The UK's largest Bitcoin money laundering case involves China's 40 billion illegal fundraising case

Source: Visual China

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

Recently, a money laundering case verdict from a British court led to a financial Ponzi scheme in China in 2017 - the Blue Sky 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 their seized assets. "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 jurisdictions have not only made people pay attention to the inherent vulnerabilities of the cryptocurrency ecosystem, but will also affect the direction of international cooperation in combating transnational financial crimes.

Hit by "virtual wealth": counterattack unfinished life

On March 18, 2024, a jury at Southwark Crown Court in the UK 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 in the country. Based on the price of $62,745 per bitcoin on April 19, the market value of this virtual currency is about $3.8 billion (about RMB 27.5 billion).

There is very limited public information about Jian Wen in China. According to the investigation reports of the British Royal Prosecution Service, the London Metropolitan Police and many local media, she was born in an ordinary family, has a university law degree, 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. Due to her husband's violent tendencies, the couple divorced in 2010, and she moved with her son to Leeds, the third largest city in the UK and the capital of West Yorkshire, to live 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 the case of Tianjin Lantian Ge Rui illegally absorbing public deposits, the main culprit Qian Zhimin quickly left the country and entered the UK in September 2017 with a forged passport of Saint Kitts and Nevis, a member of the Commonwealth of Nations (alias "Yadi Zhang").

Qian Zhimin carried a black Lenovo laptop with an encrypted wallet, which contained bitcoins that had been transferred from his subordinates' Huobi account in advance. Based on the limited information and clues currently 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 this employer who was "engaged in jewelry and real estate business." There is a strong literary and artistic atmosphere here, and they paid the monthly rent of 17,300 pounds for half a year 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 make large purchases, including purchasing Mercedes-Benz cars and luxury houses, 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 here is 6,000 pounds per semester, which is also borne by Qian Zhimin.

During this period, the UK Financial Regulatory 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, because they failed 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, Joe Ryan, a senior anti-money laundering expert, led a team to raid the two'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 there were 61,000 Bitcoins hidden in these devices. They returned the seized fake passports to Qian Zhimin six months later.

For more than a year afterwards, the two continued to exchange Bitcoin for cash for consumption. Qian Zhimin found buyers online, and the latter met offline to collect cash, earning a total of 400,000 pounds during the period. 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 Jian was arrested and brought to justice, while Qian Zhimin is believed to have left the UK long ago. The police also cracked 61,000 bitcoins in the device. At this time, more than two years had passed since the first search in 2018. As of the early morning of May 30, 2021, nearly 500 of them had been mined. The police also found a handwritten note in Wen Jian's new residence, which read, "If they crack the Bitcoin code, I'm finished." In this regard, Wen Jian 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 of the charges of money laundering and will face the final judgment in May this year. She admitted in court that she participated in Qian Zhimin's processing of Bitcoin, but had no idea of ​​their origin 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.

Lantian Green: Crazy Illegal Absorption

British court documents stated that the cryptocurrencies involved in the above money laundering case were purchased with the proceeds of Qian Zhimin's fraud in China. Qian Zhimin was born on September 4, 1978. She fled China after the Chinese police began investigating the fraud case. And this fraud case was the Blue Sky Green case that caused a sensation that year.

Lantian Green was a case of illegal absorption of public deposits investigated by the Chinese police in 2017. The police reported that the funds involved in the case amounted to 43 billion yuan, and 126,000 investors were involved in it, covering 31 provinces, municipalities and autonomous regions. Lantian 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 rebates as bait to sign investment agreements with the public and absorb social funds through product promotion meetings, developing brokers, and opening courses and training.

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

Zhang Ping, with the idea of ​​"retiring soon", 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 per day for the next six months, 200 yuan per day for the second six months, and 500 yuan per 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 each of her daughter, brother, cousin and a friend, investing a total of 300,000 yuan.

A verdict shows that Blue Sky Green has launched 10 financial products, including Blue Sky No. 1, Blue Sky No. 2, Youli Youbi, Super Calculation No. 1, Super Calculation No. 2, Life Ring Merchants, Carnival, and British Aisheng Digital Insurance. The investment cycle 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.

"You give Green three years, and Green will give you three generations of wealth", such a slogan was hung at the Blue Sky Green product promotion meeting. Source: Photo provided by the interviewee

For investors, Qian Zhimin, the actual controller of BlueSky Green and nicknamed "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, and there was a commotion in the audience, "Huahua is here!" Before Zhang Ping could react, he was squeezed to the wall by the crowd. Amid the crowd, a fat young woman entered the venue in a wheelchair.

"I guarantee you three generations of wealth", Qian Zhimin picked up the microphone and said only this 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 turning around and greeting investors in the audience, Qian Zhimin left.

An investor told Jiemian News that only "big customers" who invested more than 6 million yuan and enjoyed lifelong dividends were eligible to listen to Qian Zhimin's lectures. In class, they were required to wear "painted faces" like Qian Zhimin, and their mobile phones were confiscated. The organizers 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", is the founder of Bitcoin, and has also developed Dotcoin herself.

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 buy 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 and his partner Ren Jiangtao also invested 1.215 million yuan in succession to gild the statues of the Three Buddhas and cast many Buddhist instruments. On the surface, Lantian Green has more legal representative Ren Jiangtao. According to Ren Jiangtao's court confession, he met Qian Zhimin through playing online games. Because he completely obeyed Qian Zhimin's command in the game, Qian Zhimin asked him to serve as the legal representative of Lantian Green, and agreed to give him 1 million yuan after working for three years, and give him a salary of 30,000 yuan per month. If the company has problems, he needs to take responsibility, but Qian Zhimin will find a way to get him out. Ren Jiangtao said that he participated in the promotion of financial products, absorbing bank cards, managing "mines" and other work within the company, but in fact he was just a figurehead, and the specific work had to be arranged by Qian Zhimin. In order to increase its visibility, Lantiange Rui 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 long seen that Lantiange Rui was illegally raising funds and asked his brother to withdraw, but the other party responded that "there is no way to withdraw, and you can only keep going."

Photo of Qian Zhimin (Huahua). Source: Photo provided by the interviewee

"Controls 15%-20% of global Bitcoin output"

Ren Jiangtao testified in court that one of the businesses Qian Zhimin assigned to the company was Bitcoin and Bitcoin "mining", using computer networks to mine these two currencies to make money. The mining machines in the "mine" initially mined Bitcoin, but later the machines became outdated, so they mined Bitcoin. He transferred the mined virtual coins to Qian Zhimin from time to time. The "Blue Sky No. 1", "Blue Sky No. 2" and "Youliyoubi" financial products sold by Blue Sky Green to investors also correspond to Bitcoin and Bitcoin.

In anticipation of "Bitcoin's appreciation", Zhao Zhongmei, a stockholder from Shenyang, mortgaged her house in March 2017 to take out a loan of 450,000 yuan, and purchased 18 "Digital No. 1" orders, officially entering Blue Sky Green's Bitcoin. Lantiange Rui claimed that 8,000 yuan was equivalent to one bitcoin, and she added 15 orders of "Youliyoubi", with a total investment of more than 700,000 yuan. Zhao Zhongmei said that her investment was not considered a large amount in the local area. Lantiange Rui asked the loan company's people to work on the purchase site. Many people borrowed millions of dollars on the spot to buy it, in order to "buy a single room with one bitcoin in the future appreciation." In April of the same year, Zhao Zhongmei and hundreds of Shenyang investors took a bus to Lantiange Rui's mine in Dazhangzhuang Town, Beichen District, Tianjin to visit the mining machines. 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 visit said that Lantiange Rui was the only private enterprise in China with a supercomputing center, providing computing power for Bitcoin mining. The company has established "seven large automated mines" across the country, controlling "15%-20% of the global Bitcoin output", and Qian Zhimin is specifically responsible for technical work. After the visit, Lantian Green guided people to the hotel to swipe the POS machine to buy financial products.

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

Lantian Green claimed to have Bitcoin mining farms in many places across the country. Source: Photo provided by the interviewee

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. Chen Zheming, then secretary of the Baodi District Committee, 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 served as deputy director of the Propaganda Department of the Tianjin Municipal Committee for a long time. In December 2014, he was promoted to secretary of the Baodi District Committee. In August 2016, he served as a member of the Standing Committee of the Tianjin Municipal Committee. 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.

Blue Sky Green has been madly absorbing deposits in China for three years. Until around 2017, 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, but 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 the disposal of illegal fund-raising, stating that it was necessary to give greater importance to the prevention and control of financial risks; 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, calling a halt to all ICOs (initial issuance of virtual currencies) in the country.

In July 2017, Lantian Green stopped rebates on the grounds of upgrading its financial system, and then issued an announcement stating that it would suspend its business due to financial rectification. In late July, Lantian Green was completely "exploded". On July 27, Tianjin police sealed Lantian Green. But at this time, the actual controller Qian Zhimin had already fled abroad with the help of a fake passport, and eventually began to spend a large amount of illegal income 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 transferring 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 residence 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 a case was filed for investigation into Lantian Ge Rui'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" headed 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 Lantian Green Company were transferred for review 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 parts of the country issued online registration announcements for the information of fund-raising participants in the case. Some investors told Jiemian News that a considerable number of investors are public officials such as teachers, military personnel, and police officers in various places. After the "thunderstorm", some public officials "dare not report the case for various reasons."

Several investors who have received refunds revealed to Jiemian News that the clearance 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 fund-raising case of Lantian Green, the funds recovered by the police are currently 2.8 billion, accounting for only 6.5% of the total fund-raising.

On April 9, 2024, at the Social Contradictions and Disputes Mediation and Resolution Center in Hedong District, Tianjin, Blue Sky Green investors went to the office of the withdrawal team to register their information. Source: Interface News reporter Lv Yaxuan

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 half will be assigned to the British Home Office.

"We don't want and don't accept Bitcoin being confiscated by the UK." Recently, 2,500 BlueSky Green investors submitted a joint letter to the Chinese Ministry of Public Security. They hope that China will negotiate with the British government to recover "Bitcoin purchased with their money." Huang Feng, a professor at the G20 Anti-Corruption Pursuit and Recovery Research Center of Beijing Normal University, told Jiemian News that for transnational asset recovery cases, 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 illegal crimes in China, then after the UK confiscates the property transferred to the UK in accordance with the anti-money laundering law, it can share the confiscated assets with China in accordance with the international practice of "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 the 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 the civil recovery procedure. "For the frozen assets in this case, there seems to be no room for China and the UK to carry out criminal recovery cooperation at present," he believes. In this case, Chinese investors can only take the path of civil recovery to recover their assets and directly make property rights claims to the British court.

"Before the British court opens a hearing on the civil recovery application, the property victims should find a lawyer with cross-border case handling qualifications and capabilities to file a civil lawsuit in the UK as soon as possible and make their own property rights claims to the British court," Huang Feng said. According to the provisions of British law, if the property victims make relevant rights claims, the British court will suspend the hearing of the civil recovery application filed 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 suit" against objects rather than persons, that is, civil recovery only targets property, not the person who committed the illegal act, and is not subject to criminal prosecution or conviction. Civil recovery adopts the "preponderance of evidence" standard. Even if the British 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 are more convenient to collect evidence, and can 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 the government departments in charge. 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 behavior can make the government departments in charge realize the importance of the incident and adopt a more cautious attitude.  

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