Author: Xiao Sa Team

Recently, the news of a British Chinese female takeaway delivery driver, Jian Wen (phonetic transcription, Wen Jian), being sent to court by the British judicial authorities on suspicion of a multi-billion Bitcoin money laundering case has become popular in the cryptocurrency circle. In addition to the huge amount involved, the twists and turns of the story, and the contrast in the identity of the suspect have brought a sense of curiosity. The source of the involved funds has sparked various speculations. With the further disclosure of relevant litigation documents and legal papers by the British court, the source of the funds has now been basically clarified - the illegal absorption of public deposits by certain individuals from Tianjin Blue Sky Grid, such as Qian and others.

According to information publicly released by the British judicial authorities, the principal offender in the Blue Sky Grid case, Qian, after converting all the funds involved in the case into Bitcoin, fled to the UK and used Jian Wen to launder the funds. As a result of the money laundering case, the British judicial authorities have seized and confiscated 61,000 Bitcoins worth 30 billion.

Today, the Xiao Sa Team will combine practical experience to provide a detailed explanation of the specific path for cross-border asset recovery, providing ideas for the many victims of the Blue Sky Grid case.

01. The Story of a Globally Renowned Female Swindler and a Billionaire Takeaway Delivery Driver

It is believed that loyal followers of Xiao Sa are not unfamiliar with the "illegal absorption of public deposits" - cases such as Ezubao and Fanya Metals, which have left a lasting impression in history, still evoke fear. These cases all share a common feature in their timeline: they absorbed deposits around 2014-2015 and collapsed around 2017-2018, and Blue Sky Grid is no exception.

According to publicly available judgments and media reports in China, the basic situation of the Blue Sky Grid case and its key cases is as follows:

On March 31, 2014, Qian (alias "Hua Hua" "Hua Jie," etc.) and others registered and established Tianjin Blue Sky Grid Electronic Technology Co., Ltd. in Tianjin, and used the company (which did not hold any banking licenses) to promote, advertise, and sell so-called "guaranteed high-yield" short-term investment products to the general public (mainly the elderly). The investment period of these financial products generally ranged from 6 to 30 months, with promised annualized returns ranging from a minimum of 100% to a maximum of 300%. In an era of financial regulation loopholes, within a few years, Blue Sky Grid, through viral marketing, established dozens of branches nationwide, with over 100,000 victims. It was through this illegal absorption of deposits from the elderly that Qian quickly obtained billions of funds.

It is worth mentioning that in addition to being quite persuasive, Qian was also a "veteran" in the cryptocurrency circle. Even before using Blue Sky Grid to absorb deposits, he had already discovered the huge business opportunity in Bitcoin mining. In 2013, taking advantage of the first surge in Bitcoin's popularity, Qian set up a sizable "mining farm" and publicly claimed that his "mining farm" could provide mining machine hosting services with a promised annualized return of 300%. Through Bitcoin mining, Qian gradually realized the outstanding "advantages" of Bitcoin in fund transfer, money laundering, and other aspects compared to other assets.

It was because of this that, taking advantage of the "window period" when cryptocurrency regulation was not yet in place and a global anti-cryptocurrency money laundering system had not been established, Qian instructed Ren Jiangtao to exchange a large amount of funds absorbed by Tianjin Grid into Bitcoin through platforms such as Huobi. This move was quite clever, allowing for both offense and retreat.

For a special non-standard asset like Bitcoin, which could double or even triple in value overnight, a promised return of 300% was indeed not considered high if the investor was lucky and had the right investment methods. Therefore, if the Bitcoin purchased by Qian performed well, paying out a 300% return would not be a problem. However, as cryptocurrency partners know, during the period when Blue Sky Grid collapsed from 2014 to 2017, the price of Bitcoin fluctuated within the range of $200 to $800, which could not support the promised annualized return of 300%, directly leading to the collapse of Blue Sky Grid.

Once the collapse occurred, the cleverness of Qian's move to convert the illegally absorbed funds into Bitcoin immediately became apparent: in 2017, Qian, under the alias "NAN YIN," obtained a Burmese passport, and then, by using someone else's identity, obtained a passport from the offshore tax haven of Saint Kitts and Nevis Federation. Carrying only a laptop filled with Bitcoin, he successfully transferred the billions of illicit funds to London and has been on the run since.

After fleeing to the UK with the funds, as he was already on the Chinese blacklist and unable to appear easily, and with cryptocurrency regulation and anti-money laundering measures becoming stricter, Qian urgently needed to find a "front" to cash out the illicit funds. At this time, Jian Wen, a divorced single mother working as a delivery driver in the UK, got to know Qian through a small advertisement he posted and helped him launder money and spend it over the years, acting as a stand-in to handle various matters, ultimately laundering several million pounds of illicit funds for Qian.

However, Qian may be a clever swindler who happened to catch the trend of the times, but he did not have the shrewd mind for large-scale money laundering. The frequent appearances of a delivery driver at Harrods in London and the purchase of super luxurious villas immediately caught the attention of the British regulatory authorities, and eventually, after a long period of preparation, the British police arrested Jian Wen and seized almost all of Qian's approximately 61,000 Bitcoins. Although Qian managed to escape under the nose of the British police, it did not affect the overall situation.

02. How Can Victims of Blue Sky Grid Recover Funds Across Borders?

Currently, with regard to the 61,000 Bitcoins seized, the British Crown Prosecution Service has initiated a confiscation procedure (criminal confiscation procedure) in the High Court in accordance with the provisions of the 2002 Proceeds of Crime (Recovery) Act and the (Combatting) Serious Crime Act. According to the provisions of the Proceeds of Crime (Recovery) Act, when a suspect is convicted in a magistrates' court and is transferred to a criminal court, or has been convicted by a criminal court, the criminal court can initiate a confiscation procedure based on the request of the prosecutor or the UK National (Combatting) Crime Agency. This procedure is similar to a trial procedure in China, with the prosecutor or the crime-fighting agency providing evidence to the court to determine whether the suspect has benefited from the crime or related activities, and the specific amount of benefit, and the court will decide whether to issue a confiscation order. Currently, there has been no progress in this case, and before the British court issues a confiscation order, it still needs to go through a judicial process to determine whether there are other legitimate rights holders for the illicit funds.

So, can the victims of the Blue Sky Grid case in China assert their rights to these Bitcoins? What avenues should they take to make such claims?

1. Submitting a Cross-Border Recovery Request to the Chinese Judicial Authorities

Article 5 of the Chinese International Criminal Judicial Assistance Law stipulates: "The People's Republic of China and foreign countries conduct criminal judicial assistance through liaison agencies. The Ministry of Justice of the People's Republic of China and other liaison agencies are responsible for submitting, 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 a foreign country, contact shall be made through diplomatic channels."

The Xiao Sa Team advises that China and the UK have actually signed relevant criminal judicial assistance treaties. On December 2, 2013, China and the UK signed the "Treaty between the People's Republic of China and the United Kingdom of Great Britain and Northern Ireland on Criminal Judicial Assistance," so China and the UK have a legal basis for recovering illicit funds in criminal cases. 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 the British judicial authorities and make requests for cross-border recovery in this case.

Therefore, the Xiao Sa Team currently recommends that the victims of the Blue Sky Grid case first submit an application to the Ministry of Justice and other functional agencies in China through legal channels, providing materials that can prove their status as victims of the case, and request cross-border recovery to protect their rights.

Referring to successful precedents in British judicial practice, there are actually quite a few successful cases of foreign victims applying to the British judicial authorities for the recovery of illicit funds. In the Alamieyeseigha case, Nigeria successfully recovered approximately $17 million in illicit funds transferred to the UK by Alamieyeseigha through a combination of convicting the suspect in their own country and filing a civil lawsuit in the UK. Furthermore, Nigeria, on the grounds of public interest, successfully applied to the British court and police to disclose relevant evidence in the Alamieyeseigha case, clarifying the assets transferred by the suspect and laying a solid foundation for successful recovery.

China has also accumulated a lot of experience in cross-border judicial cooperation, such as the Yu Zhendong case and the Li Huaxue case, which are successful experiences in China.

2. Pursuing Loss Recovery Through Civil Litigation

As mentioned earlier by the Xiao Sa Team, in countries such as Hong Kong and the UK, victims of criminal cases who suffer losses due to the actions of the suspects can pursue loss recovery through civil litigation. However, in this case, the Xiao Sa Team does not recommend pursuing civil litigation as the first choice.

This is mainly because the funds involved in this case have been converted from legal tender (general equivalents) to cryptocurrency (special assets). If the victims directly file a civil lawsuit with the British judicial authorities, they would first face the enormous challenge of proving themselves as the rightful owners of the funds involved. Even if they submit investment contracts with Blue Sky Grid and bank transfer records, it would not directly prove the "connection" recognized by British law between the current Bitcoins involved and their property.

In addition, the cost of hiring a lawyer in the UK to initiate such litigation is extremely high, and the uncertainty is great, so caution is advised in making such a choice.

03. Conclusion

Recovering illicit funds from cryptocurrency assets is not an easy task, even within China, let alone in other countries or jurisdictions. Therefore, the Xiao Sa Team advises the victims of this case to maintain the necessary patience with the Chinese judicial authorities. The Xiao Sa Team will continue to closely monitor this case and provide high-quality legal services to partners in a timely manner.

The above is today's sharing. Thank you, readers!

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