Inspection and Analysis of S.281's Rights Protection Path

2025-11-24

Abstract:

In this article, we conduct an analytical assessment of the highly scrutinized s.281 rights protection path under the UK POCA in the Lantian Gerui case. It must be noted that, if successful, the s.281 rights protection path can exclude the relevant Bitcoin assets from the UK civil recovery proceedings and secure all appreciation benefits of the Bitcoin assets; however, its premise is that victims must satisfy the highly stringent evidentiary burden of establishing a “traceable proprietary interest,” and must also bear significant litigation costs and the risk of adverse costs if unsuccessful.

Considering the circumstances of this case, we assess that most Chinese victims are unlikely to meet the evidentiary requirements under s.281, and the overall success rate of pursuing the s.281 rights protection path—particularly the possibility of recovering the appreciation in the value of the Bitcoin—is expected to be low. We suggest that victims with strong evidentiary conditions may cautiously consider the s.281 rights protection path while preserving the opportunity to participate in a collective compensation scheme, whereas most victims should focus on pursuing a more favourable and equitable collective compensation mechanism. Overall, the “enthusiasm for s.281” should return to rationality and should not be viewed as a universally feasible rights protection path for all Chinese victims.

ONE.Background and Origins

（one）Basic Factual Background

The fraud case involving Tianjin Lantian Gerui Electronic Technology Co Ltd (hereinafter referred to as "Lantian Gerui") was an investment scam implemented in China from 2014 to 2017, affecting approximately 130,000 Chinese victims.

The funds related to this case were laundered into approximately 61,000 bitcoins (currently valued at about $7 billion) and transferred to the United Kingdom, where they were subsequently seized by the UK police.The case was once dubbed "the UK's largest Bitcoin money laundering case," attracting considerable attention.

Particularly in recent times, with the main perpetrator Zhimin Qian pleading guilty to money laundering in a UK court in September of this year, the processing of the case has accelerated, further elevating attention from all parties.

Previously, the Crown Prosecution Service (CPS) had initiated civil recovery proceedings against the aforementioned Bitcoin assets under the UK's Proceeds of Crime Act 2002 (hereinafter referred to as "POCA"), and once the court issues a civil recovery order, the relevant assets may be forfeited to the UK government.

The CPS has committed that it will not seek the court to issue the aforementioned civil recovery order until victims are given a "reasonable period" to obtain legal advice and make any appropriate representations and/or applications to the High Court, including any application under Section 281 of POCA (hereinafter referred to as "s.281").

Additionally, according to news reports, the UK prosecutors have recently proposed establishing a collective compensation scheme for Chinese victims, but no further details have been provided yet.

（two）Origins of This Article

For this case, a significant portion of domestic media reports and professional articles primarily focus on tracing the facts of the case itself and tracking current developments; regarding the rights protection issues for Chinese victims, they generally suggest that Chinese victims should promptly adopt the rights protection path of "applying to the UK court under s.281 to assert rights over the Bitcoin assets involved in the case" (hereinafter referred to as the "s.281 rights protection path").

However, there are rarely articles that, based on relevant UK legal provisions, objectively and comprehensively analyze the advantages, disadvantages, and risks of the aforementioned rights protection path (especially the likelihood of success).

The reasons for this situation are not difficult to understand.

On one hand, to accurately analyze and judge the aforementioned rights protection path, one must be familiar with UK legal rules and procedures, yet the vast majority of Chinese legal practitioners (including relevant professional media) respectfully and understandably lack knowledge and experience in this area.

On the other hand, since many legal issues themselves may be controversial, coupled with the complexity of the existing legal procedures in this case (not only intertwining multiple domestic UK legal procedures but also incorporating complex factors such as cross-border judicial assistance), this further increases the difficulty of accurately analyzing and judging the relevant issues.

The above circumstances may lead Chinese relevant professionals to feel "willing but unable" to undertake this work, and even if they force themselves to do it, they may end up with "twice the effort for half the result."

Nevertheless, we have decided to attempt this "laborious and thankless" task, with three considerations:

(1) Chinese traditional wisdom has always advocated "planning before acting," especially in cases involving such enormous interests; blindly taking action without conducting a necessary assessment of the advantages, disadvantages, and risks of the relevant rights protection paths is inevitably reckless and may lead to unnecessary risks or even major failures; given that the relevant UK legal procedures are advancing rapidly, the time window reserved for Chinese victims' rights protection is not long, so conducting as accurate an analysis and prediction as possible of the relevant rights protection paths is an urgent task that "must be done";

(2) From our long-term practical experience in cross-border legal services, in cross-border cases similar to this one, there are not only differences and conflicts between countries in terms of law, culture, and even national interests at the macro level, but also at the micro level, one may have to face differences and conflicts between China and overseas relevant institutions (including professional legal service institutions) in terms of "professional perspectives, grasp of the case details, and even interest positions";

Therefore, in the analysis and decision-making of major issues, one cannot simply rely on the opinions of overseas professional institutions, nor should one blindly and passively follow the work rhythm set by overseas countries or institutions, lacking one's own proactive thinking and judgment, which could lead to losing the initiative and discourse power that could originally be grasped.

In the context of this case, as Chinese-related legal professionals, it is our bounden duty to proactively think about and judge the major issues related to this case;

(3) Considering the difficulties mentioned earlier in this article, perhaps even if we expend great effort, we may not necessarily ensure that every viewpoint or judgment we express is entirely accurate or reliable, but by conducting serious discussions at the professional level, directing the attention of relevant parties to the case toward calmer, deeper, and more comprehensive thinking, and attracting more outstanding industry professionals to participate in the discussion, it will undoubtedly help to leverage collective wisdom and jointly discuss a rights protection path that truly aligns with the interests of Chinese victims.

In this process, we are willing to adopt the mindset of "success does not have to be attributed to me," by initiating discussions and throwing out a brick to attract jade, in the hope that Chinese victims will ultimately benefit from it.

Below, we will analyze one by one the advantages, disadvantages, and risks of the "s.281 rights protection path," its feasibility, operational strategy suggestions, etc.

TWO.Analysis of the Advantages, Disadvantages, and Risks of the "s.281 Rights Protection Path"

（one）Advantages and Benefits of the "s.281 Rights Protection Path"

1.Reducing the Risk of Dilution of Rights

An application under s.281 is essentially identifying and excluding "your" specific property from the "recovery pool" in the civil recovery proceedings; once the court recognizes your ownership of the specific property, that property is preferentially returned to you, rather than entering the "public pool" for national recovery (and subject to unified distribution).

This means: your rights will not be "diluted" by other victims, nor eroded by management fees, execution fees, etc., in the public distribution scheme.

2.Locking in "Appreciation Benefits"

Once the court recognizes the victim's ownership of the specific property (i.e., the Bitcoin assets), based on the form of rights of "ownership," the appreciation benefits of the relevant assets should in principle belong to the victim.

Under the current circumstances, this path undoubtedly can better capture the appreciation dividends of the Bitcoin assets, and the recovery amount is usually superior to participating in a victim collective compensation scheme.

（two）Thresholds and Risks of the "s.281 Rights Protection Path"

1.High Burden of Proof

According to UK law, the "victim" referred to in Section 281 is not a victim in any sense, but rather a party who held ownership or other proprietary interests in the relevant property before the unlawful conduct occurred, and who can trace that interest along traceable substitutes all the way to the property currently being applied for.

If victims hope to obtain court support, in addition to proving the source of their rights to the relevant assets, they also need to fulfill the burden of proof in terms of "specification," that is: they need to precisely trace on the evidence chain to "that identifiable portion of the subject property" (for example, providing evidence of fund flows and relevant asset transaction evidence to completely trace and prove the connection between the victim's funds and the specific subject property).

From practical perspectives, meeting the aforementioned stringent requirements for evidence under Section 281 is not an easy task.

2.Litigation Costs and Costs of Losing the Case

In the relevant litigation process, the amounts for UK legal fees, expert evidence fees, etc., may be substantial.

Furthermore, if the case is lost, the losing party also bears the risk of adverse costs orders, that is: the losing party is usually ordered by the court to pay (in addition to their own) the winning party's legal costs incurred in conducting the litigation.

（three）Summary

Overall, the "s.281 rights protection path" is a rights protection path where "if the conditions are met, the advantages are enormous; if not, the costs are not small."

Three.Feasibility Analysis of the "s.281 Rights Protection Path"

In litigation activities, various relevant factors (especially evidence conditions, the professional capabilities of the representing lawyers, etc.) may have a significant impact on the success or failure of the litigation.

In the Lantian Gerui case, the situations of different victims may not be identical, and the feasibility (especially the likelihood of success) for individual victims to pursue the "s.281 rights protection path" needs to be specifically analyzed in combination with the specific conditions of each individual case.

Here, we are unable and have no intention to analyze or predict the feasibility of specific individual cases.

However, from the overall situation of the victim group, in the Lantian Gerui fraud case, the scale of the funds involved is enormous and mixed, the time span is long, the transfer levels are multiple, and some key evidence may even be held only by relevant exchanges or law enforcement departments.

Considering the complex state of the aforementioned facts and evidence, as well as the evidence-gathering capabilities of most victims (including their entrusted lawyers) under realistic conditions, we predict that most victims generally have evidence gaps and are expected to find it difficult to meet the stringent evidence requirements under Section 281 (mainly difficult to complete the complex on-chain tracing procedures by providing relevant evidence).

Therefore, until we see evidence to the contrary, we estimate that in the victim group of the Lantian Gerui case, the overall success rate of pursuing the "s.281 rights protection path", particularly in relation to pursuing and recovering any uplift in the value of the bitcoin, will not be high, and may even be quite low.

FOUR.Relevant Operational Strategy Suggestions

（One）Suggestions from the Perspective of Individual Victims

1. Victims with Favorable Conditions May Seize the Time Window and Consider Pursuing the "s.281 Rights Protection Path," with "Participating in the Collective Compensation Scheme" as a Backup Option

As mentioned earlier, pursuing the "s.281 rights protection path," if successful, can in principle secure all the appreciation benefits of the relevant Bitcoin assets, significantly increasing the recovery amount; for individual victims, this may be the litigation path to strive for maximizing their own interests under existing conditions.

Therefore, based on a prudent assessment of the risks, advantages, and disadvantages of the "s.281 rights protection path," for victims who possess good conditions for success (especially evidence conditions), if they can bear the risks and costs of the relevant litigation, they may consider pursuing the "s.281 rights protection path" (if such victims can obtain support from relevant litigation funds, thereby reducing the risks in terms of costs, the effect may be even better).

Additionally, it needs to be noted that if victims are preparing to pursue the "s.281 rights protection path," they should pay attention to the time window for rights protection.

The CPS stated in its previously released victim notice that it will provide a "reasonable period" to allow victims to obtain legal advice and make any appropriate representations and/or applications to the High Court, including any s.281 applications, but did not define a specific timeframe.

And our understanding is that if victims intend to make claims under s.281, they generally need to do so before the UK court makes a civil recovery order under Section 266 of POCA; if victims fail to submit an application before the court issues the recovery order, they may lose the opportunity to assert their claims.

Furthermore, our understanding is that, generally speaking, if a victim pursues the "s.281 rights protection path," even if they lose, it only proves that the court does not support "the relevant property is yours," but it does not "directly deny your victim status," and does not automatically deprive you of your eligibility in the "collective compensation scheme."

Under the premise of not constituting double benefits, it does not hinder your transition to the "collective compensation scheme" path.

Therefore, while pursuing the "s.281 rights protection path," victims can prepare for both eventualities, treating "participating in the collective compensation scheme" as a backup option, and should simultaneously monitor the progress of the relevant "collective compensation scheme," so as not to miss the declaration opportunities for victims under the "collective compensation scheme."

2. Victims Without Favorable Conditions Should Focus More Attention on "Participating in the Collective Compensation Scheme"

From the current situation, for victims who do not possess good conditions to pursue the "s.281 rights protection path," from the perspective of risk-benefit comparison of the relevant litigation, unless there are special considerations, it seems inadvisable to treat the "s.281 rights protection path" as their primary rights protection path.

For the aforementioned victims, actively monitoring and seeking a "collective compensation scheme" that is favorable to themselves may be a more pragmatic and reliable choice. (Of course, if the aforementioned victims can obtain support in terms of costs through litigation funds, thereby significantly reducing the relevant risks for the victims, it may be a different matter)

（Two）Suggestions from the Perspective of the Victim Group as a Whole

As mentioned earlier, we currently tend to believe that in the victim group of the Lantian Gerui case, the overall success rate of pursuing the "s.281 rights protection path", particularly in relation to pursuing and recovering any uplift in the value of the bitcoin, will not be high; therefore, from a feasibility perspective, it is not a rights protection path that most victims can effectively rely on.

Furthermore, in terms of the legal effects of the "s.281 rights protection path," in group fraud cases similar to this one, if only some victims make claims applications under Section 281, even if they succeed, the effects of their success extend only to themselves and not to those victims who did not make applications.

According to relevant media reports, currently only a few Chinese law firms, in cooperation with UK lawyers, have submitted applications under Section 281 on behalf of groups of victims, albeit it is fair to say that, overall, these groups represent a minority percentage of the total victims. (Of course, considering the difficulty and workload of reviewing the relevant evidence, even if all 130,000 victims in this case make applications under Section 281, it is almost impossible for the UK court to review each of the 130,000 victims one by one according to the evidence review standards under the s.281 path.)

Additionally, it should be noted that if there is excessive reliance on the above path, it is easy to trigger new unfairness within the victim group.

For example, victims with strong financial resources may have the money and opportunity to assert rights and obtain compensation (or more compensation) through this, while those victims who cannot afford the relevant litigation fees and costs may lose opportunities in this regard.

In summary, from the perspective of the victim group as a whole, rights protection litigations similar to the "s.281 rights protection path," which are "scattered and fragmented" initiated in the name of individual partial victims, ultimately find it difficult to shoulder the heavy responsibility of effectively safeguarding the overall interests of the victims.

From the perspective of the overall interests of the victims, it is advisable to shift more attention and work focus to other rights protection paths that are more conducive to safeguarding the collective rights of the victims (for example: striving for a collective compensation scheme that is more favorable to Chinese victims, etc.).

FIVE.Conclusion

In general, the "s.281 rights protection path" has its seemingly attractive appeal and for a time seems to have become a hotly discussed and even sought-after rights protection path in China, but starting from the actual situation, considering the stringent requirements for evidence under Section 281, as well as the related costs and fee risks, victims, when considering whether to pursue the "s.281 rights protection path," should make prudent decisions based on a careful assessment of the relevant risks and benefits.

We appreciate the courage and enthusiasm of victims (and their representing lawyers) in actively protecting their rights, and also hope to inject a touch of rational coolness into this enthusiasm.

After all, in such complex and arduous rights protection actions, firm confidence, eager expectations, and calm thinking are all indispensable.

At the same time, from the perspective of the overall victims in the Lantian Gerui case, rights protection litigations like the "s.281 rights protection path," which are "scattered and fragmented" initiated in the name of partial individual victims, ultimately find it difficult to shoulder the heavy responsibility of effectively safeguarding the overall interests of the victims.

From the perspective of the overall interests of the victims, other rights protection paths such as the victim collective compensation scheme should currently receive more attention.

We will continue to discuss the issues regarding the aforementioned other rights protection paths in subsequent articles.

Special Statement:

(1) The above content  is only for reference, study, and discussion by all parties; it should not be regarded as formal legal opinions issued by us.

Due to the limited case materials and information we currently possess, and given that it involves a large amount of application and judgment regarding UK legal rules, although we have made great efforts within our capabilities to minimize possible deviations, the viewpoints in the article may not be entirely mature or accurate; if there are any errors or omissions, we welcome readers to point them out;

(2) Considering the professionalism and complexity of the relevant issues, and that a significant portion of the readers of this article may not be legal professionals, to facilitate readers' quick understanding and grasp of the core content we wish to convey, we have appropriately simplified or popularized some parts of the article (especially some legal rules); if relevant parties need to formally use the related content mentioned in the article, please note to verify it themselves first;

(3) The above content extensively involves the understanding and application of UK legal rules; when judging and handling issues involving UK law, relevant parties are advised to consult relevant UK legal professionals;

(4) If readers have related questions about the content in the article or are interested in this topic, they can contact us according to the contact information attached at the end of the article.

For questions that everyone is interested in and that are representative, we will provide unified answers in due course.

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