How should the victims of Lantian Ge Rui act in the cross-border recovery of cryptocurrency assets?

Author: Xiao Za Team Recently, a news story about a Chinese female delivery worker in the UK, Jian Wen (phonetic), being brought to court by British judicial authorities for allegedly being involved in a massive Bitcoin money laundering case has gone viral in the cryptocurrency community. The case not only involves a staggering amount of money and a convoluted story but also piques curiosity due to the stark contrast in the identity of the suspect. Speculation has arisen regarding the source of the illicit funds. However, with the further disclosure of relevant court documents and legal papers, the source of the funds has become largely clear—specifically, the illegal fundraising case involving Tianjin Lantian Ge Rui and individuals such as Qian, Ren, and Wu. According to publicly available information from British judicial authorities, the main suspect, Qian, exchanged all the illicit funds into Bitcoin before fleeing to the UK, where he used Jian Wen to launder the money. Currently, due to the money laundering case, British authorities have seized and confiscated 61,000 Bitcoins valued at 30 billion. Today, the Xiao Za team will combine practical experience to explain the specific paths for cross-border recovery of cryptocurrency assets, providing ideas for the many victims of the Lantian Ge Rui case to recover their losses.

01. The Story of a Globally Notorious Female Fraudster and a Billionaire Delivery Worker

Those who have been following Xiao Za are likely familiar with the crime of "illegal fundraising." Cases like eRent Treasure and Pan-Asia Metal have left lasting impressions, and these cases share a common timeline: fundraising around 2014-2015, and then collapsing around 2017-2018, with Lantian Ge Rui being no exception.

According to publicly available court documents and media reports in China, the basic situation of the Lantian Ge Rui case and its key incidents is as follows:

On March 31, 2014, Qian (alias "Hua Hua," "Sister Hua," etc.) and Ren (the legal representative) registered Tianjin Lantian Ge Rui Electronic Technology Co., Ltd. in Tianjin, using the company (which did not hold any banking licenses) to promote, advertise, and sell so-called "capital-preserving high-yield" short-term investment financial products to unspecified members of the public (mainly the elderly). The investment periods for these financial products generally ranged from 6 to 30 months, promising annual returns of at least 100% and up to 300%. In that era of lax financial regulation, Lantian Ge Rui rapidly opened dozens of branches nationwide through a viral marketing approach, with over 100,000 victims. It was through this illegal fundraising targeting the elderly that Qian amassed hundreds of billions in a short time.

It is worth mentioning that Qian, in addition to being quite persuasive, was also an "old player" in the cryptocurrency space. Before using Lantian Ge Rui for fundraising, he had already discovered the enormous business opportunity in Bitcoin mining. In 2013, taking advantage of the first Bitcoin boom, Qian established a sizable "mining farm" and widely claimed that his "mining farm" could provide hosting services for mining machines, promising an annual return of 300%. Through Bitcoin mining, Qian gradually understood the unique "advantages" of Bitcoin in terms of capital transfer and money laundering compared to other assets.

Thus, taking advantage of the regulatory vacuum regarding cryptocurrency assets and the lack of an established global anti-money laundering framework, Qian instructed Ren to convert the large amounts of funds raised in Tianjin Ge Rui into Bitcoin through platforms like Huobi. This move was quite clever, allowing for both aggressive action and a quick escape.

For a special non-standard asset like Bitcoin, if an investor is lucky enough and has sufficient investment skills, a 300% return is not considered high and may even be slightly conservative. Therefore, if the Bitcoin purchased by Qian performed well, cashing out a 300% return would not be a problem. However, as those familiar with the cryptocurrency space know, during the period from 2014 to 2017 when Lantian Ge Rui collapsed, Bitcoin's price fluctuated between $200 and $800, which essentially could not support the promised annual return of 300%, directly leading to the collapse of Lantian Ge Rui.

Once the collapse occurred, the cleverness of Qian's decision to convert the illegally raised funds into Bitcoin became evident: in 2017, Qian first bought a Myanmar passport under the alias "NAN YIN," and then, by impersonating others, obtained a passport from the famous offshore haven and tax paradise of Saint Kitts and Nevis. Carrying only a laptop filled with Bitcoin, he successfully transferred the billions in illicit funds to London and has been on the run ever since.

After fleeing to the UK, Qian, having already been placed on China's blacklist, could not easily show himself. As cryptocurrency asset regulations and anti-money laundering measures became increasingly stringent, he urgently needed to find a "front" to cash out the illicit funds. At this time, Jian Wen, a divorced woman wandering in the UK with children, met Qian through a small advertisement he posted. Over the years, she helped Qian launder money and spend it, acting as a proxy to handle various affairs, ultimately laundering several million pounds of illicit funds for him.

However, while Qian may be a clever fraudster who happened to ride the wave of the times, he lacked the acumen for large-scale money laundering. The frequent and conspicuous activities of a delivery worker at Harrods in London, purchasing ultra-luxurious villas, immediately attracted the attention of British regulatory authorities. Ultimately, after a long-term investigation, the British police arrested Jian Wen and seized nearly all of Qian's approximately 61,000 Bitcoins. Although Qian managed to escape under the noses of the British police, it did not change the overall situation.

02. How Can Victims of Lantian Ge Rui Pursue Cross-Border Recovery?

Currently, regarding the 61,000 Bitcoins, the UK Crown Prosecution Service has initiated a recovery procedure (criminal confiscation procedure) in the High Court based on the provisions of the Proceeds of Crime Act 2002 and the Serious Crime Act. According to the Proceeds of Crime Act, when a suspect is convicted in a magistrates' court and transferred to a criminal court, or has been convicted by a criminal court, the criminal court can initiate a criminal confiscation procedure at the request of the prosecutor or the UK National Crime Agency. This procedure is similar to a trial process in China, where the prosecutor or crime-fighting agency must provide evidence regarding whether the suspect has benefited from the crime or related activities, and the specific amount of benefit, after which the court will decide whether to issue a confiscation order. Currently, there has been no progress in this case, and before issuing a confiscation order, the UK court must determine whether there are other legitimate claimants to the illicit funds through judicial procedures.

So, can the victims of the Lantian Ge Rui case in China claim rights to these Bitcoins? What avenues should they pursue? 1. Submit a Cross-Border Recovery Request to Chinese Judicial Authorities Article 5 of China's International Criminal Judicial Assistance Law states: "Criminal judicial assistance between the People's Republic of China and foreign countries shall be conducted through contact with foreign liaison agencies. The Ministry of Justice of the People's Republic of China and other foreign liaison agencies are responsible for initiating, receiving, and transmitting requests for criminal judicial assistance and handling other matters related to international criminal judicial assistance. If there is no criminal judicial assistance treaty between the People's Republic of China and foreign countries, contact shall be made through diplomatic channels." The Xiao Za team reminds that China and the UK have actually signed relevant treaties for mutual criminal judicial assistance. On December 2, 2013, China and the UK signed the Treaty on Mutual Legal Assistance in Criminal Matters between the People's Republic of China and the United Kingdom of Great Britain and Northern Ireland, thus providing a legal basis for recovering illicit funds in criminal cases between China and the UK. According to the aforementioned International Criminal Judicial Assistance Law, the Ministry of Justice of China should be the main functional agency to initiate contact with UK judicial authorities and propose recovery requests in this case. Therefore, the Xiao Za team currently suggests that victims of the Lantian Ge Rui case first submit applications and materials proving their status as victims to the Ministry of Justice and other functional agencies in China, reflecting their situation and making legal requests for recovery, thereby safeguarding their rights. Referring to relevant judicial practices in the UK, there have been many successful cases where foreign victims have requested the recovery of illicit funds from UK judicial authorities. In the Alamieyeseigha case, Nigeria successfully recovered approximately $17 million in illicit funds transferred to the UK by convicting the suspect in Nigeria and filing a civil lawsuit in the UK. Furthermore, Nigeria even applied to the UK courts and police for the disclosure of relevant evidence in the Alamieyeseigha case on the grounds of public interest, successfully clarifying the assets transferred by the suspect, laying a solid foundation for successful recovery. China has also accumulated considerable experience in cross-border judicial cooperation, as seen in cases like the Yu Zhendong case and the Li Huaxue case, which are examples of successful experiences. 2. Recover Losses Through Civil Litigation As previously mentioned by the Xiao Za team, in countries like Hong Kong and the UK, victims of criminal cases can pursue recovery through civil lawsuits against the suspects for losses incurred due to their actions. However, in this case, the Xiao Za team does not recommend pursuing civil litigation as the primary option. This is mainly because the funds involved in this case have already been converted from legal currency (generally equivalent) into cryptocurrency (special assets). If victims directly file a civil lawsuit with UK judicial authorities, they will first face the significant challenge of proving that they are the rightful claimants to the assets involved. Even if we submit investment contracts and bank transfer records related to Lantian Ge Rui, it may not directly prove the "connection" recognized by UK law between the involved Bitcoins and our property. Additionally, hiring a lawyer in the UK to initiate such litigation is extremely costly and carries significant uncertainty, requiring careful consideration.

03. Final Thoughts

Recovering illicit assets from cryptocurrency is not an easy task even within China, let alone in other countries or jurisdictions. Therefore, the Xiao Za team advises the victims of this case to maintain necessary patience with Chinese judicial authorities. The Xiao Za team will continue to closely monitor this case and provide quality legal services to our partners in a timely manner. Today's sharing ends here, and we are grateful to our readers!