Over the past two years, criminal cases involving virtual currency have been increasing. Besides common cases like money laundering, virtual currency fraud, pyramid schemes, casino operations, and illegal business such as currency exchange or illegal foreign exchange trading that form "highly professional" capital pools, fraud and theft crimes involving virtual currency between individuals have also become more frequent. Some of these cases can provide good insights for defending and investigating criminal cases involving currency.
Today, we share a fraud case that evolved from a virtual currency investment dispute between individuals (Case No.: (2019) Jing 0105 Xing Chu 2172). Through this case, we will discuss whether the virtual currency involved in criminal cases can be priced.
1. Case Introduction
From June to July 2018, Zheng, in the China Hotel in Beijing's Chaoyang District, defrauded Wang of 32 Bitcoins and over 1,000 Ethereum by claiming to help invest in a blockchain project. Zheng sold the Bitcoins and gained over 1.64 million yuan. After receiving a phone call from the Jianguomen Substation of the Chaoyang Branch of Beijing Public Security Bureau, Zheng voluntarily surrendered.
After trial, the court found that based on the victim Wang's statement, witness testimony, and documentary evidence, Zheng had the intention of illegal possession, fabricated facts, and fraudulently obtained property in an especially large amount, and should be held criminally responsible for fraud.
Ultimately, the court sentenced Zheng to ten years in prison and a fine of 200,000 yuan.
2. Beijing Chaoyang District Court: Virtual Currency Should Not Be Priced in Individual Cases
In recent years, the number of virtual currency fraud cases or fundraising fraud cases has been increasing. A crucial issue in such cases is: how to determine the amount involved.
Lawyer Liu has mentioned in many previous articles the different approaches of judicial authorities in practice, such as the price at which the victim purchased virtual currency, the price at which the suspect/defendant sold stolen goods, the market price on overseas virtual currency exchanges, or the appraisal/assessment price from domestic third-party institutions.
However, in this Chaoyang District case, the judgment explicitly states: "The value of virtual currency is influenced by national laws, regulations, and industry regulatory policies, and should not be directly determined in individual cases." In Lawyer Liu's view, this is the most standard criterion currently. We will analyze the specific reasons below. The court ultimately used the 1.64 million yuan Zheng obtained from selling stolen goods as the case amount.
Three, Policies and Practices Regarding Virtual Currency
Why is the Chaoyang District Court's judgment so standardized? As early as September 15, 2021, the virtual currency regulatory policy document "Notice on Further Preventing and Handling Risks of Virtual Currency Trading Speculation" (also known as the "9.24 Notice") jointly issued by ten government departments, including the "Two High and One Department," uniformly defined virtual currency-related business activities as "illegal financial activities," including providing information intermediary and pricing services for virtual currency transactions.
Although in judicial practice, some believe that judicial authorities conducting or entrusting third-party institutions to price the involved virtual currency is essentially a judicial activity and not the "pricing service for virtual currency transactions" prohibited by the "9.24 Notice," some people (especially defense lawyers) often believe that the "9.24 Notice" categorically bans virtual currency-related business activities without exemption or exception for judicial activities. Judicial authorities or their entrusted third-party institutions (such as appraisal institutions, audit institutions, etc.) pricing the involved virtual currency is essentially a "pricing of involved virtual currency transactions" and violates current national virtual currency regulatory policies.
How to better solve the issue of determining the value of involved virtual currency? Lawyer Liu believes the Beijing Chaoyang District Court did well: the court principally does not actively determine the value of involved virtual currency. Especially when there is a stolen goods sales amount, prioritize using the stolen goods sales amount to determine the case amount. If there is no stolen goods sales amount, consider the purchase price of involved virtual currency, disposal cash amount, judicial appraisal or assessment amount in order.
Judicial authorities principally cannot actively price involved virtual currency, unless the case amount cannot be determined by other means, and the case amount is indispensable for determining guilt and sentencing, then they can actively price the involved virtual currency.
IV. Conclusion
A lawyer colleague said: "Nothing has ever entangled the law as much as virtual currency." Lawyer Liu agrees. The reason is not complicated; in fact, it is because our regulators have an overly simplistic and superficial understanding of virtual currency. They intend to completely control virtual currency with a simple regulatory document. However, in practice, this not only fails to achieve thorough control but also causes significant difficulties for other law enforcement and judicial agencies.
Solving this problem is simple: modify the "9.24 Notice". As for how to modify it, we can discuss that another time.
