A Bitcoin theft case in Qingdao, China, further demonstrates that the local judicial system treats Bitcoin as legally protected property in criminal cases. The court ultimately sentenced the defendant to 10 years and 9 months in prison for theft and fined him 100,000 yuan.
107 BTC were transferred after the mnemonic phrase was recorded.
This case originated in July 2023. A cryptocurrency holder asked an acquaintance for help with the transfer and wallet setup of 117 bitcoins. Prosecutors stated that the person memorized 11 words of the mnemonic phrase and the first letter of the last word at the scene. They then repeatedly tried to complete the mnemonic phrase, gained control of the wallet, and transferred 107 bitcoins.
Electronic records refute the claim of "protective takeover".
The day after discovering their assets had been transferred, the victim contacted the blockchain security company and then reported the incident to the police. Police opened an investigation in October 2023 and, based on wallet records, on-chain transaction data, and associated IP addresses, confirmed that the transfers in question were related to the defendant.
The defendant admitted to transferring the Bitcoin, but argued that it was a "protective takeover" to prevent the assets from being stolen. He also claimed that he incurred losses in subsequent transactions and did not actually cash out.
However, transaction records obtained by the investigating authorities contradicted this claim. After tracing the flow of funds through multiple wallets, investigators discovered that over 660,000 yuan had entered a friend's bank account, considered the amount involved in the case.
The court convicted and sentenced him for theft.
The prosecuting attorney stated that current policies do not recognize virtual currencies as legal tender, but this does not mean they lack property attributes. Based on this, the prosecution argued that Bitcoin has economic value, and its holders can exercise exclusive control through private keys and mnemonic phrases, thus meeting the criteria for "property" under criminal law.
Because China does not have an official Bitcoin exchange rate, the prosecution did not directly calculate the value of the case based on the market price of 107 Bitcoins. Instead, they used the realized cash income as the basis for sentencing. This approach became an important foundation for the conviction and sentencing in this case.
On April 28, 2025, the Licang District People's Court of Qingdao City rendered a first-instance judgment, sentencing the defendant to 10 years and 9 months imprisonment for theft and imposing a fine of 100,000 yuan. Subsequently, on November 10, 2025, the Qingdao Intermediate People's Court rejected the appeal and upheld the original judgment.
Additional information:The report mentioned that China's Supreme People's Court stated in May of this year that it would study clearer judicial rules for virtual currency disputes. In recent years, courts in many regions have treated Bitcoin as virtual property in disputes involving theft, ownership, and restitution.
