Judicial Qualitative Analysis of Cases Involving Virtual Money Crimes

Recently, with the continuous accumulation of criminal cases involving Virtual Money, it can be observed that judicial authorities have formed a certain "unwritten rule" or path dependence in terms of conviction standards when handling such cases. This article will explore how the practical community determines whether certain behaviors constitute a crime in some common coin-related offenses.

I. Analysis of Typical Cases

In April 2020, the Zhejiang Provincial High Court made a final ruling on a fundraising fraud case involving Virtual Money transactions. The case involved various business models such as coin issuance, promotional marketing, and ICOs. The uniqueness of the case lies in the fact that the defendant was originally sentenced to probation for the crime of organizing and leading pyramid schemes, but the original judgment was later revoked, and the defendant was re-sentenced for fundraising fraud and received a life sentence. This difference in judgment highlights the important distinctions in the conviction logic between pyramid scheme crimes and fraud-related crimes.

2. Legal Definition of Coin-related Crimes

( one ) the legality of Virtual Money transactions

Since the joint announcement issued by multiple ministries in September 2017 to prevent the risks of token issuance and financing, conducting token issuance within China has been regarded as an unapproved illegal public financing activity, suspected of illegal fundraising and other criminal activities. Even virtual money issued by overseas platforms is still considered to have legal risks due to the lack of national recognition and actual economic value.

( two ) Common Types of Virtual Money Related Crimes

Crimes related to coins mainly include:

1. Fraud-related crimes (such as fraud, contract fraud, fundraising fraud)
2. Pyramid Scheme Crime
3. Establishing Gambling Crimes
4. Illegal Business Operations

( Three ) The conviction logic of crimes related to coins

Taking pyramid scheme crimes and fundraising fraud crimes as examples:

1. The elements of pyramid scheme crimes:

   • Set thresholds to absorb participants
   • Use the number of developers as the basis for calculating remuneration
   • The organization must reach more than three levels and have more than thirty people.
   • The perpetrator's goal is to defraud participants of their property.

2. Identification of Fraud-related Crimes:

   • The perpetrator misleads the victim into forming a false impression through deceptive means.
   • The victim disposes of property based on a misunderstanding.
   • The perpetrator ultimately illegally occupies the property of others

In practical cases, the court changed the original ruling of pyramid scheme crime to fundraising fraud mainly based on the following considerations:

• The perpetrator attracts investment through virtual money that has no actual value.
• Form a fund pool and use the funds for personal consumption or transfer abroad.
• The nature of the behavior belongs to illegal fundraising and has the subjective intention of fundraising fraud.

3. Conclusion

Although investing in Virtual Money is not explicitly prohibited at present, related activities may still be regarded as "suspected of undermining financial order and endangering financial security" and could be subject to investigation. There may be differences in the understanding and enforcement of related regulations by law enforcement agencies in different regions, which is particularly evident in the handling of cases involving Virtual Money. Therefore, one should exercise extra caution when participating in activities related to Virtual Money and fully understand the potential legal risks.