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A court in the eastern Chinese city of Qingdao sentenced a man to 10 years and nine months in prison for stealing 107 Bitcoin (BTC) after memorizing most of a victim’s 12-word wallet seed phrase. The Licang District People’s Court also fined him 100,000 Chinese yuan, about $14,700.
The case began in July 2023, when a Bitcoin holder identified as “Feng” asked an acquaintance, “Zhang,” to help convert 117 BTC. 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.
That night, Zhang tested possible combinations until he unlocked the wallet. He transferred 107 BTC from Feng’s wallet, moved the funds through multiple wallets, and eventually converted them into cash worth more than 660,000 yuan.
The next day, Feng discovered that the Bitcoin was missing. Zhang appeared relaxed and attempted to comfort Feng, which aroused suspicion. Feng then sought help from a blockchain security company before turning to law enforcement. Police began investigating in October 2023, working with blockchain experts to trace wallet activity and IP addresses linked to the transactions.
Zhang later claimed he had taken the funds as a protective measure. Electronic records disproved the claim and confirmed 660,000 yuan in sale proceeds.
The legal question at the center of the case was whether Bitcoin could be treated as protected property in a jurisdiction that bans crypto trading and does not recognize Bitcoin as legal tender.
Prosecutors argued that Bitcoin still carries economic value and should be treated as property because holders exercise control through private keys and recovery phrases. The court agreed, treating the stolen Bitcoin as a protected asset and reinforcing that virtual currencies can be covered under property crime provisions.
Prosecutors used the realized cash proceeds to calculate the theft amount because China has no official Bitcoin exchange rate, avoiding the need to assign a spot market value to all 107 Bitcoin when determining the sentence.
The Licang District People’s Court convicted Zhang of theft on April 28, 2025. 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.
The Qingdao ruling sits alongside a widening set of Chinese court decisions that treat digital assets as property under criminal law while leaving the regulatory ban on trading intact. The legal framework effectively creates a two-track system: Owning Bitcoin remains a legal grey area in China, but stealing it is unambiguously a crime.
The case also carries a practical warning for anyone holding self-custodied crypto. Zhang required no technical exploit, no malware, and no exchange vulnerability. He needed only proximity, a good memory, and one night of trial and error. The victim’s single operational lapse, writing down a seed phrase in the presence of an acquaintance, was sufficient.
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