Exquisite explanation of suspicious cases: Judicial determination of money laundering involving virtual currency

Authors: Liu Xiao, Wang Hanhan; Source: Chinese prosecutors

1. Basic case facts< /p>

In March 2023, Xiao met "Big Shanghai", the person in charge of the benchmarking group, by searching for people who had the need to "exchange U" (USDT TEDA currency) on the Telegram instant messaging software. Even though Xiao knew that the cash provided to him by "Greater Shanghai" might be suspected of illegal crimes, he still left the virtual currency trading place and conducted over-the-counter virtual currency transactions for the purpose of transferring and replacing the stolen money. The specific behavior is: "Big Shanghai" informed Xiao through instant messaging software the amount of cash needed to be exchanged, and Xiao conducted over-the-counter transactions in advance with other currency sellers at a transaction price that was 2 cents higher than the market price on the virtual currency trading platform. , prepare the corresponding number of Tether coins to be stored in the virtual currency wallet, "Greater Shanghai" arranges personnel to escort "Cannon" to perform the withdrawal operation, completes the cash handover, and then temporarily agrees with Xiao on an unfixed location (mostly a parking lot, toilet, etc. ) met and conducted a virtual currency transaction in Xiao’s car. After Xiao counted the cash on site, he first transferred 100 yuan of virtual currency to the “Greater Shanghai” virtual currency wallet address as agreed, and the other party confirmed receipt and ensured After the transaction channel was unblocked and safe, Xiao transferred the remaining virtual currency that needed to be exchanged to "Greater Shanghai" through an online wallet. Xiao sold TEDA coins (5 cents higher for 1 USDT coin) at a price higher than the real-time trading price in the virtual currency trading market to earn money. Illegal benefits.

After investigation, on April 25, 2023, "Greater Shanghai" contacted Xiao to inform him of the amount of cash that needed to be exchanged. Xiao immediately contacted the currency seller and exchanged the amount of currency required by "Greater Shanghai" Complete the off-site purchase of virtual currency and wait for the designated trading location in "Greater Shanghai". Later, "Greater Shanghai" arranged for members of the "running score team" Zhan, Yang and others to escort "Cannon" Cai to withdraw more than 900,000 yuan offline, and then completed the cash handover in the toilet. The handover personnel took the money and split it with Xiao. They met in different parking lots several times and completed the above-mentioned transfer of stolen money. In the end, Xiao made a profit of more than 6,000 yuan.

2. Divergent opinions

There are different opinions on the characterization of Xiao’s behavior. The first opinion is that Xiao’s behavior is not guilty. Xiao subjectively did not know the nature of the stolen money. Xiao only interacted with one person from "Greater Shanghai" to conduct cash-virtual currency exchange transactions, and did not participate in the specific electronic fraud, score running, etc. negotiations with the "running points group" or its superior telecom fraud group, and did not have any knowledge or knowledge of the attributes of the stolen money. The extent to which it should be known. In addition, there is currently controversy over whether virtual currencies can be used as criminal objects or criminal tools. As we all know, virtual currency is not a legally negotiable currency in our country and does not have the same legal status as legal currency. Virtual currency is essentially the same as virtual game currency, virtual game equipment, etc. It is a digital token or has digital attributes. It is not clear whether it has value, how to calculate the value, etc., and whether it can be included in the scope of property protection. According to the principle of "the crime is legally punishable" and "the suspect is not guilty," Xiao's behavior should be deemed innocent.

The second opinion is that Xiao’s behavior has the nature of money laundering, and combined with the specific type and pattern of the predicate crime, it should be determined to constitute the crime of covering up and concealing the proceeds of crime. In addition to data attributes, virtual currency also has economic value. It can realize rights and interests through circulation and exchange. It obviously has value and use value and should be included in the scope of property rights certificates. Xiao knew subjectively that the cash he handled was stolen from upstream crimes. Based on the judgment of the crime node, the upstream crime has been completed. Xiao transferred the stolen money from the upstream crime through virtual currency transactions, concealing the nature of the stolen money to achieve the purpose of evading investigation and hindering the judicial authorities from ascertaining the crime and recovering the proceeds of the crime. His behavior was money laundering. nature.

3. Comments

With the rise of emerging economic forms such as blockchain, virtual currency has entered the lives of normal people, and because of its Characteristics such as anonymity, rapid circulation, convertibility, and difficulty in traceability have been quickly exploited by some criminals to launder and transfer illegal and criminal property. In reality, more and more virtual currency-related crimes are seriously endangering social and economic order and stability and need to be severely cracked down. For example, the upstream crime in this case was a telecommunications fraud gang. Since the "two cards" operation effectively blocked the collection and circulation of a large amount of defrauded funds, the criminal gangs used virtual currency over-the-counter transactions to achieve rapid transfer of telecommunications fraud funds, and even Cross-border transfers seriously infringe on the property security of victims, and also bring new challenges and obstacles to the investigation of upstream telecom fraud crimes and the recovery and recovery of stolen goods. This article believes that Xiao’s behavior constitutes the crime of covering up and concealing the proceeds of crime. The specific reasons are as follows:

(1) As a criminal object or tool, virtual currency should be included in the scope of criminal law regulation and protection

In judicial practice, the criminal law attributes of virtual currency can be roughly summarized into several opinions: First, it is believed that virtual currency is just a kind of electronic data accompanying blockchain technology, which itself does not have the value attribute of currency, so virtual currency Currency cannot be counted as property. Since virtual currency is not property, it is not protected by criminal law. The second is that virtual currency is similar to "tokens" in online games and has liquidity and property properties. However, the circulation of virtual currencies is mostly used for illegal purposes such as alternative payments. Our country also prohibits the circulation of virtual currencies, so virtual currencies cannot be regarded as property protected by criminal law. Third, virtual currency is property in the sense of criminal law. Although virtual currency is often used for illegal and criminal purposes, this cannot deny the legitimate rights and interests of normal virtual currency holders.

In 2013, the People's Bank of China, the Ministry of Industry and Information Technology and five other departments jointly issued the "Notice on Preventing Bitcoin Risks", clarifying that Bitcoin is a specific virtual product and does not have the same status as currency. Legal status, cannot and should not be used as currency for circulation in the market. In September 2021, 10 departments including the People's Bank of China and the Central Cyberspace Administration jointly issued the "Notice on Further Preventing and Dealing with Speculation Risks in Virtual Currency Transactions", which continued to clarify that all virtual currencies cannot be used as currency in the market, but at the same time It also clarifies that virtual currencies can be used as criminal targets for illegal fund-raising and other financial activities. Obviously, although the above-mentioned documents confirm that virtual currency is not legally negotiable currency in our country, it does not deny its property value and instrumental value attributes, nor does it exclude it from legal protection. It is worth mentioning that the Civil Code directly affirms the recognition and protection of data and network virtual property. With the widespread application of virtual currencies, especially the increase in criminal cases such as direct use of criminal objects and payment and settlement tools, a series of laws, regulations and judicial interpretations have been promulgated in recent years, such as the "Anti-Telecommunications Network Fraud Law of the People's Republic of China" and "About Interpretation of Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fund Raising", "Opinions on Several Issues Concerning the Handling of Cross-border Gambling Criminal Cases", "Opinions on Several Issues Concerning the Application of Law in the Handling of Criminal Cases such as Telecommunications and Network Fraud (2)", the above-mentioned normative documents It involves the prevention and handling of the risks of speculation in virtual currency transactions, and clearly regulates the crimes involved in virtual currency cases. Therefore, whether in civil or criminal fields, there is no doubt that virtual currency has been included in the scope of legal protection.

In criminal law, property as the object of property crimes refers to items with property value. Virtual currency has the characteristics of property attributes. It can be possessed, managed and controlled by people, and can also be transferred, exchanged, paid and used. Therefore, including virtual currency into the scope of property protection is not only in line with the literal understanding of "property", but also in line with the public's cognition and expectations. The determination of the value of virtual currency is directly related to the conviction and sentencing of the case. In judicial practice, the crimes that may be involved in virtual currency as a crime target include typical property crimes such as theft and fraud. As a criminal tool, virtual currency may be involved in crimes such as the crime of providing information to network criminal activities, the crime of covering up and concealing criminal proceeds, and the crime of money laundering. The above crimes cannot avoid the determination of the amount of the crime. The price of virtual currency is similar to the price of foreign exchange and is in a state of fluctuation. However, because it is not recognized as a legal currency in my country, there are no foreign exchange guide prices, intermediate exchange rates and other conversion standards issued by authoritative institutions such as the Bank of China. In practice, there is a lack of reliable Operability. Some scholars believe that the price of virtual currency is affected by market value, transaction volume, supply, etc., and its liquidity, investment value and practical value, objective value, subjective value, etc. must be comprehensively considered to determine its value. Some scholars also argue that the amount of property corresponding to virtual property in real life can be determined by referring to the actual transaction price of the virtual property in real life. The author believes that if the virtual currency involved in the case has been exchanged with existing circulating currency, it can be recognized as a transaction or the amount of circulating currency used for the transaction. At the same time, refer to the relatively mature virtual currency trading platforms such as Huobi.com and Binance.com. During the time period involved, the exchange price of the corresponding currency is used to determine whether the deemed value is reasonable; in the absence of exchange, the price of the virtual currency can also refer to the victim’s cost of obtaining the virtual currency, the victim’s actual loss, the virtual currency trading platform Determine the corresponding value on the virtual currency, thereby avoiding the inability to determine the value of virtual currency that affects the protection of the legitimate rights and interests of victims and the crackdown and punishment of illegal crimes. At the same time, criminal objects or criminal tools seized in the form of virtual currencies can be directly returned or disposed of if the victim can provide the basis for their legal acquisition and possession and they fall within the scope of infringed property. If it has been converted into legal tender, the converted property can be disposed of directly.

As for this case, although virtual currency is not a legally negotiable currency in our country, it does not have the same legal status as legal currency. But virtual currency is only a medium, used by Xiao as a means to cover up and conceal the proceeds of crime. Xiao's criminal method in this case was to contact "Greater Shanghai" in advance and go to a designated location to collect the stolen money provided by "Greater Shanghai" as scheduled. The object of Xiao's cover-up and concealment was the stolen money. After the stolen money was in Xiao's hands, Xiao transferred the equivalent value of virtual currency into the account of "Greater Shanghai", thereby completing the process of "laundering" the stolen money. In essence, virtual currency formally serves as a tool for Xiao to cover up and conceal stolen money. The object of Xiao's cover-up and concealment is stolen money rather than virtual currency. However, when calculating the amount of the crime in this case, the virtual currency is equivalent in value to currency, so the actual crime amount can be determined by the relevant exchange price of the virtual currency.

(2) Xiao’s behavior is consistent with the characteristics of covering up and concealing the proceeds of crime

First of all, the transaction method between Xiao and “Greater Shanghai” is too covert. Xiao and "Big Shanghai" met online through the overseas chat software Telegram. The most significant feature of this software that is different from ordinary public chat software is the non-recoverability of chat data. Ordinary software such as WeChat, QQ and other chat tools with high domestic applicability have strict risk control mechanisms. When the chat content involves sensitive words such as running scores, speculating on coins, and moving U, it will be automatically recognized by the system, which may cause the account to be compromised. blocked. Overseas software such as Telegram has functions such as secret chatting and burning after reading. Chat records will also be automatically deleted. Most of the deleted information cannot be recovered afterwards, and it is highly anti-investigation. Domestic criminals are taking advantage of this feature and using Telegram software as a communication tool for illegal and criminal activities to evade investigation and prosecution by judicial authorities.

Secondly, Xiao’s transaction pattern in this case was obviously abnormal. Xiao has been engaged in virtual currency trading for many years. He himself confessed that normal virtual currency transactions are through highly recognized trading platforms such as Huobi.com, Ouyi, and Binance. The above platforms require him to use real-name authentication trading tools (register an account Then bind the real-name authentication bank card, etc.) to conduct account transactions, and set up such as: the currency cannot be withdrawn within 24 hours of the transaction on the day of the transaction, and the currency must be withdrawn the next day, the transaction must provide the buyer's bank statement in advance to ensure that the funds in the card are settled for 5-7 days, Too frequent transaction flow may be frozen and other exchange rules will be used for risk control. In the past, Xiao used the above-mentioned mature and reliable virtual currency trading platform to conduct normal virtual currency transactions with others. In this case, Xiao's transactions with "Greater Shanghai" deliberately bypassed the trading platform and conducted over-the-counter transactions. Xiao made an agreement with "Greater Shanghai" on the withdrawal location in advance, and then collected the stolen money at the designated location. After receiving the stolen money, Xiao then transferred the virtual currency equivalent to the stolen money into the virtual currency wallet provided by "Greater Shanghai". It can be seen that Xiao and "Greater Shanghai" intentionally broke away from the virtual currency trading platform. The purpose of doing so was not to take the safety of the transaction into consideration, but to avoid supervision and deliberately break away from the normal trading platform and trading habits, thereby achieving Large amounts of funds are transferred in real time.

Thirdly, the transaction has a "card test" link and abnormal profits. When Xiao conducts each transaction with "Greater Shanghai", he first transfers a small denomination of 100 yuan for security testing. After confirming that the transaction channel is normal and has not been intercepted or frozen, he will continue to make high-frequency and large-amount transfers for virtual currency. trade. "Greater Shanghai" personnel all wore hats, masks and other coverings when trading with them, and deliberately chose trading locations such as toilets and cars to avoid surveillance, which was not in line with normal trading characteristics. Compared with online transactions on conventional trading platforms, the virtual currency transactions between "Greater Shanghai" and Xiao can be described as loss-making transactions. Their transaction prices are much higher than the highest transaction price of the day on the trading platform. Their offline transactions, cash transactions, and hidden transactions , high-price transactions are not in line with the characteristics of normal virtual currency market transactions, nor are they in line with trading common sense.

Finally, Xiao is engaged in virtual currency transactions with fixed targets. For each transaction, Xiao contacted "Greater Shanghai", explained the withdrawal location in advance, agreed on the transaction volume and related transaction methods, and exchanged money by entering virtual currency into the virtual currency wallet provided by "Greater Shanghai" . It can be seen that the virtual currency transaction that Xiao engaged in was not a legal transaction or a normal transaction, but an act of helping specific objects transfer or "launder" funds by using the purchase and sale of virtual currency as a medium or means after prior agreement with a specific person.

(3) Xiao subjectively fully possesses the elements of presumption of "knowledge"

Article 1 of the Supreme People's Court's "Interpretation on Several Issues Concerning the Specific Application of Laws in the Trial of Money Laundering and Other Criminal Cases" regarding "Knowingly" stipulates: "The 'knowingly' stipulated in Articles 191 and 312 of the Criminal Law should be combined with the defendant's cognitive ability, contact with other people's criminal proceeds and their proceeds, and the criminal proceeds and The type and amount of the proceeds, the criminal proceeds and the method of conversion and transfer of the proceeds, and the defendant’s confession shall be determined by subjective and objective factors. If there is any of the following circumstances, it may be determined that the defendant knew that the proceeds were criminal proceeds and the proceeds, but Exceptions are made where there is evidence proving true ignorance: (1) Knowing that others are engaged in criminal activities and assisting in the conversion or transfer of property; (2) Assisting in the conversion or transfer of property through illegal means without justifiable reasons; (3) Without justifiable reasons, Purchasing property at a price that is significantly lower than the market price; (4) Assisting others to convert or transfer property without justifiable reasons, and charging 'handling fees' that are significantly higher than the market price; (5) Assisting others to deposit huge amounts of cash in bulk without justifiable reasons Multiple bank accounts or frequent transfers between different bank accounts; (6) Assisting close relatives or other closely related people to convert or transfer property that is obviously inconsistent with their occupation or property status; (7) Other identifiable perpetrators Knowingly."

Compared with the above judicial interpretation, it is not difficult to see that Xiao deliberately bypassed the more mature virtual currency trading venues and used hidden software to contact and conceal the location under the premise of lack of trust with the other party. Collect the other party's money through joints, and then transfer the received money into the other party's account in the form of virtual currency. In short, Xiao realized that the other party's transaction form and transaction requirements were contrary to conventional trading habits, and still provided the other party with currency exchange services for virtual currencies. In terms of objective behavior, Xiao’s behavior is contrary to ordinary trading habits and common sense; in terms of subjective presumption, Xiao admitted in his confession that he has been engaged in virtual currency transactions for many years, and normal virtual currency transactions are conducted through highly recognized channels. Huobi, Oyi, Binance and other trading platforms. It can be inferred from this that Xiao knew that his behavior was not in line with the usual trading habits of virtual currencies, but he still conducted transactions at prices and behavior that were obviously different from the market to seek illegal benefits. At the same time, the evidence in the case can prove that Xiao made a profit of more than 6,000 yuan. Just think about it, it is obviously impossible to obtain such a "huge profit" by merely providing exchange services between virtual currency and currency. This profit obviously falls under Item (4) of the above-mentioned judicial interpretation "without justifiable reasons, assisting in the conversion or transfer of property and charging obviously high 'handling fee' in the market." Therefore, combined with Xiao’s cognitive ability and currency speculation experience, he conducts virtual currency transactions with a trading model and price that is obviously different from the market, and is unable to provide a reasonable explanation for the above-mentioned abnormal behavior. It can be determined that Xiao knowingly obtained criminal proceeds but still Assist in converting or transferring property through illegal means.

To sum up, Xiao’s behavior constitutes the crime of covering up and concealing the proceeds of crime. In November 2023, the court sentenced Xiao to 3 years and 3 months in prison for covering up and concealing criminal proceeds and fined him 10,000 yuan.