Court Freezes $172M in Bitcoin After Alleged Spousal Theft
The UK’s High Court of Justice has frozen 2,323 Bitcoin, currently valued at around $172 million, as it prepares for a trial over an alleged theft between estranged spouses. The plaintiff, Ping Fai Yuen, claims his wife, Fun Yung Li, stole the funds from his Trezor hardware wallet on August 2, 2023. At the time of the transfer, the Bitcoin was worth just under $60 million.
The lawsuit alleges that Li used home CCTV cameras to "covertly record" Yuen and obtain the 24-word seed phrase required to access the assets. In a March hearing, Justice Cotter granted an asset preservation injunction, noting the plaintiff has a "very high probability of success" and that an early trial is necessary given Bitcoin's price volatility. The case proceeds even after the judge rejected a claim of 'conversion', a law traditionally applied to physical property, highlighting the legal system's adaptation to digital assets.
On-Chain Data Shows Funds Dormant Since December 2023
Blockchain analysis shows that after the initial transfer on August 2, 2023, the 2,323 BTC was moved through multiple transactions and dispersed across 71 different Bitcoin addresses. The funds have not moved since December 21, 2023, suggesting they are being held rather than liquidated as the legal dispute unfolds. Evidence supporting the plaintiff's claim includes audio recordings he made after being warned of the potential theft.
According to court filings, the recordings captured damning phrases, including an alleged admission from Li stating, "The Bitcoin has transferred to me." Although police arrested Li in 2023 and seized 10 cold wallets, they have not pursued further action pending new evidence from the civil case.
Theft Highlights Broad Physical Security Risks for Crypto
This high-profile case serves as a stark reminder that the greatest risks to crypto holders are often physical, not digital. The alleged theft resulted from a failure in operational security—protecting a seed phrase from physical surveillance—rather than a technical failure of the Bitcoin protocol or the hardware wallet itself. This underscores the responsibility that comes with self-custody of digital assets.
The vulnerability of seed phrases extends beyond targeted personal attacks. Security researchers recently disclosed a flaw in MediaTek chipsets used in approximately 25% of Android phones that allowed an attacker with physical USB access to extract crypto seed phrases in under a minute. While a patch was issued, the incident proves that even powered-down devices can be compromised, reinforcing that protecting cryptographic keys from physical access is a critical and often overlooked security layer.
