A Chinese court sentenced a man to more than a decade in prison for memorizing a wallet seed phrase and stealing 107 Bitcoin, formally recognizing the cryptocurrency as legally protected property.
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China court treats Bitcoin as property in 107 BTC theft case
A Chinese court sentenced a man to more than a decade in prison for memorizing a wallet seed phrase and stealing 107 Bitcoin, formally recognizing the cryptocurrency as legally protected property.
A Chinese court sentenced a man to 10 years and nine months in prison for stealing 107 Bitcoin after memorizing a wallet recovery phrase, treating the cryptocurrency as legally protected 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, according to the case summary published by the Supreme People's Procuratorate's official WeChat account.
The Licang District People's Court in Qingdao convicted Zhang, who had memorized 11 of 12 recovery words while watching the victim, Feng, set up a wallet in July 2023. Zhang reconstructed the final word, transferred 107 Bitcoin to addresses he controlled, and later cashed out more than 660,000 yuan, or about $97,000, according to electronic records cited by prosecutors. The court fined Zhang 100,000 yuan ($14,700) in addition to the prison term. The Qingdao Intermediate People's Court rejected his appeal on Nov. 10, 2025.
The ruling does not reverse China's ban on cryptocurrency trading and mining, but it establishes that Bitcoin holders can seek legal protection against theft — a distinction that may influence how courts in other jurisdictions treat digital assets in property disputes.
The case began when Feng, who held 117 Bitcoin, asked Zhang to help convert the assets. Zhang had assisted with an earlier transaction, so Feng trusted him to set up a new wallet. Feng wrote down the 12-word recovery phrase while Zhang watched. Prosecutors said Zhang memorized 11 words and the first letter of the last one, then tested possible combinations to gain control.
When Feng discovered the missing Bitcoin the next day, he 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 claimed he had been protecting the assets and had not profited, arguing he later lost money speculating on the price. Transaction records contradicted that account. Investigators traced the assets through several wallets and found more than 660,000 yuan in proceeds sent to a friend's bank account.
Legal framework and precedent
Prosecutors argued that Bitcoin meets the criminal-law definition of property because it carries economic value and gives holders exclusive control through private keys and recovery phrases. They used the realized cash proceeds to calculate the theft amount, since China has no official Bitcoin exchange rate.
The decision adds to a growing body of Chinese case law treating Bitcoin as virtual property in disputes involving theft, ownership and recovery. China's Supreme People's Court said in May that it would study clearer judicial rules for virtual-currency disputes, signaling potential refinement of the legal framework.
Alvin Kan, chief operating officer at Bitget Wallet, said the case shows wallet security threats are often human rather than technical. While 12-word recovery phrases are computationally secure against brute-force attacks, Kan said 24-word phrases "raise the ceiling further," making a reasonable case for the industry to adopt them more widely. He added that the incident highlights the risks of sharing recovery phrases in trusted helper scenarios, where social engineering can lead to wallet compromise.
The ruling carries implications beyond China. Other jurisdictions, including the U.S. and European Union, continue to debate whether digital assets qualify as property under existing legal frameworks. A Chinese court's explicit recognition of Bitcoin as property — even in a country that bans crypto trading — may provide persuasive authority in cross-border disputes and influence how international arbitration panels treat digital asset ownership.
This article is for informational purposes only and does not constitute investment advice.
