A Chinese court sentenced a man named Zhang to nearly 11 years in prison for stealing 107 Bitcoin. Zhang memorized 11 of 12 words of the victim's seed phrase while pretending to help. The court's ruling that Bitcoin is "property" under criminal law sets a key precedent in China, a country that has banned crypto trading. The case highlights social engineering as a major crypto security risk.
Zhang's memorized seed phrase theft
- ▪Zhang memorized 11 of the 12 words of Feng's recovery phrase and the first letter of the final word as Feng read them aloud
- ▪In July 2023, a man named Zhang stole 107 Bitcoin from an acquaintance named Feng in China
- ▪The theft occurred while Zhang was helping Feng set up a new digital wallet to cash out 117 Bitcoin
- ▪Zhang later guessed the complete phrase by testing combinations, which allowed him to access the wallet and transfer the 107 BTC
Police investigation of wallet activity
- ▪After discovering the theft, Feng contacted a blockchain security firm before turning to law enforcement
- ▪Police began investigating in October 2023, tracing wallet activity and IP addresses to link the transactions to Zhang
Rejected protective takeover defense
- ▪Zhang converted the stolen Bitcoin into cash worth more than 660,000 yuan (about $91,000)
- ▪Prosecutors rejected Zhang's defense, presenting transaction records as evidence that he profited from the theft
- ▪Zhang admitted to moving the Bitcoin but claimed it was a 'protective takeover' to prevent hackers from compromising the funds
Bitcoin as property under law
- ▪The court ruled that Bitcoin qualifies as 'property' under China's criminal law, setting a legal precedent
- ▪Zhang was also fined 100,000 yuan, equivalent to roughly $13,800-$14,700
- ▪The ruling is significant as China has banned cryptocurrency trading and does not recognize it as legal tender
- ▪The initial verdict from the Licang District Court was upheld on appeal by the Qingdao Intermediate People’s Court in November 2025
- ▪A court in Qingdao, China, sentenced Zhang to 10 years and nine months in prison for the theft
Seed phrase theft prosecution pattern
- ▪Security experts note the case highlights social engineering and physical proximity as key crypto security risks over technical flaws
- ▪Prosecutors valued the crime based on the 660,000 yuan Zhang received, not the Bitcoin's market value of 22.54 million yuan ($3.1 million)
- ▪China's Supreme People’s Procuratorate labeled the incident a 'new type of virtual currency theft.'
Story comments
Loading comments…