 million yuan after working for three years, and an additional 30,000 yuan salary every month. If the company had problems, he would have to bear the responsibilities, but Qian Zhimin would find a way to get him out.

Ren Jiangtao said that he participated in the promotion of financial products, soliciting bank cards, and managing the "mine" within the company, but in fact he was just a figurehead and his specific work was arranged by Qian Zhimin. In order to increase its popularity, Lantian Green held a meeting at the Diaoyutai State Guesthouse in Beijing and "bought" Ren Jiangtao the title of China's business integrity leader.

Ren Jiangtao's brother testified that he had seen that Lantian Green was illegally raising funds very early on and asked his brother to withdraw, but the other party responded that "it was impossible to withdraw and he had to keep going."

Ren Jiangtao testified in court that one of the businesses Qian Zhimin assigned to the company was to "mine" Bitcoin and Dotcoin, using computer networks to mine these two currencies to make money. The mining machines in the "mine" initially mined Bitcoin, but later when the machines became outdated, they mined Dotcoin, and he transferred the mined virtual coins to Qian Zhimin from time to time. The "Blue Sky One", "Blue Sky Two" and "Youliyoubi" financial products sold by Blue Sky Green to investors also correspond to Bitcoin and Dotcoin.

In anticipation of the "definite appreciation of Bitcoin", Zhao Zhongmei, a stockholder from Shenyang, mortgaged her house in March 2017 to obtain a loan of 450,000 yuan and purchased 18 "Digital One" orders, officially entering the Bitcoin market of Blue Sky Green. Blue Sky Green claimed that 8,000 yuan was equivalent to one Bitcoin, and she purchased 15 more "Youli Youbi" orders, investing more than 700,000 yuan in total. Zhao Zhongmei said that her investment was not considered a large amount in the local area, and Blue Sky Green asked the loan company to work on the purchase site, and many people borrowed millions of yuan on the spot to buy it, in order to "buy a single room with one Bitcoin in the future."

In April of the same year, Zhao Zhongmei and hundreds of investors from Shenyang took a bus to visit the mining machines at the Blue Sky Green mine in Dazhangzhuang Town, Beichen District, Tianjin. At the scene, she met investors from all over the country. "Rows of shelves were filled with things like computer hosts, stacked more than ten layers high, and there were wires behind them," Zhao Zhongmei recalled. The employee who led the tour said that Blue Sky Green was the only private enterprise in China with a supercomputing center, providing computing power for Bitcoin mining. The company has established "seven automated mines" across the country, controlling "15%-20% of the world's Bitcoin output", and Qian Zhimin is specifically responsible for technical work. After the visit, Blue Sky Green guided people to the hotel to swipe the POS machine to buy financial products.

The testimony of Pan, the custodian of the BlueSky Green "mining farm", stated that the mining machines and electricity bills of the mining farm were provided by Qian Zhimin, the network was connected by Qian Zhimin's people, and the mined bitcoins were deposited into Qian Zhimin's online wallet. By 2017, the mining machines were all obsolete and sold as scrap at 30 yuan each, and the money was used to pay the electricity bill. British court documents stated that BlueSky Green only used some nearly obsolete equipment as a show to deceive potential investors.

A past report from Baodi TV's "Baodi News" shows that on March 28, 2016, the Blue Sky Green "smart bracelet" project settled in Baodi District, Tianjin, and the then Baodi District Party Committee Secretary Chen Zheming and other district leaders attended the signing ceremony. Investors said that the official platform behavior greatly increased their trust in Blue Sky Green.

Public information shows that Chen Zheming had long served as deputy director of the Propaganda Department of the Tianjin Municipal Party Committee. He was promoted to secretary of the Baodi District Party Committee in December 2014 and became a member of the Standing Committee of the Tianjin Municipal Party Committee in August 2016. Before retiring in January 2023, Chen Zheming served as deputy director of the Standing Committee of the 17th Tianjin Municipal People's Congress and deputy secretary of the Party Group.

Lantian Green has been madly absorbing deposits in China for three years. It was not until around 2017 that a large number of illegal fund-raising cases, represented by Ezubao, broke out. The overnight wealth that many investors expected did not become a reality, and what they waited for was the disillusionment of a Ponzi scheme. In April 2017, the Supreme People's Court and 14 other state agencies held an inter-ministerial joint meeting on handling illegal fund-raising and stated that it was necessary to raise the prevention and control of financial risks to a more important position; on September 4 of the same year, the central bank and seven other ministries and commissions issued an announcement on preventing the risks of token issuance and financing, and stopped all ICOs (initial issuance of virtual currencies) in the country.

In July 2017, BlueSky Green stopped rebates on the grounds of upgrading its financial system, and later issued an announcement that it would suspend business due to financial rectification. In late July, BlueSky Green was completely "exploded". On July 27, Tianjin police sealed up BlueSky Green. But by then, the actual controller Qian Zhimin had already fled abroad with a fake passport, and eventually began to spend the illegal proceeds in large quantities in the UK with the assistance of his assistant Wen Jian.

A verdict shows that six months before the "thunderstorm", in February 2017, Qian Zhimin asked her lover Zhao Linfeng to help her sneak across the border. Later, with the help of Zhao Linfeng, Qian Zhimin fled across the border. Another person was arrested when he was moving the boxes that Qian Zhimin failed to take away. The public security organs confiscated gold jewelry, jewelry and jade inlaid jewelry, gold bars, jade articles, and cash RMB from the seized boxes and Qian Zhimin's rental before leaving the country. In addition, Qian Zhimin spent a total of about 10 million yuan on valuable items such as agarwood, antiques, and jade articles at Zhao Linfeng's company.

On December 27, 2017, the Tianjin police issued a notice stating that they had opened an investigation into Lantian Green's suspected illegal absorption of public deposits.

What are the ways to recover investment losses across borders?

From 2017 to 2019, 50 suspects in the "Lantian Green Illegal Fund Raising Case" led by Ren Jiangtao, Wu Xiaolong and Huang Yafang were successively brought to justice. Among them, Ren Jiangtao and his lover Huang Yafang were arrested by the public security organs in Vientiane, Laos on November 1, 2017. The public security organs recovered 520 million yuan in cash, 17.1 million Thai baht, and 1.15 million US dollars; froze 1.8 billion yuan in account funds; froze 45,200 shares of Luoniushan; seized 1,568 pieces of jewelry, jewellery, gold bars, etc.; seized 14 luxury cars such as Maserati, Mercedes-Benz Maybach, Porsche, Cadillac, etc.; and sealed 42 properties.

As of June 24, 2019, 28 suspects of BlueSky Green Company were transferred for investigation and prosecution. On September 13, 2021, Ren Jiangtao and Huang Yafang were sentenced to 10 and 5 years in prison respectively for the crime of illegally absorbing public deposits. However, the "ringleader" Qian Zhimin has never been arrested.

In December 2022, the Lantian Green case initiated the compensation procedure, and public security organs in many places across the country issued online registration announcements for the information of the fund-raising participants in the case. Some investors told Jiemian News that a considerable number of investors were public officials such as teachers, military personnel, and police officers in various places. After the "thunderstorm", some public officials "did not dare to report the case for various reasons."

Several investors who have received refunds revealed to Jiemian News that the liquidation team returned 8% of the defrauded funds in May 2023, and another 5% in October of the same year. It is reported that in the 43 billion yuan illegal fundraising case of Lantian Green, the funds recovered by the police are currently 2.8 billion yuan, accounting for only 6.5% of the total amount of funds raised.

Recently, the 61,000 bitcoins seized by the British police have once again brought hope to investors. However, according to the Financial Times, the British Crown Prosecution Service has filed a civil recovery procedure with the High Court for these seized assets. If no one else claims rights to the criminal assets, half will belong to the British police and the other half will be assigned to the British Home Office.

"We do not want and do not accept our Bitcoin being confiscated by the UK." Recently, 2,500 BlueSky Green investors submitted a joint letter to the Ministry of Public Security of China. They hope that China will negotiate with the British government to recover "the Bitcoin purchased with their money."

Huang Feng, professor at the G20 Anti-Corruption and Asset Recovery Research Center of Beijing Normal University, told Interface News that in cases of transnational asset recovery, Chinese and British law enforcement agencies can cooperate in criminal proceedings. If China can prove that the relevant property comes from the criminal suspect's crimes in China, then after the UK confiscates the property transferred to the UK in accordance with anti-money laundering laws, it can share the confiscated assets with China in accordance with the international practice of the "sharing system", based on the law enforcement resources and contributions invested by Chinese law enforcement agencies.

However, Huang Feng also pointed out that according to the latest reports from the UK, the criminal proceedings in this case have basically ended, and there are few criminal charges against Wen Jian in the end. The criminal proceedings were not very successful in recovering assets, so the UK initiated civil recovery procedures. "For the frozen assets in this case, China and the UK currently seem to have no room for criminal recovery cooperation." He believes that in this case, Chinese investors can only take the path of civil recovery to recover their assets and directly file property rights claims with the British courts.

"Before the British court opens a hearing to hear a civil recovery application, property victims should quickly find a lawyer with cross-border case handling qualifications and capabilities to file a civil lawsuit in the UK and submit their property rights claims to the British court," Huang Feng said. According to British law, if property victims make relevant rights claims, the British court will suspend the hearing of the civil recovery application submitted by the British law enforcement agency to determine the ownership of the relevant property.

Unlike criminal confiscation, the civil recovery procedure stipulated in the UK's "Proceeds of Crime Recovery Act" is a "rem action" against objects rather than persons. In other words, civil recovery only targets property, not the person who committed the illegal act, and is not conditional on achieving criminal prosecution or conviction. Civil recovery adopts the "preponderance of evidence" standard. Even if the UK law enforcement agency only applies for confiscation based on certain suspicious materials, as long as such suspicion cannot be overturned by any other evidence, the judge will consider such suspicious materials to be "preponderance of evidence."

Huang Feng believes that most of the evidence in the Blue Sky Green fund-raising case is in China, and Chinese lawyers can more easily collect evidence and even request Chinese law enforcement agencies, diplomatic and consular agencies and other competent authorities to provide necessary assistance to prove that the assets frozen and seized in the UK are from the property of Chinese investors. Of course, Chinese lawyers should cooperate with British lawyers, and relevant litigation and court appearances should be conducted by British lawyers in the country.

A lawyer told Jiemian News that it is very important that for cases involving a large number of people, if civil lawsuits are initiated overseas, it is best to conduct them under the coordination of government departments. Currently, 2,500 investors in this case have collectively written to the Ministry of Public Security, requesting the initiation of corresponding recovery work. This collective action can make government departments aware of the importance of the incident and take a more cautious attitude.

"However, if the British police find new suspects, such as Qian Zhimin, or discover new evidence and restart the criminal process, the Chinese police can still carry out criminal cooperation with the British side," Huang Feng said, and then recover part of the funds through the sharing system mentioned at the beginning in accordance with the criminal confiscation procedures stipulated by British law.