Zhang was sentenced to 10 years and 9 months in prison and fined 100,000 yuan by a court in Licang District, Qingdao. While helping Feng convert 117 bitcoins into fiat currency, he memorized 11 of the 12 words in the recovery phrase and later used the information to transfer 107 BTC. Prosecutors valued the proceeds from the conversions at more than $97,000, despite Zhang’s claims that he intended to protect the funds before losing money through speculation. Chinese prosecutors argued that bitcoin could qualify as property susceptible to theft, allowing them to pursue Zhang on that basis. The case highlights that a recovery phrase must remain confidential from the moment it appears on screen, even when a trusted person is helping to set up the wallet.
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