Chinese court sentences man to nearly 11 years for stealing 107 BTC by memorizing wallet seed phrase

A court in the eastern Chinese city of Qingdao has 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 recovery phrase. The Licang District People's Court sentenced the defendant, identified as Zhang, and fined him 100,000 yuan (about $14,700) after finding that he took control of the wallet and later converted more than $97,000 of the assets, according to a case summary published by the Supreme People's Procuratorate's official WeChat account.

The victim, Feng, asked Zhang, an acquaintance who had previously assisted with Bitcoin transactions, to help cash out 117 Bitcoin in July 2023. While Feng wrote down the wallet's 12-word recovery phrase during setup, Zhang memorized 11 of the words and later reconstructed the final word to transfer 107 Bitcoin from the wallet. China has imposed a series of cryptocurrency-related restrictions in recent years, including bans on mining and trading, but prosecutors argued that Bitcoin meets the legal definition of "property" and can be the object of theft under criminal law.

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 said he had been "protecting" the assets and had not profited, claiming 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, said the case illustrates that 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 highlights the risks of sharing recovery phrases in "trusted helper" scenarios, where social engineering can lead to wallet compromise, and noted that most users avoid screenshots but rarely consider who is physically present during wallet setup, even though "momentary exposure is still exposure."