China court treats Bitcoin as property in 107 BTC theft case

A Chinese court sentenced a man to 10 years and nine months after he memorized a wallet recovery phrase and stole 107 Bitcoin.

The case began in July 2023, when a Bitcoin holder identified as Feng asked an acquaintance, Zhang, to help convert 117 Bitcoin. Zhang had assisted with an earlier transaction, so Feng trusted him to set up a new digital wallet and handle the process.

Feng wrote down the wallet’s 12-word recovery phrase while Zhang watched. Prosecutors said Zhang memorized 11 words and the first letter of the last one. He later tested possible words, gained control of the wallet and transferred 107 Bitcoin to addresses he controlled.

Electronic evidence challenged the “protective takeover” claim

Feng noticed the missing Bitcoin the next day and contacted a blockchain security company before reporting the theft. Police opened an investigation in October 2023. Investigators used wallet records, transaction data and linked IP addresses to connect Zhang to the transfers.

Zhang admitted moving the Bitcoin but called it a “protective takeover” intended to prevent another theft. He also claimed he lost money while speculating and had not cashed out. Transaction records contradicted that account. Investigators traced the assets through several wallets and found more than 660,000 yuan, or about $97,000, in proceeds sent to a friend’s bank account.

Prosecutors treat Bitcoin as property under criminal law

“Current policies deny virtual currencies legal-tender status, but do not deny their property attributes,” the prosecutor handling the case said.

The Licang District People’s Procuratorate argued that Bitcoin carries economic value and gives holders exclusive control through private keys and recovery phrases. Prosecutors said those features meet the criminal-law definition of property, allowing Bitcoin to serve as the object of theft.

They used the realized cash proceeds to calculate the theft amount because China has no official Bitcoin exchange rate. The approach avoided assigning a market value to all 107 Bitcoin when determining Zhang’s sentence.

The Licang District People’s Court convicted Zhang of theft on April 28, 2025. It sentenced him to 10 years and nine months in prison and imposed a 100,000-yuan fine. The Qingdao Intermediate People’s Court rejected his appeal and upheld the ruling on Nov. 10, 2025.

The decision does not reverse China’s restrictions on cryptocurrency trading and related financial services. Bitcoin still lacks legal-tender status, and mainland regulators continue to classify many crypto business activities as illegal financial operations.

As previously reported by crypto.news, China’s Supreme People’s Court said in May that it would study clearer judicial rules for virtual-currency disputes. Local courts have already treated Bitcoin as virtual property in cases involving theft, ownership and recovery.

The Qingdao case adds another example of courts protecting crypto ownership while regulators restrict trading. It also shows how brief physical exposure to a recovery phrase can give another person full control of a self-custody wallet.