Chinese Man Gets 10+ Years for Stealing 107 BTC Using Memorized Key

A court in Qingdao, China, sentenced a man to 10 years and nine months in prison for stealing 107 Bitcoin (BTC) by memorizing most of a victim’s 12-word wallet recovery phrase. The Licang District People’s Court also fined the man, identified as Zhang, 100,000 yuan (approximately $14,700). The theft, which occurred in July 2023, highlights the vulnerabilities of recovery phrase exposure during wallet setup.

The victim, surnamed Feng, sought Zhang’s assistance in cashing out 117 Bitcoin. During the process, Zhang reportedly memorized 11 of the 12 recovery words and later reconstructed the remaining one to gain unauthorized access to the wallet. He transferred 107 Bitcoin and liquidated the holdings for over $97,000, according to a case summary posted on the Supreme People’s Procuratorate’s official WeChat account.

Despite China’s strict regulatory ban on cryptocurrency trading and mining, the court classified Bitcoin as “property” under criminal law, allowing the theft to be prosecuted. This ruling aligns with a broader legal precedent in China, where courts have repeatedly recognized the economic value of Bitcoin in criminal cases, even though crypto is not legal tender. Legal experts note this dual approach reconciles regulatory prohibitions with property rights enforcement.

Wallet Security Risks Highlighted

Alvin Kan, COO of Bitget Wallet, commented that the case underscores the human vulnerabilities in crypto security. While 12-word wallet recovery phrases are computationally secure, Kan suggested that 24-word phrases could enhance protection. He warned against sharing recovery phrases, even in seemingly trustworthy scenarios, noting that “momentary exposure is still exposure.”

Feng’s case is a stark reminder for crypto users to remain vigilant during wallet setup. While many avoid taking screenshots of recovery phrases, fewer consider the risks of having others physically present during this process. As cryptocurrency adoption grows, such “trusted helper” compromises could become more common.

Broader Legal Context

China has maintained a blanket ban on cryptocurrency activities, including trading, mining, and tokenization. However, its courts have consistently treated virtual assets as protected property under criminal law. This case follows a May 2026 ruling in which another defendant received a 12-year sentence for stealing and selling Bitcoin. Both rulings reflect China’s policy of using its criminal framework to punish offenders while sticking to its administrative prohibitions on crypto-related activities.

As of June 9, 2026, Bitcoin is trading at $62,627, down 0.92% in the last 24 hours. While the market impact of China’s regulatory stance on crypto remains muted globally, incidents like these serve as a cautionary tale for investors. Traders and wallet users should reinforce their security measures, especially given the growing sophistication of social engineering attacks.

This case illustrates not only the risks of lax wallet security but also the evolving legal recognition of digital assets. While China’s regulatory environment remains hostile to crypto, its courts continue to affirm Bitcoin’s status as property, bridging the gap between administrative bans and criminal law enforcement.

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