Justice.cn: Establishing multiple judicial disposal pathways for virtual currency cases involving criminal offenses, exploring three disposal measures: "monetization, destruction, and return".

According to Mars Finance, on December 14th, the Justice Network, a website under the Procuratorial Daily of the Supreme People's Procuratorate of China, published an article entitled "Establishing Multiple Judicial Disposal Paths for Virtual Currency Involved in Criminal Cases," exploring three disposal measures: "monetization, destruction, and return." The authors of this article are, respectively, a member of the Party Committee and a first-level researcher of the Third Branch of the Beijing Municipal People's Procuratorate, a professor and doctoral supervisor at the School of Law of the Capital University of Economics and Business, and a research assistant at the Center for Anti-Corruption and Rule of Law Research of the Capital University of Economics and Business. The article points out: First, clarifying the legal status and role of third-party institutions. Under the current legal framework, third-party institutions lack clear legal authorization to participate in the disposal of criminal case-related property. Future legislation could include third-party institutions in the category of judicial auction assistants through a special procedure for the disposal of criminal case-related property, granting them the exclusive qualification of "one-time, targeted, and non-public bidding." This role positioning clarifies the auxiliary status of third-party institutions and limits their scope of participation, avoiding the risks of rent-seeking and market abuse. Second, constructing a dual system of technical standards and procedural norms. To ensure compliance and transparency in the handling process, the Supreme People's Court and the Supreme People's Procuratorate, together with financial regulatory authorities, should jointly issue dual standards for both technology and procedures. Regarding technical standards, the qualification requirements for bidding platforms should be clearly defined, including blockchain technology capabilities and data security guarantees. Regarding procedural standards, price assessment methods should be standardized, requiring the use of the average price of the 20 days prior to the transaction date or the victim's acquisition cost as a benchmark to avoid subjective pricing. Simultaneously, a unified on-chain evidence format should be established to ensure the traceability of the virtual currency's circulation path. Regarding fund clearing, it should be required that proceeds be directly transferred to a special fiscal account, without any third-party intermediary accounts, to prevent funds from flowing back into cryptocurrency trading channels. Third, strengthen the seamless connection between prosecutorial supervision and rights protection throughout the entire process. Supervision of the handling process is crucial, and the procuratorate can participate in the entire process and implement dynamic supervision. Specifically, the procuratorate can require third-party institutions to submit regular progress reports, including on-chain tracking records, the bidding process, and fund transfer vouchers. At the same time, a rights notification and objection mechanism can be established to ensure that involved parties and bona fide third parties can promptly understand the handling situation and raise objections. For objections, expert consultation or independent review can be organized to ensure the fairness of the handling results. Fourth, explore differentiated handling models to adapt to diverse needs. The handling needs of virtual currencies involved in criminal cases are diverse. In the future, differentiated handling models can be explored, using the principle of proportionality as a benchmark, and applying the three handling measures of monetization, destruction, and return differently. For cases involving the return of victims' property, the targeted bidding monetization model can be given priority to ensure that the proceeds are fully refunded. For example, for stablecoins that victims have not yet redeemed after being defrauded, if they are willing to return them in the original currency, they can be returned directly under the premise of compliance with regulations to avoid exchange rate losses. For cases involving the confiscation of contraband, the destruction or technical sealing model can be adopted to prevent them from re-entering the market. For tokens used specifically for pyramid schemes and gambling, if the liquidity is poor and the market depth is insufficient, forced monetization may depreciate the value. They can be destroyed in accordance with the law, and the destruction record should be recorded in the judgment. For high-value currencies that have been mixed with legitimate investments, monetization should be given priority to recover losses to the greatest extent. Furthermore, for cases involving relatively small sums of money or those with significant technical challenges in tracing the transactions, simplified procedures can be explored. For example, a comprehensive assessment model could be used, where, when the entire circulation path cannot be fully traced, the value and ownership of the virtual currency involved are determined based on a comprehensive review of relevant evidence. The prosecution can hold hearings before indictment to hear opinions from victims, defense lawyers, and representatives of financial regulators. Considering factors such as the type of currency, market value, victim claims, and financial security, the prosecution can choose a method that minimizes harm to the rights of the parties involved, reduces the impact on financial order, and is most effective in combating crime.