Rachel Reeves is sitting on a £5billion windfall of Bitcoin seized from organised criminals that could now be used to plug the huge black hole in her budget.
The Mail on Sunday has learnt the Government has amassed an astonishing stash of crypto-currency after a money-laundering probe into a Chinese fraud led to one the world’s biggest ever seizures.
Valued at an estimated £5.2billion, the seized Bitcoin was last night described as a ‘get out of jail free card’ for the embattled Chancellor amid fears that Britain faces an ‘economic doom loop’.
Crucially, the sum is worth more than the amount of cash that will be raised annually by the hugely controversial cut to winter fuel payments, the VAT raid on private school fees and the hated family farm tax combined.
City experts and politicians last night said the seized Bitcoin provided the Chancellor with a financial lifeline and urged her to sell it.
They highlighted how Germany has already used cryptocurrency seized from criminals to boost its finances.
Former Tory chancellor Norman Lamont said: ‘I think that Reeves should spend it right away and not hold onto it. Otherwise it looks like the Government is legitimising crypto – which has no intrinsic value. It would also help with the Government’s finances.’
Tory former Cabinet minister Sir Jacob Rees-Mogg said: ‘If this money does come to rest in the Treasury’s coffers, Rachel Reeves must make use of it as soon as she can. The Chancellor’s punitive tax rises were never justified in the first place.’
Jian Wen, 42, came to the attention of police when she tried to buy some of London’s most expensive properties
After a three-year operation, the National Crime Agency also successfully dismantled the criminal enterprise of Ekaterina Zhdanova – called the ‘Cash for Crypto Queen
The crypto-currency is understood to be in accounts controlled by the Government after it was seized from online wallets controlled by former Chinese takeaway worker Jian Wen (Stock image)
Chris Etherington, a partner and crypto expert at accounting firm RSM, said: ‘There is a strong case for selling the Bitcoin right away. The currency is too volatile, too speculative.
‘Rachel Reeves will be looking at it given the political pressure she is under as she waits for the Office For Budget Responsibility forecasts. Germany cashed in last year. Let’s face it – it is a get out of jail free card for her.’
The crypto-currency is understood to be in accounts controlled by the Government after it was seized from online wallets controlled by former Chinese takeaway worker Jian Wen, who was jailed for six years last year for money laundering.
Wen, 42, came to the attention of police when she tried to buy some of London’s most expensive properties, including a £23.5million seven-bedroom mansion with a swimming pool in Hampstead, North London, and a £12.5million home with a cinema and gym.
She had earned just £6,000 as a takeaway worker in Leeds the previous year.
The investigation led to the UK’s biggest ever cryptocurrency seizure, when more than 61,000 Bitcoins were discovered in digital wallets.
The haul was worth £1.4billion at the time – but it is now estimated to be worth around £5.2billion.
It came from an investment scam carried out in China between 2014 and 2017 and the alleged mastermind Yadi Zhang will go on trial in London in September. She denies the charges.
Rachel Reeves faces an estimated £20billion hole in public finances due to the faltering economy and Government borrowing costs
Tory former Cabinet minister Sir Jacob Rees-Mogg said: ‘If this money does come to rest in the Treasury’s coffers, Rachel Reeves must make use of it as soon as she can’
The Crown Prosecution Service has asked the High Court for permission to keep the seized Bitcoin and if – as is expected – it grants it, that money is set to flow into the Treasury’s coffers.
New legislation introduced in 2023 allows seized crypto-currency to be sold and the proceeds transferred to the Government’s Consolidated Fund, its current account at the Bank of England.
Quentin Hunt, a barrister at 2BR chambers, explained: ‘It [forfeited crypto-currency] gets paid back into the public purse to the Consolidated Fund, which is where all the monies go to which are effectively seized. That money is managed by the Treasury – so it effectively goes back into the public purse.’
Reeves faces an estimated £20billion hole in public finances due to the faltering economy and Government borrowing costs.
Based on the current price of Bitcoin, the proceeds could be more than the Chancellor’s £1.7billion raid on private school fees, the £520million inheritance tax hit on farmers and £1.5billion due to be raised by slashing Winter Fuel Allowance.
The German government last year sold 50,000 Bitcoins that it had seized from the defunct piracy site Movie2 for £2.3billion.
Bitcoin has more than doubled in value over the past year, with its most recent surge attributed to the return of Donald Trump. Unlike his predecessors, Trump is in favour of crypto-currency. As a result, market observers believe it could climb even higher.
Experts last night told the Chancellor she needed to get expert advice on when to sell to achieve the best deal for the taxpayer.
How Britain’s FBI busted the queens of crypto
By Mark Shapland
The Chancellor owes her extraordinary luck to a former Chinese takeaway worker named Jian Wen, who last year was sentenced to six years in jail for laundering Bitcoin.
But bringing her to justice – and boosting the public coffers – isn’t the only success of the British police in busting Bitcoin money-laundering operations.
Wen jetted across Europe, including to Germany. She denied knowing she was involved in money laundering and said she was lied to
Wen was living in a basement room under a Chinese takeaway in Abbey Wood, south-east London. But within weeks, she moved into this fabulous six-bedroom house in Hampstead Heath, paying £17,000 a month in rent in September 2017
Wen tried to buy a £23million Hampstead mansion (pictured) – prompting alarm bells to ring over the source of the fund
After a three-year operation, the National Crime Agency also successfully dismantled the criminal enterprise of Ekaterina Zhdanova – called the ‘Cash for Crypto Queen’.
Wen’s tale is an audacious rags to riches story. At 42, she was living in Leeds in 2016 and had earnings of just £5,979. But then she answered an advert on Chinese social media app to be a ‘butler’ for a woman who claimed to run a business trading in diamonds and antiques across the world.
By 2017, she was working for Yadi Zhang, allegedly as her carer, and her life changed.
Zhang is accused of stealing billions from 128,000 investors in China and converting the money into Bitcoin. Zhang denies all charges.
It is claimed that Wen helped to launder the Bitcoin into cash, jewellery and other luxury items, as well as property. She embarked on a life of extravagance and moved into a mansion in Hampstead.
But it all started to unravel when she tried to purchase a £12.5million London property. Metropolitan Police raided her mansion and seized devices containing 61,000 Bitcoins.
Police, meanwhile, seized more than £20million in cash and Bitcoin in their crackdown on two Russian money-laundering operations. One was run by Siberian-born Zhdanova, 38, who is said to have taken a commission of three per cent on transactions worth billions via her Smart network.
Her customers allegedly included a ransomware group responsible for tying to extort at least £27million from 149 UK victims, including hospitals and schools. She is currently in custody in France awaiting trial.
