A hundred billion "cryptocurrency" money laundering case, can the funds raised by Lantian Ge Rui really come back?

Author: Xiao Za Lawyer

In May of this year, Sister Za's team wrote two articles about the main suspect Qian in the Lantian Ge Rui case being arrested in the UK. Just a few days ago, Qian, who is also the main suspect in the largest Bitcoin case in the UK involving illegal public deposit collection, appeared in the Southwark Crown Court in London and pleaded not guilty to the charges of Bitcoin money laundering.

Today, let’s have Sister Za's team discuss this case with all our old friends and take a closer look at who Qian really is.

Who is Qian?

Qian's story is quite mysterious and dates back to March 2014, when Qian, also known as Huahua or Sister Hua, along with Ren (the legal representative) and others, registered Tianjin Ge Rui Electronic Technology Co., Ltd. in Tianjin. They used this company to promote, advertise, and sell so-called "capital-preserving high-yield" short-term investment financial products to the elderly. Of course, Ren had already been arrested in 2021. According to Ren's confession after his arrest, he met Qian through online gaming and completely obeyed Qian's commands in the game. Qian made him the legal representative of Lantian Ge Rui, but in reality, he was just a figurehead, and the specific work was still arranged by Qian.

The investment period for these financial products from Lantian Ge Rui generally ranged from 6 to 30 months, promising an annual return rate of at least 100% and up to 300%. In that era of financial regulatory absence, Lantian Ge Rui established dozens of branches across the country in just a few years through a viral marketing approach, with victims exceeding 100,000. It was through this illegal collection of deposits from the elderly that Qian amassed hundreds of billions of funds in a short period.

But who exactly is Qian? Even the investors of Lantian Ge Rui know very little about his background. The official channels of Lantian Ge Rui promoted Qian as a graduate of Tsinghua University with a PhD from Tsinghua.

However, Sister Za's team searched for Qian's name on the Tsinghua University "Tsinghua People" app and found no alumni information, indicating that Qian's identity as a "Tsinghua University PhD" is likely false. Additionally, some investors received information that Qian studied in the United States and understands finance. It was also reported that Qian had been in a car accident in China, which made walking and breathing very difficult, and he usually could only move in a wheelchair.

The claim that "he suffered a car accident in China, usually moves in a wheelchair, and finds walking and breathing difficult" seems credible. Some media outlets revealed that Lantian Ge Rui held a promotional event in Beijing in 2016, where Qian, dressed in a white veil and sitting in a wheelchair, was lifted high along with his wheelchair by people in the aisle leading to the podium, allowing the crowd to chant slogans, one of which was "Give Ge Rui three years, and Ge Rui will give you three lifetimes of wealth." This certainly has a criminal flavor to it.

Besides being exceptionally persuasive and providing investors with slogans about making money, directly shouting out a three-year exchange for three lifetimes of wealth, Qian also has some business acumen and is a "veteran" in the cryptocurrency circle. Long before using Lantian Ge Rui to collect deposits, he had already discovered the huge business opportunity in Bitcoin mining.

In 2013, taking advantage of the first Bitcoin boom, Qian opened a relatively large "mining farm" and widely claimed that his "mining farm" could provide mining machine hosting services, promising an annual return rate of 300%. Through Bitcoin mining, Qian gradually learned about Bitcoin's outstanding "advantages" in capital transfer and money laundering compared to other assets. Thus, Qian seized the "window period" when regulatory norms for crypto assets had not yet been established and global anti-money laundering systems for crypto assets were not in place, and instructed Ren Jiangtao to convert the large amounts of funds collected by Tianjin Ge Rui into Bitcoin through platforms like Huobi. This move was actually quite clever, allowing for both offense and retreat.

The model of Lantian Ge Rui can be said to be a typical case of illegal fundraising, with no possibility of compliance, making "sanctions" inevitable.

On April 21, 2017, public security authorities initiated an investigation into Lantian Ge Rui for suspected illegal public deposit collection. In June 2019, the Hedong Branch of the Tianjin Public Security Bureau reported that 50 suspects, including the legal representative Ren Jiangtao, had been arrested, with 28 of them transferred for prosecution. In February 2021, the Tianjin Hedong District People's Court publicly tried the case against Ren, along with his assistant Huang, who was also Ren's girlfriend. The court found that between June 2014 and August 2017, during Ren's tenure as the legal representative of Lantian Ge Rui, he participated in the illegal collection of over 40.2 billion yuan in public deposits; Huang was involved in the illegal collection of over 17.6 billion yuan. In September 2021, the court sentenced Ren to 10 years in prison and fined him 500,000 yuan, while Huang was sentenced to 5 years in prison and fined 250,000 yuan.

Qian denies all money laundering charges - How will the debts be handled?

After Ren's arrest, Qian's subsequent actions became even more "legendary." She first used the alias "Zhang Yadi," held a passport from Saint Kitts and Nevis, and then entered the UK using that passport. Upon entering the UK, she carried a laptop with a Bitcoin cold wallet containing a large amount of illegally raised funds from Lantian Ge Rui. Among the 128,000 Chinese investors involved, many have been actively seeking compensation but continue to face multiple challenges such as cross-border debt recovery, virtual currency ownership, and value conversion.

How much of the assets involved are there? According to a special audit of the Lantian Ge Rui case, from August 2014 to July 2017, Lantian Ge Rui raised over 40.2 billion yuan, all of which were controlled and allocated by Qian. From April 2014 to August 2017, Lantian Ge Rui refunded over 34.1 billion yuan to 128,409 people, spent over 95.68 million yuan on jewelry purchases, over 91.89 million yuan on real estate purchases, over 210 million yuan on daily operational expenses, and over 120 million yuan on the Life Circle Customer Service Center project. Notably, over 1.14 billion yuan was used to purchase Bitcoin. In other words, when Qian was arrested in the UK, she should have at least 1 billion yuan worth of virtual assets in her possession.

Regarding the disposal of these virtual assets, the UK Crown Prosecution Service announced on October 22 to specifically inform the Chinese victims: the agency has initiated civil recovery procedures for the assets frozen by the UK from Qian and others earlier this year. The Crown Prosecution Service filed a civil recovery procedure with the High Court earlier this year, and if no other individuals or entities claim rights to the criminal assets, half will belong to the UK police, while the other half will be allocated to the UK Home Office, aimed at handling the proceeds of crime and preventing further criminal activities.

In Conclusion

How should domestic investors recover this portion of funds? In fact, the UK has made it very clear; their approach is quite similar to the FTX case. The first step is to initiate civil recovery procedures for the frozen assets in Qian's possession, and only after the case verdict will the recovery process proceed based on the registered claims.

Undoubtedly, this procedure will take a considerable amount of time (like the FTX case), and it is unlikely that investors in our country will easily recover their losses. This also serves as a reminder to many investors: why do such obvious scams still manage to deceive people? The answer remains the same, if you invest, never be greedy; once greed arises, the scam may just be around the corner.