Recently, the crypto circle of friends has been flooded with a new regulation, which is the "Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Money Laundering"
In short, this is a new regulation jointly issued by the Supreme People's Court and the Procuratorate to combat money laundering crimes. This new regulation has 13 articles, with the focus on comprehensively combating money laundering crimes.
In particular, Article 5 explicitly includes "virtual asset transactions" as a catch-all clause for money laundering crimes.
According to Article 13 of the Interpretation, the new regulations will come into effect on August 20, 2024.
After the "Interpretation" was officially implemented, it attracted widespread attention, especially the provisions on virtual currency.
People are beginning to worry about what impact this new regulation will have on the cryptocurrency industry? Will it be possible to continue to trade in cryptocurrencies in the future? What are the biggest risks in the crypto? Is cryptocurrency trading equivalent to money laundering? How can we deposit and withdraw funds safely?
In order to answer these questions, I looked up a lot of information and consulted lawyer friends. In today's content, I will share their suggestions.
1. After the new regulations come into effect, can we still trade in cryptocurrencies?
Let me first state the conclusion: Yes.
This interpretation is not specifically aimed at the crypto. From its name and related criminal penalty clauses, it can be seen that the main target is crimes such as money laundering and concealing criminal proceeds, and it is not intended to crack down on the crypto industry.
Article 5 of the "Interpretation" clearly states that only those who use virtual asset transactions to conceal the proceeds of the seven specific upstream crimes stipulated in the crime of money laundering may constitute the crime of money laundering.
The upstream crimes stipulated in Article 191 of the Criminal Law for money laundering include: drug crimes; organized crimes of a mafia nature; terrorist activities; smuggling crimes; corruption and bribery crimes; crimes that disrupt financial management order; and financial fraud crimes.
The main reason why "virtual asset transactions" are clearly defined as a catch-all clause for money laundering crimes is that crypto assets are too easy to use as a money laundering tool.
In recent years, crypto assets have been increasingly used for money laundering and concealing criminal proceeds due to the peer-to-peer and global transmission advantages of blockchain technology.
According to a research report by China Science and Technology Chain Security, in 2021 alone, the amount involved in cases of money laundering, pyramid schemes, and online gambling using cryptocurrencies has reached 298.542 billion yuan, of which USDT, BTC and ETH account for the majority.
At the same time, according to data published by PoliceTechnology, among the types of virtual currency crimes, aiding and abetting ranks first and concealing ranks second, and the number is far higher than other crimes.
There is another case that everyone is familiar with - the case of Tianjin Lantian Ge Rui illegally absorbing public deposits. On the eve of the 2017 bankruptcy, the culprit Qian Zhimin used only a mobile hard drive to convert tens of billions of stolen money into Bitcoins, easily took it out of the country and fled abroad. He was not arrested until 2024 by the British police.
In another case, between 2015 and 2018, Chen Moubo defrauded a large amount of customer funds by opening companies and issuing "virtual currency". In 2018, he felt that the police might investigate him, so he quickly fled abroad.
In order to conceal the proceeds of crime, Chen Moubo instructed Chen Mouzhi to sell a luxury car at a low price, and transferred the money to a Bitcoin "miner" through a WeChat group of only three people in exchange for Bitcoin keys, and then sent these keys to Chen Moubo for him to exchange and use overseas.
Although they were very careful in the transaction, they were eventually arrested by the Shanghai Public Security Bureau, and Chen Mouzhi was prosecuted for suspected money laundering.
This shows that once crypto assets are used as a money laundering tool, they are extremely useful.
2. Does cryptocurrency speculation constitute a money laundering crime?
The lawyer made it clear that cryptocurrency trading itself does not constitute money laundering, let alone a criminal offense.
Article 5 of the "Interpretation" issued by the Supreme People's Court and the Supreme People's Procuratorate lists "virtual asset" transactions as one of the ways of money laundering to cover up and conceal seven types of upstream crimes.
Specifically, Article 5, paragraph 6 mentions: Transferring or converting criminal proceeds and their proceeds through virtual asset transactions, financial asset exchanges, etc.
Therefore, this does not mean that all virtual currency transactions are money laundering. Only when the stolen money is used to purchase virtual assets does it constitute money laundering.
For example, suppose "Zhang San" obtains illegal funds through telecommunications fraud and then uses the funds to buy Bitcoin.
According to Article 5, paragraph 6 of the Interpretation, this behavior constitutes money laundering because the person conceals and conceals the source and nature of illegal income through virtual asset transactions.
On the contrary, if "Zhang San" uses legal income to purchase Bitcoin and conducts normal trading activities, this behavior does not constitute money laundering.
Even if the person frequently conducts virtual asset transactions, as long as the source of funds is legal, it will not involve money laundering crimes.
Moreover, in the past, when OTC merchants received stolen money, they were basically sentenced for concealing the crime, and it was rare to hear of any being convicted of money laundering.
So what is the relationship between money laundering and concealing a crime? What is the difference?
The crime of money laundering and the crime of concealing and concealing are in a "conflict of laws" relationship in law. The crime of money laundering was singled out from the crime of concealing and concealing in order to impose heavy sentences based on the source of the stolen money.
Concealing a crime carries a maximum sentence of seven years, while money laundering carries a maximum sentence of 10 years.
The crime of money laundering requires that the stolen money comes from seven types of upstream crimes: drug funds, underworld crime funds, terrorist crime funds, smuggling funds, corruption and bribery funds, criminal funds that disrupt financial management order, and financial fraud crime funds.
3. What is the biggest risk facing the crypto after the new regulations are released?
First, OTC merchants, and second, people with high demand for OTC and frequent transactions. According to the provisions of my country's Criminal Law, in order to identify the crime of money laundering or concealing the proceeds of crime, it is necessary to prove that the criminal "knew or should have known" that the relevant money was stolen money or its derivative income obtained by others through criminal activities.
Simply put, the criminal must know that the money was obtained through illegal means in order to be considered a crime.
The upstream crime of concealing the proceeds of crime refers to proceeds of crimes other than money laundering, such as money obtained from telecommunications fraud.
For a long time, the biggest headache for OTC merchants and people who trade frequently is receiving stolen money involved in a case. There is even a saying in the crypto that "if your card has never been frozen, you cannot be considered to have traded in cryptocurrency."
Since receiving stolen money has become inevitable, it becomes very important to define the "knowing or should have known" in the crimes of money laundering and concealing the proceeds of crime in my country's criminal law.
Article 3 of the Interpretation clearly stipulates how to determine whether a person "knows or should know" that he or she is involved in proceeds of crime.
Simply put, it depends on whether the person has been exposed to information related to the crime, whether he has handled the proceeds of crime and its profits, as well as the type and amount of these criminal proceeds and how they are transferred or converted.
At the same time, we must also consider this person's professional background, his relationship with the criminals, his confession and defense, as well as the testimony of his co-defendants and witnesses, and make a comprehensive judgment.
For example, if Zhang San is an OTC merchant, he received a sum of money in a transaction. The money came from a telecommunications fraudster.
During the transaction, Zhang San discovered that there were abnormalities in the other party's account, such as frequent large-amount transfers, or the other party was unable to reasonably explain the source of funds.
Although Zhang did not directly participate in the telecommunications fraud, according to the law, this information may have made Zhang "should have known" that the funds were illegally obtained, and thus he was convicted of concealing the proceeds of crime.
4. How should cryptocurrency traders protect themselves?
In recent years, due to the increasing number of online fraud cases, a lot of stolen money has flowed into underground banks, resulting in a greatly increased probability of friends receiving dirty money.
In most cases, the money will lead to the freezing of bank cards, and occasionally the police will call you in for questioning. However, criminal risks are like black swans around you, and you never know when they will appear.
Therefore, in order to help cryptocurrency traders prevent criminal risks, lawyers have given some suggestions.
First of all, keep records of the source of funds for cryptocurrency trading.
In fact, the sources of funds for most of the partners who trade in cryptocurrencies are very clean. Some are their own salary income, some are income from legal businesses, and some are idle funds from the disposal of real estate, stocks and other assets in previous years.
Therefore, the top priority is to keep evidence of the source of funds used for cryptocurrency trading so that you can explain everything clearly once you are asked.
Secondly, keep a record of your purchase and sale of crypto assets on the platform.
This part of evidence is very important. Many exchanges only provide the record query function for the recent three months, and the platform may not cooperate for further query. Therefore, you have to develop the habit of taking screenshots and recording videos every month in case of emergency.
Then, the relevant records must be kept consistent and the funding chain must be complete. No matter what the reason, there should not be a situation where the source of large amounts of funds is unknown, far exceeding the profits from cryptocurrency speculation and cannot be explained.
Finally, if it is not absolutely necessary, try to avoid OTC transactions.
Only choose reputable channels to withdraw funds when you really need it.
When withdrawing funds, you and the other party can sign an agreement to guarantee each other that the sources of the crypto assets and fiat currencies are clean, so that evidence can be left.
Summarize
This time, the two high courts and one law officially declared "virtual asset transactions" as crimes, which means increased criminal risks for those of us in the crypto.
OTC merchants and cryptocurrency traders need to be extremely cautious and not apply previous withdrawal experience directly to today. Keeping good evidence is the best way to protect yourself.
In the next issue, I will share with you how to deposit and withdraw money safely? What are the safe ways to deposit and withdraw money at present? Interested friends can pay attention to it. Or if you have anything you want to hear, you can leave a message in the comment area.
Because some content platforms are not allowed to talk about it, I have compiled a "Gold Guide". Friends who need it can get it from me privately. At 8 o'clock tonight, we will also have a live broadcast on Tencent Conference. If you have any questions, you can also come to the live broadcast room for interactive Q&A.
