jakiro
Introduction
In the two recently handled criminal cases involving virtual currency, we encountered two identical problems. In the process of disposing and realizing the virtual currency involved in the case during the investigation stage, the investigative agency (i.e., the public security agency) indirectly or passively participated in illegal financial activities.For the legitimate rights and interests of the parties, the defense lawyer will of course put forward our opinions to the relevant departments on this.
In this way, in the judicial disposal business of virtual currency involved in the case, once the judicial organ “meets bad people” and entrusts an unreliable disposal company, it will not only bring hidden dangers to the handling of the case, but also bring risks to the judicial organs themselves.
What is the “unreliable” judicial disposal model
In a case of opening a casino in a currency-related category, the local public security organ entrusted Company A to handle the judicial disposal of the virtual currency involved. Company A continued to entrust Company B overseas to deal with the disposal overseas. After Company B completed the disposal, it issued a power of attorney to its employee “Xiao Liu” (a mainlander in China), entrusting Xiao Liu to directly transfer RMB (i.e. judicial disposal funds) to the Finance Bureau where the judicial organ is located. The total subject matter is several hundred million yuan, and the figure below is only a small part of the transfer.
In addition to this case, we often see in other currency-related cases that third-party disposal companies entrusted by judicial authorities directly adopt domestic RMB payment model in their actual disposal business to transfer disposal funds to judicial authorities’ bank accounts or special financial accounts.Based on the confidentiality requirements of information in criminal cases, we have coded the payer, payee, transaction amount, and flow number.
This direct adoption of domestic RMB payment model is the most primitive and non-compliant way of handling it. According to current regulatory regulations, it is the least reliable and most purified.Illegal financial activities.
What is the distance between judicial disposal and illegal financial activities?
The reason why “judicial disposal” is given in the name of “judicial” is because it is a judicial activity.Virtual currency, especiallyMainstream virtual currency(such as Bitcoin, Ether, Tether, etc.)Property Attributes, has been widely recognized in my country’s current criminal justice practice.Just like traditional property, vehicles, even stocks, bonds, etc. involved in the case, they can be dealt with judicially.
However, virtual currency is different from traditional property involved in the case.
According to the provisions of the “9.24 Notice” (Notice on Further Preventing and Handling the Risk of Virtual Currency Stimulus Trading) issued by the ten national ministries and commissions (two high and one ministries, the central bank, the State Administration of Foreign Exchange and other parts) in September 2021, allVirtual currency-related business activitiesAll belong toIllegal financial activities, all must be strictly prohibited and resolutely banned in accordance with the law. Those who carry out related illegal financial activities constitute a crime shall be held criminally liable in accordance with the law.
So what are the business activities related to virtual currency?
First, the exchange of fiat currency and virtual currency;
The second is the exchange business between different virtual currencies;
The third is to buy and sell virtual currencies as a central counterparty;
Fourth, provide information intermediary and pricing services for virtual currency transactions;
Fifth, conduct token issuance financing (i.e. ICO) and virtual currency derivative transactions.
For judicial disposal, it is essentially to convert the virtual currency involved in the case into fiat currency, and then fine and confiscate the cashed fiat currency.Based on the provisions of “9.24 Notice”, judicial authorities cannot directly carry out exchange activities of virtual currencies and legal currency involved. In practice, they are entrusted to third-party companies, and third-party companies cannot directly carry out exchange services of virtual currencies and legal currency; the common current operation mode is that third-party companies entrust overseas disposal entities to deal with and cash out overseas (in practice, they also deal with it through auctions overseas or direct recycling of virtual currencies by coin issuing companies).
There is the most basic knowledge point here: no matter which disposal model, the exchange/monetization of virtual currency and legal currency cannot be carried out in China, and it is entrusted to individuals to carry out the transaction through RMB transfer, because this model is essentially that individuals in the country directly purchase virtual currency from judicial authorities.Once a disposal company does this, it is essentially conducting illegal financial activities, and for the judicial organs that cooperate with such disposal companies, it is a reliance on theIllegal financial activitiesThe funds exchanged, or actually selling the virtual currency involved in the case to individuals in the country, should be considered to have directly or indirectly participated in illegal financial activities. According to the provisions of “9.24 Notice”, the legal consequences should be “strictly prohibited and resolutely banned in accordance with the law; if related illegal financial activities constitute a crime, criminal responsibility will be pursued in accordance with the law.”
Web3 lawyer’s advice
As a web3 criminal defense lawyer, Lawyer Liu strongly recommends that judicial organs must be very cautious in cooperating with third-party technology companies and disposal companies when handling criminal cases involving virtual currency.We also understand that some judicial organs, especially grassroots judicial organs, may not have professional technical knowledge on virtual currencies and blockchain, so they need the assistance of third-party companies, but this kind of auxiliary case handling should be based within the prescribed boundaries of laws, regulations and regulatory policies.
If the judicial authorities ignore compliance and believe that the natural correctness of cracking down on criminal crimes can overcome violations or even illegality in judicial disposal, then once they encounter a professional web3 criminal lawyer (Lawyer Liu does not dare to claim to be professional, but it is still no problem to pass), they will definitely take out the illegal behavior in judicial disposal activities and argue, and the judicial authorities will inevitably fall into an embarrassing situation.(END)
