The mastermind of a £5bn Chinese investment fraud was found with a device containing £67m of cryptocurrency in a secret pocket of her jogging bottoms when she was arrested after years on the run, a court has heard.

Prosecutors are setting up a compensation scheme after Yadi Zhang, 47, conned around 128,000 Chinese investors into fraudulent wealth schemes between 2014 and 2017.

Zhang, who is also known as Zhimin Qian, admitted money laundering charges after police discovered more than 61,000 Bitcoin, now worth more than £5bn, in digital wallets, in the UK’s biggest ever cryptocurrency seizure.

She arrived in the UK on a false St Kitts and Nevis passport in September 2017 before coming to the attention of police after trying to buy some of London’s most expensive properties.

Zhang vanished after police raided her £5m six-bedroom rented house near Hampstead Heath in north London in 2018, but was finally arrested in York last year.

In written legal arguments, Martin Evans KC representing the Director of Public Prosecutions Stephen Parkinson, said a ledger and passwords were found in a purpose-made concealed pocket in the jogging bottoms she was wearing.

She revealed the access code for two wallets during interviews in prison, leading investigators to cryptocurrency worth around £67m.

The stash has been added to the £5bn Bitcoin hoard, which has reportedly been earmarked by Chancellor Rachel Reeves to help plug the hole in the public finances.

The fortune is at the centre of a High Court battle between the UK government and thousands of Chinese victims, who want to recover their investment and say it should reflect the huge rise in the value of Bitcoin.

Law firm Fieldfisher, which is representing around 1,000 victims, said some have lost their life savings and many are old and vulnerable.

The court heard the DPP is also setting up a compensation scheme for the victims not represented in court, although no further details have been given.

The judge, Mr Justice Turner, will make orders on the case at a later date.

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Zhang pleaded guilty to charges of possessing criminal property and transferring criminal property on or before the 23 April 2024 last month and is in custody awaiting sentencing in November.

Jian Wen, 43, was jailed for six years and eight months last year after being found guilty of one count of money laundering between October 2017 and January 2022 relating to 150 Bitcoin, now worth around £12.5m.

Her trial heard that Wen, who previously worked in a Chinese takeaway, was not involved in the alleged fraud but acted as a “front person” to help disguise the source of the money.

The court heard how the two women travelled the world, spending tens of thousands of pounds on designer clothes, jewellery and shoes.

Seng Hok Ling, 47, is said to have replaced Wen as Zhang’s “butler”, organising helpers and booking Airbnbs, including in Scotland, for the fugitive while she was on the run.

Police found Zhang after carrying out surveillance of Ling and seized assets including encrypted devices, cash, gold and cryptocurrency.

Ling, a Malaysian national from Matlock in Derbyshire, pleaded guilty at Southwark Crown Court to entering into a money laundering arrangement with Zhang on or before 23 April 2024 and will be sentenced alongside her.

Prosecutors said Zhang masterminded a scam in China, before converting the money into cryptocurrency to get it out of the country.

Royal Mail has been fined £21m for failing to meet delivery targets for the third year in a row and warned fines are likely to continue unless there’s an improvement.

As well as failing to meet current delivery times for both first and second class mail, Royal Mail did not meet revised down targets agreed with Ofcom.

The delivery network delivered 77% of first class mail and 92.5% of second-class mail on time from April 2024 to March this year, “well short” of its 93% and 98.5% targets, the communications regulator said.

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It’s also below the reduced goals which were set out for the delivery company at the start of the year – bringing down the percentage of first class post delivered the next day from 93% to 90%, and second class mail delivered within three days from 98.5% to 95%.

The latest fine is double that levied last year, £10.5m, and nearly quadruple the £5.6m fine in 2023 because of the repeat offending.

It’s the third-largest fine ever levied by Ofcom and would have been higher, £30m, but for Royal Mail’s admission of wrongdoing and agreement to settle.

Millions not getting what they pay for

Royal Mail has, without justification, failed to provide an acceptable level of service and breached its obligations, Ofcom said.

“It took insufficient and ineffective steps to try and prevent this failure, which is likely to have impacted millions of customers who did not get the service they paid for.”

People have also been experiencing times when letters have taken weeks to arrive.

Ian Strawhorne, director of enforcement at Ofcom, said: “Millions of important letters are arriving late, and people aren’t getting what they pay for when they buy a stamp.

“These persistent failures are unacceptable, and customers expect and deserve better.

“Royal Mail must rebuild consumers’ confidence as a matter of urgency. And that means making actual significant improvements, not more empty promises.”

Real world harms

In highlighting the real-life consequences of the delivery delays, Citizens Advice said it had encountered someone who got a pile of mail with their council tax bill, a court summons for a passed court hearing date and a liability order for the debt, all at the same time.

Another client of the service was sent an eviction notice, which had not arrived more than a week after a copy came from the landlord’s solicitors.

They were unsure if the warrant would arrive by the time the bailiffs came and were unsure how to act, Citizens Advice said.

What next?

Royal Mail has been ordered by Ofcom to urgently and publicly set out and implement a “credible plan” on how it is going to change.

The regulator said it expects to see “meaningful progress soon”, rather than “more empty promises”.

Improvements Ofcom had pressed for have not materialised, it said, and Royal Mail has been called on to make “actual significant improvements”.

“If this doesn’t happen, fines are likely to continue,” the regulator warned.

Ofcom said the “persistent failures” are unacceptable, and customers expect and deserve better.

“Royal Mail must rebuild consumers’ confidence as a matter of urgency,” it added.

The company has also been set a new enforceable target for 99% of mail to be delivered no more than two days late.

How has Royal Mail responded?

A Royal Mail spokesperson said: “We acknowledge the decision made by Ofcom today and we will continue to work hard to deliver further sustained improvements to our quality of service.”

The company has implemented “important changes across our network including recruiting, retaining and training our people, and providing additional support to delivery offices”, they said.

“Where we have piloted universal service changes, we can see that our model is working, with improvements in deliveries,” the spokesperson added.

Rachel Reeves has told Sky News she is looking at both tax rises and spending cuts in the budget, in her first interview since being briefed on the scale of the fiscal black hole she faces.

“Of course, we’re looking at tax and spending as well,” the chancellor said when asked how she would deal with the country’s economic challenges in her 26 November statement.

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Ms Reeves was shown the first draft of the Office for Budget Responsibility’s (OBR) report, revealing the size of the black hole she must fill next month, on Friday 3 October.

She has never previously publicly confirmed tax rises are on the cards in the budget, going out of her way to avoid mentioning tax in interviews two weeks ago.

Cabinet ministers had previously indicated they did not expect future spending cuts would be used to ensure the chancellor met her fiscal rules.

Ms Reeves also responded to questions about whether the economy was in a “doom loop” of annual tax rises to fill annual black holes. She appeared to concede she is trapped in such a loop.

Asked if she could promise she won’t allow the economy to get stuck in a doom loop cycle, Ms Reeves replied: “Nobody wants that cycle to end more than I do.”

She said that is why she is trying to grow the economy, and only when pushed a third time did she suggest she “would not use those (doom loop) words” because the UK had the strongest growing economy in the G7 in the first half of this year.

What’s facing Reeves?

Ms Reeves is expected to have to find up to £30bn at the budget to balance the books, after a U-turn on winter fuel and welfare reforms and a big productivity downgrade by the OBR, which means Britain is expected to earn less in future than previously predicted.

Yesterday, the IMF upgraded UK growth projections by 0.1 percentage points to 1.3% of GDP this year – but also trimmed its forecast by 0.1% next year, also putting it at 1.3%.

The UK growth prospects are 0.4 percentage points worse off than the IMF’s projects last autumn. The 1.3% GDP growth would be the second-fastest in the G7, behind the US.

Last night, the chancellor arrived in Washington for the annual IMF and World Bank conference.

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‘I won’t duck challenges’

In her Sky News interview, Ms Reeves said multiple challenges meant there was a fresh need to balance the books.

“I was really clear during the general election campaign – and we discussed this many times – that I would always make sure the numbers add up,” she said.

“Challenges are being thrown our way – whether that is the geopolitical uncertainties, the conflicts around the world, the increased tariffs and barriers to trade. And now this (OBR) review is looking at how productive our economy has been in the past and then projecting that forward.”

She was clear that relaxing the fiscal rules (the main one being that from 2029-30, the government’s day-to-day spending needs to rely on taxation alone, not borrowing) was not an option, making tax rises all but inevitable.

“I won’t duck those challenges,” she said.

“Of course, we’re looking at tax and spending as well, but the numbers will always add up with me as chancellor because we saw just three years ago what happens when a government, where the Conservatives, lost control of the public finances: inflation and interest rates went through the roof.”

Blame it on the B word?

Ms Reeves also lay responsibility for the scale of the black hole she’s facing at Brexit, along with austerity and the mini-budget.

This could risk a confrontation with the party’s own voters – one in five (19%) Leave voters backed Labour at the last election, playing a big role in assuring the party’s landslide victory.

The chancellor said: “Austerity, Brexit, and the ongoing impact of Liz Truss’s mini-budget, all of those things have weighed heavily on the UK economy.

“Already, people thought that the UK economy would be 4% smaller because of Brexit.

“Now, of course, we are undoing some of that damage by the deal that we did with the EU earlier this year on food and farming, goods moving between us and the continent, on energy and electricity trading, on an ambitious youth mobility scheme, but there is no doubting that the impact of Brexit is severe and long-lasting.”