Inventory of High-Frequency Criminal Charges in China Related to Virtual Currency
China's High-Frequency Criminal Charges for Virtual Currency Inventory
Author: Gao Mengyang, Senior Lawyer at Shanghai Mankun Law Firm
In recent years, with the strong emergence of concepts such as the metaverse and WEB3.0, virtual currency has seen wave after wave of popularity. With the introduction of various strong regulatory policies by the government, the judiciary has also increased its crackdown on illegal and criminal activities related to virtual currencies. The topic of currency-related crimes has become a new field that the legal practice industry must pay attention to and is the starting point for blockchain practitioners to conduct pre-risk compliance. This article will use case retrieval to sort and analyze currency-related criminal charges in combination with the characteristics of virtual currencies in order to discuss them together.
Retrieval website: Weike Xianxing
Retrieval date: July 1, 2023
Keywords: “virtual currency”, “criminal charges”
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Document type: Judgment
In this search, a total of 3714 documents were found. From the classification of charges, there were 989 cases of disrupting the socialist market economy order, 1195 cases of infringing on property, and 1395 cases of disturbing social order (concentrated in crimes such as opening a gambling house and helping with information network criminal activities). Overall, currency-related crimes are mostly economic crimes, which is closely related to their economic attributes.
Crime of Illegally Absorbing Public Deposits/Raising Funds by Fraud
This group of charges is a financial crime, and their actions are collectively referred to as “illegal fundraising,” which is a common charge after the P2P financial crisis. For virtual currencies, the financial field is also a key area of national prevention. The introduction of policies such as the “Announcement on Preventing Risks of Token Issuance Financing” and the “Initiative on Preventing Financial Risks Related to NFT” also provides a basis for regulating financial criminal activities in the coin circle.
Illegal fundraising in the field of virtual currency is mainly reflected in “fundraising mining.” For example, according to the judgment of the People’s Court of Shouxian County, Anhui Province (2022) No. 0422 Criminal Initial 34, Bao used WeChat groups, word of mouth, and other forms to promote the “Snail Star Server” mining machine, promising investors that they could quickly recover costs by mining CAI coins, and could generate high long-term returns, with the court ultimately determining the amount of funds raised to be 5.6435 million yuan, with a loss of 4.2445 million yuan, and both defendants were sentenced to imprisonment.
One of the most common criminal charges that emerging things are likely to involve is probably fraud, and the more innovative the field, the more it will be subject to such questioning. Conversely, new things have become a breeding ground for crime, and also the “minefield” that practitioners are most likely to touch.
By searching, it can be seen that the form of defrauding property by means of false digital currency trading platforms is more prominent in currency-related fraud crimes. For example, as shown in the judgment of the People’s Court of Shimen County, Hunan Province (2022) Xiang 0726 Xing Chu 54, Duan and Li built the “time disk” platform, and through their downlines, they released advertisements such as “investment on the same day, return on the same day, and withdrawal on the same day” to attract victims to join, guide them to become customers, and induce victims to recharge and invest on the platform. Then, the agents act as technical personnel to “guide” customers to buy virtual currency’s rise and fall or odd and even. The agents first use simple instructions to let customers make profits and gain their trust, lure customers to increase their investment, and then directly modify the data to manipulate customers’ gains and losses through background risk control permissions, and defraud customers’ money.
Another example is shown in the judgment of the People’s Court of Pudong New Area, Shanghai (2021) Hu 0115 Xing Chu 3630, where defendants Qu and Zhao set up a lecturer team to conduct lectures in live broadcast rooms as “financial investment experts”, and water armies create an atmosphere and forge false profit charts to enhance the lecturer’s prestige, and then send investment instructions to the victims, luring them to invest in so-called “virtual currency” on the “BZ”, “AME”, and “ZG” platforms. After the victims recharged virtual currency at the above platforms without knowing the truth, the lecturers in the live broadcast room jointly reversed the direction, creating a false impression that the above victims’ virtual currency speculation failed and lost money to deceive the victims. In fact, the money lost by the victims such as Song was divided among the group and various agents according to the pre-arranged proportion. Finally, the People’s Court of Pudong New Area convicted and punished them for fraud.
From the above two cases, it can be seen that crimes related to virtual currency trading platforms are more technical, especially the first case, which has the characteristics of concealing the victims’ investment by modifying the data in the background, making it difficult to distinguish for a while. In addition, false propaganda in the early stage of fraud generally promises high returns or guaranteed returns. Although the falsity is more obvious, under the high-risk and high-return characteristics of virtual currency field, the difficulty of identifying victims increases sharply, making them very susceptible to being deceived.
The People’s Court of Lichuan County, Jiangxi Province also made a similar determination. In the judgment of (2022) Gan 1022 Xing Chu No. 91, the public prosecution agency accused Ruan of finding Chen and others to provide Alipay or WeChat QR codes, bank accounts and other means for him to buy and sell virtual currency (USTD) to earn the price difference, and promised to give benefits in return. Eventually, the court found that the public prosecution agency’s accusation was established, and Ruan and others constituted the crime of assisting in the activities of information network crimes.
As a legal practitioner, the author believes that research should be conducted on the above charges, clarifying the crimes and non-crimes in currency-related crimes, this crime and that crime, light and heavy crimes, in order to better serve the entire industry; as a practitioner in the currency circle, knowledge of the above charges should be understood, and compliance with operations should be ensured, and vigilance should be maintained at all times to avoid becoming a party to the case.