Chinese Man Jailed for 107 Bitcoin Theft After Memorizing Wallet Mnemonic

A court in the eastern Chinese city of Qingdao sentenced a man to 10 years and nine months in prison for stealing 107 Bitcoin after memorizing most of a victim’s 12-word wallet seed phrase.

The Licang District People’s Court sentenced the perpetrator, identified as Zhang, to prison and fined him 100,000 yuan (about $14,700) after finding he took control of the victim’s wallet and later cashed out more than $97,000, according to the case summary published by the Supreme People’s Procuratorate’s official WeChat account.

Feng asked Zhang, an acquaintance who had previously helped with Bitcoin transactions, to assist in cashing out 117 Bitcoin in July 2023. While Feng wrote down the wallet’s 12-word recovery phrase during setup, Zhang memorized 11 of them and later reconstructed the final word to transfer 107 Bitcoin.

China has imposed a series of cryptocurrency-related bans over the years, including on mining and trading. However, prosecutors argued that Bitcoin meets the legal definition of “property” and can be the object of theft under criminal law.

Related: California man jailed for 78 months over $250M crypto theft conspiracy

107 Bitcoins vanished? Source: Supreme People’s Procuratorate’s official WeChat account

Electronic evidence and legal classification

When Feng discovered the missing Bitcoin and reported the theft, investigators traced the transactions and linked them to Zhang.

Zhang admitted transferring the Bitcoin but claimed he had been “protecting” the assets and had not profited, arguing he later lost money speculating on the price.

Prosecutors said electronic records showed Zhang converted the assets and realized more than $97,000 in proceeds.

Alvin Kan, chief operating officer at Bitget Wallet, told Cointelegraph that 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.

Kan added that the incident also highlights the risks of sharing recovery phrases in “trusted helper” scenarios, where social engineering can lead to wallet compromise. Most users avoid screenshots but rarely consider who is physically present during wallet setup, even though “momentary exposure is still exposure.”

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