Chinese Court Sentences Man for Bitcoin Theft
In a notable ruling, a Chinese court has sentenced a man to nearly 11 years in prison for stealing 107 Bitcoin after memorizing a wallet’s recovery phrase. The incident traces back to July 2023 when Feng, a Bitcoin holder, sought assistance from his acquaintance Zhang to convert 117 Bitcoin into a new digital wallet. Having previously helped Feng with transactions, Zhang was entrusted with the task.
The Theft
While Feng jotted down a 12-word recovery phrase, Zhang memorized 11 of those words, along with the first character of the final word. Later, he tested various combinations to gain access to the wallet and misappropriated 107 Bitcoin to wallets he controlled. Realizing the discrepancy the following day, Feng engaged a blockchain security firm and then reported the theft to the police, prompting an investigation in October 2023.
Investigation and Confession
Investigators leveraged wallet data, transaction logs, and IP address tracing to associate Zhang with the illicit transfers. Although Zhang confessed to moving the Bitcoin, he referred to it as a
“protective takeover”
aimed at safeguarding Feng’s assets from potential theft. He further claimed to have suffered losses in Bitcoin trading and denied cashing out. However, transaction evidence contradicted this narrative, revealing that he had transferred over 660,000 yuan (approximately $97,000) to a friend’s bank account.
Legal Implications
The prosecutor emphasized that while virtual currencies like Bitcoin do not hold legal-tender status in China, they do possess property characteristics defined by law. The Licang District People’s Procuratorate maintained that Bitcoin’s exclusive control through private keys and recovery phrases qualifies it as property, thus making it a valid target for theft.
Sentencing
To reach the theft amount for sentencing, the prosecution calculated the cash proceeds from the illicit transaction, circumventing the challenge posed by the absence of an official Bitcoin exchange rate in China. The Licang District People’s Court found Zhang guilty of theft on April 28, 2025, sentencing him to 10 years and nine months in prison alongside a fine of 100,000 yuan. His appeal was dismissed by the Qingdao Intermediate People’s Court on November 10, 2025.
Conclusion
This ruling reinforces the stance that while cryptocurrency trading remains heavily restricted in China, legal recognition of crypto assets is evolving, with local courts increasingly acknowledging Bitcoin as virtual property in cases of theft and recovery. The Qingdao case serves as a critical example of the judiciary safeguarding crypto ownership rights amidst ongoing regulatory constraints, highlighting the risks associated with handling sensitive wallet information.
