Lawyer Li Zemin: Director of Guangqiang Economic Crime Defense Research Center
Lawyer Han Wubin: Core lawyer of Guangqiang Economic Crime Defense Research Center
“Are mainstream virtual currencies such as Usdt funds or real estate?
If I raise mainstream virtual currencies in exchange for issuing tokens myself, will I be suspected of organizing a pyramid scheme or illegally absorbing public deposits? “In cases involving the issuance of virtual currencies, litigants often consult our lawyers on this issue. Many actors defend themselves on the grounds that mainstream virtual currencies are not RMB, nor funds or property.
If the perpetrator implements the behavior of "exchanging currency for currency", can mainstream virtual currency be recognized as "property" in the crime of organizing and leading pyramid schemes, and "deposits" and "funds" in the crime of illegally absorbing public deposits? Can it be said that "mainstream virtual currencies are not funds and property"?
The lawyer believes that there is no problem in identifying mainstream virtual currencies as property. Why do you say that? This is inseparable from the fact that virtual currency is a virtual commodity. When virtual currency becomes a commodity, it can be bought and sold with RMB, and then it can be owned, and of course it becomes legal property. When it becomes property, it can be managed, controlled, used, it becomes property.
In fact, virtual currency is property under criminal law and should be considered from three aspects: whether the virtual currency has value; whether the virtual currency can be independently owned by the holder; and whether the virtual currency can be transferred to others after being held.
Judging from how to obtain virtual currency, virtual currency has exchange value and use value. Currently, there are two ways to obtain virtual currency:
The first one is obtained through "mining". "Miners" aggregate computer storage and use specific algorithms to run specific operations for the blockchain network. The blockchain network rewards the "miners" with corresponding virtual currencies based on the amount of calculations they contribute. This process condenses the labor value of the “miners”;
Second, it can be obtained through legal currency transactions and currency transactions on major trading platforms, which can bring economic benefits to holders. Therefore, as long as the virtual currency can be obtained through public transactions, it has exchange value.
From the perspective of the generation mechanism of virtual currency, virtual currency uses encryption algorithms to exist in the form of data on the blockchain network and can be used and controlled by people.
Virtual currencies not only meet value needs, but also need to be used by people and have the possibility of management. Just like lightning has great value, but humans are currently unable to use and utilize lightning at all. To hold virtual currency, you not only have your own wallet address, but also private and public key programs designed around the wallet. In particular, possession of the private key precludes others from possessing it.
Additionally, virtual currency can be transferred to others.
First, virtual currency can be transferred between holders via wallet addresses.
Secondly, virtual currencies can be transferred and exchanged between legal tender and other virtual currencies without restrictions.
It can be seen from the above that mainstream virtual currencies can become property under criminal law, or they can become legal personal property through buying and selling. Precisely because it can become property, many virtual currency issuance cases in which "mainstream virtual currencies" are exchanged for "tokens" and graded rebates are adopted, such as "pulling people's heads" and "static income, dynamic income", have been recognized by the judiciary. As an organization, agencies lead pyramid schemes crimes.
However, some people believe that the token issuance case of borrowing "mainstream virtual currency" in exchange for "tokens" does not comply with the regulations of illegally absorbing "deposits" and "funds" from the public because the mainstream virtual currency is not RMB. Deposits and therefore can only be used as a token issuance case. Investigate and punish the crime of organizing and leading pyramid schemes in accordance with the law. Can the reason why mainstream virtual currencies are not “deposits” and “funds” be established? Can illegally absorbing deposits from the public be criminalized?
In judicial practice, this reason has been rejected, and it has been ruled that the absorption of mainstream virtual currencies is the crime of illegally absorbing public deposits.
For example, the first-instance judgment on the crime of illegally absorbing public deposits by Lin and others [(2020) Zhejiang 0329 Xingchu No. 136]
Gao and others used overseas servers to build a "token bank" investment platform, claiming that it could store mainstream "virtual currencies" for financial management. They promised to deposit and withdraw money at any time without locking, and the daily interest rate ranged from 1 to 1. One thousandth to eight thousandths. Use static income models such as high returns to attract virtual currencies such as Bitcoin and Ethereum from the public, and promote the dynamic income model of "pulling people's heads" to collect kickbacks through MLM, inducing others to deposit virtual currencies they hold "passports". "Safe Bank" platform. ...The platform has since been closed and cannot be logged in.
Subsequently, Lin, together with Gu and others, relied on the "Token Bank" platform to hold currency to earn interest and recommend investors to earn rebates as bait, and held promotion meetings in Hangzhou and other places. Hangzhou and other places. Promote and share investment and financial management experience through seminars and other methods, and encourage the public to deposit virtual currencies into the "Token Bank" through WeChat promotion.
According to current statistics from those who reported the case, through the propaganda of Lin and others, a total of 59 people including Mao and others were absorbed virtual currencies worth more than 15 million yuan... On-chain asset tracking investigation and analysis found that virtual currencies worth 6.73659 million yuan were recharged to Lin’s wallet address.
This court held that the defendant Lin and others used high returns as bait and in the name of investing in virtual currencies to absorb public funds and disrupt financial order without the legal approval of relevant departments, and the amount was huge. His behavior constituted the crime of illegally absorbing public deposits.
The above cases all regarded the absorbed mainstream virtual currencies such as Bitcoin and Ethereum as funds and determined that they illegally absorbed public deposits. This shows that although mainstream virtual currencies are not legal tender, they still fall into the category of "funds" and the judgment is not an isolated case. Other judicial decisions have also exposed the tendencies of mainstream virtual currency “funds.”
For example, the first-instance judgment of Liu on the crime of illegally absorbing public deposits [(2020) Zhejiang 0603 Bank Chu No. 442]:
Liu developed and produced the "" wallet APP through Shao and others, and produced and issued UTCC coins without authorization. Subsequently, he promoted the scarcity and appreciation prospects of UTCC coins to the public through various channels such as online publicity, and promised that users could buy and sell UTCC coins. Use UTCC coins to exchange for mainstream virtual currencies, use UTCC coins to recharge gas cards and phone bills in "" wallets, and pay high amounts of UTCC coins as bait to attract users to deposit mainstream virtual currencies into "" wallets, and sell UTCC coins to unspecified parties. parties, thereby absorbing large amounts of capital. Subsequently, the "" wallet fund chain was broken, and the defendant Liu shut down the server, causing user losses.
After investigation, the "" wallet attracted more than 30 unknown people to deposit mainstream virtual currencies. The defendant Liu sold UTCC coins to 6 unknown persons including Cai, and absorbed more than 1.2 million yuan in funds. This court held that the defendant Liu violated the National Financial Management Law and illegally collected deposits from unspecified objects in society. The amount is huge and disrupts the financial order. His behavior constituted the crime of illegally absorbing public deposits.
In this case, the perpetrator obviously absorbed mainstream virtual currencies, exchanged them for UTCC coins issued by himself, and then sold the UTCC coins. Although it only shows that UTCC coins are sold to unspecified objects and absorb funds, it also implies that mainstream virtual currencies are stored in unspecified objects, which violates national financial management laws and regulations.
It can be seen from the above cases that the trend of identifying mainstream virtual currencies as “funds” in judicial practice will become increasingly obvious. It may be difficult to gain support for the claim that mainstream virtual currencies are not funds.
Whether mainstream virtual currencies are “funds” has always been controversial in criminal law theory. However, after careful analysis of the nature of mainstream virtual currencies, identifying them as “funds” is not a problem.
The illegal absorption of public deposits "deposits" has experienced the expansion of "funds". With social changes, mainstream virtual currencies such as Bitcoin can also be recognized as "funds". The illegal absorption of public deposits stipulated in the criminal law exists in the form of "deposits". To the public, deposits refer to money deposited in banks.
However, the 2010 "Interpretation on Several Issues Concerning the Specific Application of Laws in the Trial of Criminal Cases of Illegal Fund-raising" changed the "deposit" of illegal fund-raising into "funds" and defined the crime of illegal absorption of public funds as "illegal fund-raising crime". Deposits have evolved into the crime of illegally absorbing public funds, and "Article 2 expands the form of funds to include investment shares, entrusted financial management and other forms that are completely different in legal nature from 'deposits', and are also included in this category."
The judicial authorities regard these "funds" as disguised deposits and subject them to the same criminal law evaluation as deposits in the traditional sense. In fact, they replaced deposits with the superordinate concept of "funds." "1
With the development of mainstream virtual currencies such as Bitcoin, the understanding of “funds” should not be limited to fiat currencies.
Although virtual currencies such as Bitcoin are virtual commodities in our country and are not legal tender, virtual commodities are only one of their attributes, as shown in "Boao Forum, Releases New Signals!" 》Criminal compliance of virtual currency business is urgent! “As mentioned in the article, after virtual currencies become cryptoassets, they can be tokenized, that is, virtual currencies can be invested as commodities, properties, currencies, securities, etc. This means that in different industry fields, virtual currencies have different characteristics. Characteristics. Positioning. It can be a commodity in the spot field, a derivative in the financial field, or it can play the role of currency in the payment field.
Although virtual currency exists in the form of electronic data, its essence has a financing function. Mainstream virtual currencies can be freely converted into legal currencies, have real market prices, and can circulate freely around the world. Mainstream virtual currencies can be withdrawn and exchanged at any time. From the perspective of the exchange process of "RMB - mainstream virtual currency - token - RMB", RMB is always the core. The essence of owning mainstream virtual currency is to own legal currency.
"Therefore, on the surface, what the trading platform implements is illegal fund-raising 'coins', but in fact it is illegal 'fund-raising' behavior using 'coins' as a carrier." 2
It was the relevant departments that saw the financing risks of virtual currencies and clearly stipulated in the "Announcement on Preventing Financing Risks of Token Issuance" that ICO is essentially illegal public financing without approval.
To sum up, borrowing "mainstream virtual currencies" in exchange for "tokens" has been clarified in the "Announcement on Preventing Token Issuance Financing Risks", which is essentially illegal public financing without approval. If you think that mainstream virtual currencies are not property or funds, they will not be recognized in current judicial practice. Starting from the positioning of virtual currency as a virtual commodity, it is not a problem to identify it as property in criminal law; with the development of technology and the enhancement of social recognition, coupled with the reality that virtual currency can be converted into legal tender at any time, it is recognized as "funds". "It's no longer a problem. will become a problem. The current trend of virtual currency has become a quasi-currency, and only an official document from the country recognizes it as legal tender.
Therefore, under the current policies and judicial practices, the defense lawyer’s claim that “mainstream virtual currencies are not funds and property” may have little effect. The focus should still be on the value of virtual currency and the platform’s operating model and publicity and promotion model for defense, which will make it easier to achieve better defense results.
refer to:
① See Zhu Xian: "Criminal Risks in Token Issuance Transactions", "Journal of the National Prosecutor's College", Issue 6, 2018, pp. 111-112.
②Wang Yijue: "Evolution and Thoughts on the Regulation of Virtual Currency in my country", published in "Journal of Chongqing Jiaotong University (Social Science Edition)", Issue 3, 2019, page 11.
标签： #Virtual currency #Digital currency #Virtual currency trading platform development #Deposit taking #Virtual currency development
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