Through yesterday’s push, we have a rough understanding of the criminal law boundaries of virtual currencies. Starting today, we will continue to discuss the red lines that may be violated in virtual currency business models.
Fund-raising fraud is the hardest hit area for suspected virtual currency crimes. Our country has become one of the world's largest Bitcoin trading markets, accounting for more than 80% of the world's trading volume at one time. The trend of currency speculation is prevalent, but Bitcoin investment is only concentrated in the technology and financial circles. Various "scam coins" in the mass market are taking advantage of the domestic development momentum of Bitcoin to attract some investors who are eager to make money but do not have professional knowledge.
What behaviors related to virtual currency may be suspected of fund-raising fraud? Please see the following typical specific cases:
Typical case: emerging concepts that ride the wind and waves
Case 1: "K Coin", "Gaode Coin"
(2019) Zhejiang 0282 Bank Chu No. 1731
1. Main circumstances of the case:
Around August 2014, Lina, Jeff and others planned and launched the "Xiaoyi International" project, which was promoted externally in the name of jewelry sales and promised that after customers purchase any product and obtain membership, they can invest in the company's upcoming products. Virtual currency. "K Coin" and "K Coin" will be integrated with Bitcoin in the future, and 1 "K Coin" will rise from US$1 to US$50, thereby attracting others to invest in the product and become members.
From August to December 2014, the defendants Zhou, Cai, and Ye successively invested in the "Xiaoyi International" project, gradually established their own sales team, and actively attracted investment from others in the mainland.
Around December 2014, "Xiaoyi International" created the fake virtual currency "K Coin" and issued it in large quantities. It uses the reputation and value of real Bitcoin for propaganda, manipulates the price of "K coins", and claims that it can only purchase products. Only by becoming a member can you invest "K coins", and you can withdraw cash after trading "K coins", thereby deceiving old members to invest the points obtained by clicking on advertisements into "K coins" or recruiting new customers to buy products and click on advertisements to earn points and then invest. K coin”.
In order to attract more customer investments and increase the price of "K coins", Lina, Jeff and others proposed the "Amap" project around July 2015. In August 2015, the “Amap” project was officially launched. In order to distance itself from the relationship with "Xiaoyi International" and deceive customers into investing, it claimed that "Xiaoyi Automobile" and "Xiaoyi International" were the sponsoring companies of the project. Not the same company.
Around December 2015, due to the decrease in new customers, "A certain Gaode" was unable to pay the cash withdrawn by early members, so it created and launched the virtual currency "Gaode Coin" (actually the company's internal trading symbol. The top management directly controls the price) , just like promoting "K Coin", it also promotes the investment prospects of this currency and deceives customers into investing. In order to make a profit, "A Gaode" also charges a certain percentage of fees when members withdraw cash or sell "Gaode coins".
2. Court decision:
The defendants Zhou, Cai and others knew that others were using fraudulent means to illegally raise funds to achieve the purpose of illegal possession, and actively provided help, with a particularly huge amount. His behavior constituted the crime of fund-raising fraud.
3. Sentencing results:
The defendant Zhou was sentenced to six years in prison and fined 150,000 yuan for fund-raising fraud. The defendant Zhou was sentenced to seven years in prison and fined RMB 200,000 for his previous crime of fund-raising fraud. He was also fined for a number of offences. It was decided to execute a fixed-term imprisonment of seven years and eight months and impose a fine of RMB 350,000.
The defendant Cai was convicted of fund-raising fraud and was sentenced to five years and six months in prison and fined RMB 70,000. The defendant Cai was sentenced to six years in prison and fined 100,000 yuan for several crimes. , decided to execute a fixed-term imprisonment of six years and six months and impose a fine of RMB 170,000.
Case 2: "Solid Coin", "Rick Coin", "Money Point Coin"
(2017) Zhejiang 0212 Bank Chu No. 1041
1. Main circumstances of the case:
From the end of July 2016 to the beginning of September of the same year, Zhang illegally established the "Stand Together" virtual currency trading platform in Qingdao City, Shandong Province through the Internet. He used high returns as bait to promote the platform's "Stand Together Coin" and "Rui" to the public through QQ. The purchase, sale, exchange and other businesses of the three types of virtual currencies, "gram coins" and "dian coins", require investors to recharge designated accounts through bank transfers, Alipay transfers, etc. in order to carry out the above-mentioned business enterprises, thereby illegally raising funds from the public .
In early September, Zhang closed the virtual currency trading platform, disbanded the QQ group, and absconded with the money. During this period, the defendant Zhang defrauded 64 investors for a total of 0.85 yuan.
2. Court decision:
The defendant Zhang used fraudulent means to illegally raise huge amounts of funds for the purpose of illegal possession. His behavior constituted the crime of fund-raising fraud.
3. Sentencing results:
The defendant Zhang was convicted of fund-raising fraud and was sentenced to six years and six months in prison and fined 200,000 yuan. The defendant Zhang was ordered to continue to compensate the relevant victims for their property losses.
Case 3: "Yuanbao Coin"
(2019)Lu 0811 Xingchu No. 1193
1. Main circumstances of the case:
On March 21, 2017, Li registered and established Shandong Yuanjin Network Technology Co., Ltd. (hereinafter referred to as Yuanjin Company) and designated the defendant Zhen as the legal representative.
Subsequently, Li and the three people he invited, Li, Wen, and Sun, jointly determined the company's business model. From June to September 2017, they rented office space in Jining Wanda Office Building and established a WeChat investment group. They exaggerated the strength of Yuanjin Company by publishing advertisements on station square billboards, Jining Evening News and other media, and organizing press conferences, etc., and publicly and falsely advertised to unspecified social groups that the company had digital currency, Internet of Things licenses, and owned 5 listed companies. company. Involving multiple industries such as alcohol, donkey-hide gelatin, and agricultural products; by committing to purchase a virtual mining machine issued by the company, you can automatically generate Yuanbao coins (YCC digital currency) and obtain a static income of 1.3%-2.0% of the investment amount every day. At the same time, by recommending others to deposit, and obtaining dynamic income ranging from 1% to 20% of the recommended person's deposit amount according to the recommendation level as bait, he illegally raised 21.5164 million yuan in funds from the public.
In order to continue to absorb public funds, Zhen and others also returned part of the proceeds to the victims by fulfilling the promised kickbacks. As of the time of the incident, the actual economic loss caused to the people was 8. yuan.
2. Court decision:
Defendants Li, Wen, Li, Sun and others illegally absorbed 21.5164 million yuan of public funds for the purpose of illegal possession, fictitious investment projects, and promising high returns, causing public economic losses of 8.963035 yuan. This behavior has constituted the crime of fund-raising fraud.
3. Sentencing results:
The defendant Zhen was convicted of fund-raising fraud and was sentenced to six years in prison and fined 200,000 yuan.
Fundraising scams and virtual currencies: legal issues you need to know
According to Article 192 of the Criminal Law of the People's Republic of China, the crime of fund-raising fraud refers to violating relevant financial laws and regulations, using fraudulent methods for the purpose of illegal possession, illegally raising funds, and disrupting the country's normal financial order. Infringement of public and private property ownership, and the amount is relatively large.
The "method of fraud" stipulated in Article 192 of the Criminal Law refers to "deceptive behavior", which is manifested in stating false matters to the fraudster or conveying untrue information to the fraudster, but this kind of deceptive behavior must make the deceived person fall into or perpetuating (or exacerbating) a misunderstanding about the disposition of the property.
For example, as long as the other party falls into misunderstandings such as "actors raise funds legally", "actors raise funds legally", "actors raise funds with the approval of the competent authorities", "actors will get rewards after raising funds". If it is enough to get the other party to "invest", then this behavior is a form of fraud in fund-raising fraud.
Illegal fund-raising takes the form of false promises of returns. First, the promised return must be false, not real. Second, the promised returns are not necessarily certain. Fictitious uncertain returns (such as the high appreciation space of virtual currencies), that is, the possibility of promised returns, can also constitute false promises.
To constitute the crime of fund-raising fraud, in addition to intentionality, the liability element also requires the purpose of illegal possession, which is specifically reflected in the intention not to return the funds raised. According to the "Opinions on Several Issues Concerning the Application of Laws in the Handling of Criminal Cases of Illegal Fund Raising" issued by the Supreme People's Court, the Supreme People's Procuratorate and the Ministry of Public Security on March 25, 2014, if there is one of the following circumstances, it may be determined that For "the purpose of illegal possession":
(1) The raised funds are not used in production and business activities or are used in production and business activities that are obviously disproportionate to the scale of the raised funds, resulting in the inability to return the raised funds;
(2) Wantlessly squandering the raised funds, resulting in the inability to return the funds;
(3) Absconding with money;
(4) Use raised funds for illegal and criminal activities;
(5) Escape, transfer funds, conceal property, or evade returning funds;
(6) Concealing or destroying accounts, or conducting fake bankruptcy or bankruptcy to avoid the return of funds;
(7) Refusing to explain the whereabouts of funds and evading the return of funds;
(8) Other circumstances that may identify the purpose of illegal possession.
When altcoins and air coins are used to illegally raise funds, there is often no real virtual currency or even a blockchain. They often use private blockchains, where an individual or company has exclusive write access. Therefore, prices can be manipulated. It is difficult to operate a joint blockchain; Bitcoin is a public chain, and unless you own more than 51% of the Bitcoins at the same time and write the same information at the same time, it cannot be manipulated (from a difficulty perspective, it cannot be considered manipulated). manipulate).
If it is also based on public chain and open source P2P algorithm, it will basically be similar to Bitcoin. Some coins do not have a blockchain and may only have a database. Basically it is a fake project to defraud investment. Authenticity depends on consensus mechanisms, encryption and authorization technologies. With an open source system, complex but transparent mathematical algorithms, answers to a limited number of solutions, and consensus mechanisms confirming their validity, it is possible to be like Bitcoin.
Virtual currencies suspected of fund-raising fraud often have the following characteristics:
1. Make up a fictional currency and give it a catchy name.
2. Claim “blockchain”, “decentralization”, “open source” and other technologies as the technical architecture of their own virtual currency.
3. Make up stories and design models to attract investors’ attention.
4. Manipulate prices and create an early uptrend.
5. Stakeholder fraud has obvious characteristics and has various illegal and criminal characteristics.
6. The trading platform server is placed overseas. People can commit fraud at home, count money overseas, and be prepared to escape in advance.
If some people's issuance of virtual currency is considered to be a crime of illegally absorbing public deposits in my country's judicial practice, then when the issuance of virtual currency has the purpose of illegally possessing investors' investment funds, the issuance of virtual currency may be deemed to be a crime of illegally absorbing public deposits. crime. Considered a fundraising crime. Pursuing criminal liability for fraud is essentially equivalent to using fraudulent means to illegally raise funds.
Most of the fund-raising fraud cases in judicial practice are fictitious financial management platforms that do not actually exist and have no ability to pay. They pretended to provide virtual currency investment transactions, but actually squandered all the investors' funds they defrauded. In the end, they were unable to achieve the purpose of investors' profits and made it impossible to recover investors' principal.
write at the end
From the above cases, we can see that some virtual currencies are not based on real blockchain technology at all. The number of virtual coins that investors see on their “accounts” is exactly the number of virtual coins used by scammers in the backend database through the fake “investment platform”. Fixed one.
Some people believe that some domestic virtual currencies are not altcoins at all, but are completely "fraudulent coins" fabricated by deceptive means and used to deceive the Chinese people.
Investors can identify themselves by referring to the following standards:
Digital currencies you have invested in (or will invest in):
1. Is it based on an anarchic (corporate) background and the value is completely free from human manipulation?
2. Does it comply with market rules? Are prices going up or down?
3. Is it recognized by multiple parties and can be traded on different platforms?
4. Is the algorithm public so that everyone can see its full content?
5. Is it possible to artificially increase the issuance, including splitting and distribution in disguise?
6. Is it recognized and protected by domestic or foreign laws?
The reason why people in the world are deceived is not actually because of how smart the liar is, but mostly because people only look at appearances and are easily deceived by fake images. If we don’t look at the appearance and only look at the essence, will it be easy to be deceived by scammers?
There is no free lunch in the world, and the chaos in the virtual currency market has seriously disrupted the stability of the financial order. Some criminals use virtual currencies to carry out illegal and criminal activities such as pyramid schemes, fraud, and illegal fund-raising under the guise of blockchain, professional terminology, and future vision. Cryptocurrency fraud cases have long been dealt with seriously by criminal law. We don’t want everyone to fall into the tragic situation of being deceived by blind investment and having no choice but to exit the market.
When we look beyond appearances to the essence, when we look at the business model rather than the team qualifications and background of the virtual currency, the complex technical terminology and the attractive promise of returns, we may not be so easily deceived.
标签： #Crime of Fraud #Blockchain #Digital Currency #Crime of Fund-raising Fraud #Virtual Currency
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