The characterization of illegal acquisition of virtual currency

Zhang Mou is suspected of theft.

Blockchain and virtual currencies, as decentralized innovative technologies, have broad application prospects and are becoming emerging fields that countries around the world are competing to prepare for and develop. The rapid development of blockchain technology has not only drawn a great deal of public attention but also become a way for many people to make profits through investment or speculation. With the remarkable upward trend of virtual currencies in recent years, various illegal and non-compliant activities under the guise of blockchain investment or virtual currency trading still exist widely. Then, if there is an infringement of virtual tokens or virtual currencies in the blockchain, how should it be determined in judicial practice? Can this act of infringement be evaluated as "unlawful"?

Basic situation

Recently, Lawyer Zhang Xiaojuan from Jinyan Law Firm represented a criminal case involving the intrusion into a computer system and the theft of U coins. Attempt to analyze the nature and value of virtual digital currency in combination with existing academic theories and relevant precedents, and put forward defense opinions.

First, virtual currency does not have the attribute of property and does not fall under the category of property in criminal law. The actions of the criminal suspect Zhang do not meet the constituent elements of theft, and there is no legal basis for holding him criminally responsible

(1) Data attributes of computer information systems

Article 3, Paragraph 1 of the Data Security Law stipulates that "data" means "any record of information in electronic or other forms", and the scope of data in a computer information system shall include all meaningful combinations of text, symbols, sounds, images and other contents actually processed in the computer information system. Virtual currency emerges and exists in computer networks. In nature, it is an encrypted string generated by computers through specific mathematical operations, a meaningful combination of symbols, and possesses the criminal law attributes of computer information system data. Virtual currency is electronic data, which is the physical attribute of virtual currency.

(2) Non-monetary attributes

In 2013, the People's Bank of China and five other ministries jointly issued the "Notice on Preventing Risks of Bitcoin" (hereinafter referred to as the 2013 "Notice"), which clearly stated: "Although Bitcoin is called 'currency', since it is not issued by the monetary authorities and does not have the attributes of legal tender and enforceability, it is not a true currency in the real sense." In terms of nature, Bitcoin should be a specific virtual commodity and does not have the same legal status as currency. It cannot and should not be circulated and used as currency in the market. As a result, virtual currencies cannot circulate in the form of currency and do not possess the attributes of currency.

(3) Property attributes

Virtual currency does not have the attribute of property. In September 2017, the People's Bank of China and seven other ministries jointly issued the "Announcement on Preventing Risks of Token Issuance Financing", which pointed out the illegality of the issuance and circulation of virtual currencies such as Bitcoin for financing, and explicitly prohibited all services such as the exchange and trading of Bitcoin and other virtual currencies on trading platforms. That is, engaging in Bitcoin business on trading platforms is a target of severe crackdown by the national macroeconomic order. Therefore, after September 2017, virtual currencies no longer have the attribute of property in the sense of criminal law and should not be protected as property under criminal law.

In conclusion, Zhang Xiaojuan, a lawyer from Jinyan Law Firm, believes that in terms of the nature of virtual currencies, they should still be regarded as virtual items. However, when it comes to financial activities, they may be regulated by referring to the characteristics of securities. Virtual currency no longer possesses the property attribute in the sense of criminal law and should not be protected as property under criminal law. The actions of the criminal suspect Zhang do not meet the constituent elements of theft. There is no legal basis for holding him criminally responsible.

Ii. Regarding the determination of the amount involved in the Theft of Virtual currency

There is no and cannot be a universally accepted method for calculating the value of virtual property. Referring to existing case law, there is no unified opinion on the amount of stolen virtual currency either. There are various ways to determine it, such as based on the victim's investment cost, market transaction price, actual profit amount, direct loss amount of the victim, and the price appraised by a specialized institution. In the absence of a unified standard, different methods of determination will also lead to significant differences in the consequences of penalties.

Professor Zhang Mingkai once mentioned that when determining the act of illegally obtaining virtual property, the legal interest subject of the virtual property should be taken into account. If the amount is only calculated based on the market price, it will not only lead to an abnormally heavy sentence but also be difficult to be accepted. Therefore, it is suggested that the sentence be determined based on the circumstances rather than the amount. The circumstances should be determined by comprehensively considering the number of acts, the duration, the types and quantities of illegally obtained virtual property, and the amount of stolen goods sold, etc. In principle, the application of particularly serious statutory penalties should be avoided as much as possible. It should be noted here that the objects discussed in Professor Zhang Mingkai's article are virtual properties recognized by law such as computer accounts and game currency, while the objects discussed in this article are virtual currencies that are prohibited from trading and circulation in China. Relatively speaking, the social harm caused by the infringement of virtual currencies is relatively smaller, so it should be handled with caution and excessive penalties should be avoided as much as possible.

Therefore, Zhang Xiaojuan, a lawyer from Jinyan, believes that in terms of the amount involved in the crime of stealing virtual currency, the value assessment of the virtual currency itself should be minimized or even avoided as much as possible. Firstly, China has now banned all platforms and financial institutions from exchanging virtual currencies for legal tender, and also prohibited virtual currencies from being used as general equivalents to purchase goods or services. If the corresponding monetary amount is still evaluated by market transaction prices or appraisal institutions, it is equivalent to indirectly acknowledging the liquidity of virtual currencies in China. Secondly, the trading prices of virtual currencies fluctuate greatly, and the exchange prices on various trading platforms are also not consistent, making it impossible to lock in a fair and stable reference basis. However, if determined based on the cost invested by the victim, since some virtual currencies are obtained through "mining" rather than trading, the resulting price may be the cost of computing power rather than monetary cost, making it difficult to quantify into a specific amount. Moreover, in the trading market, there are also a large number of "coin-to-coin transactions" where virtual currencies are exchanged for each other, but they are not ultimately converted into RMB amounts. If this part of the virtual currency is forcibly valued in RMB at this time, it is also hard to be convincing. A more reasonable approach would be to select the lower of the direct loss of the victim and the actual gain of the defendant based on the principle of benefiting the defendant, and not to evaluate the price of the virtual currency that has not been exchanged separately.

Case Analysis

Virtual digital currency itself is not a currency in the general sense, but it can be characterized as a special kind of virtual commodity. In the relevant cases of stealing virtual currency, the current main disputes lie in the determination of the charges for theft and illegal acquisition of computer information system data. The focus of the disputes between the two sides is whether virtual currency is protected by criminal law and the determination of the amount involved in the case. For such cases, it is suggested that the actual situation where virtual currencies are prohibited from circulation and trading in our country be taken into account. More emphasis should be placed on the legal interests of protecting the security and order of computer systems, and the value judgment of virtual currencies should be minimized as much as possible. In determining the amount of virtual currency theft, it is recommended to follow the principle of benefiting the defendant, avoid touching upon the value of the virtual currency itself, and choose the lower of the direct loss of the victim and the actual profit of the defendant from selling.

Introduction to lawyers

Lawyer Zhang Xiaojuan is a practicing lawyer at Jinyan Law Firm. Graduated from Zhengzhou University with a bachelor's degree in law. Passed the National Legal Professional Qualification Examination in 2012 and obtained the lawyer's practice qualification certificate in July 2014.

Proficient in litigation services such as marriage and family affairs, traffic accident damage compensation, loan disputes, criminal defense, and related non-litigation legal services.

Contact Information

Telephone: 18639164430

Email: 406140260@qq.com