A court in Qingdao sentenced a man surnamed Zhang for stealing 107 Bitcoins from an acquaintance who had asked him to help exchange cryptocurrency for cash.
Details of the Case
The victim owned 117 Bitcoins and planned to convert them into cash. Zhang had previously helped him with a similar transaction, so in the summer of 2023 the victim turned to him again, handing over his phone so Zhang could register a digital wallet and handle the rest of the process.
While the owner was reading his seed phrase aloud and writing it down, Zhang, who was standing nearby, memorized eleven of the words as well as the first letter of the final word. That night, he tried different combinations, reconstructed the missing word, transferred 107 Bitcoins out of the wallet, and cashed them out through a cryptocurrency exchange, earning more than 660,000 yuan.
After discovering that his wallet was almost empty, the victim contacted the police. A technical investigation led authorities to Zhang. After his arrest, he did not deny transferring the Bitcoins to addresses under his control, but described his actions as a “protective takeover.” He also denied cashing out the funds, claiming that he only intended to speculate on the Bitcoin price and ultimately lost money.
A forensic examination of electronic records reconstructed the entire trail. Zhang had dispersed the stolen Bitcoins across multiple addresses, consolidated them into a wallet belonging to a friend, and then transferred the resulting 660,000 yuan to that same friend’s bank card. This reconstruction completely undermined his version of events.
Challenges in Classifying the Crime
The central question before the court was whether Bitcoin could legally be considered stolen property at all — in other words, whether it possesses the characteristics of property under criminal law.
The prosecutor explained that although China does not recognize virtual currencies as legal tender, it does not deny their property characteristics.
“Since Bitcoin requires investment and effort to obtain, has economic value, and its owner exercises full control over it through private keys and a secret recovery phrase, it can be regarded as property under criminal law and therefore can be the subject of theft,” the court concluded.
Calculating the amount of damage presented a separate challenge. No authorized institution officially assesses the value of Bitcoin. Relying on existing precedents, the prosecutor used the actual proceeds generated from the sale of the stolen cryptocurrency — more than 660,000 yuan — as the basis for determining the loss.
The court sentenced Zhang to ten years and nine months in prison and imposed a fine of 100,000 yuan. He appealed the ruling, but the higher court upheld the original judgment.
The case has become an example of how Chinese authorities investigate and prosecute a new category of crimes involving virtual currencies.