Legal Risk Analysis of Embezzlement by Practitioners in the Encryption Industry

Recently, cases of practitioners in the encryption industry suspected of embezzlement have drawn attention. This article will analyze this issue in depth, providing legal references for industry practitioners, clarifying legal boundaries, and jointly promoting the healthy development of web3.

Elements of the Crime of Embezzlement

According to the provisions of our country's criminal law, the composition of the crime of embezzlement is relatively clear:

1. Entity Identity: Employees of a company, enterprise, or other organization.
2. Objective behavior: Taking advantage of one's position to unlawfully appropriate the property of the unit for personal use, and the amount is relatively large.
3. Consequences of Behavior: Divided into three sentencing levels based on the amount.

It is worth noting that the filing standard for the crime of embezzlement is only 30,000 yuan, which is relatively low.

The Uniqueness of the Encryption Industry

Since 2017, the regulation of virtual currency-related activities in the country has become increasingly strict. After 2021, all business activities related to virtual currency have been classified as "illegal financial activities" in the mainland. However, the actual situation is quite complex:

• Some virtual currency exchanges have moved their operations overseas, but users from the mainland still account for a considerable proportion.
• Some overseas exchanges retain technical, customer service, and other teams in the mainland.
• Domestic judicial authorities still have a certain degree of cooperation with these overseas institutions.

Does the employee in the encryption industry constitute the subject of the crime of embezzlement

Although the related business is characterized as "illegal financial activities", the actions of practitioners may still be classified as embezzlement in judicial practice. The key is:

1. Can employee identity be verified: Not only look at the formal labor contract, but also consider the actual management relationship.
2. How to determine the victim unit: It may involve complex employment patterns and company structures.
3. Nature of the property involved: Mainstream virtual currencies are widely recognized as having property attributes, but other types of tokens remain controversial.

The Application of the Crime of Accepting Bribes by Non-State Staff in the Encryption Industry

In some cases, practitioners in the encryption industry may be involved in both the crime of embezzlement and the crime of bribery of non-state employees. In a typical case, the defendant was sentenced to 12 years in prison for illegally receiving property and embezzling the company's virtual currency assets.

Conclusion

With the development of the industry, the crackdown on internal corruption is intensifying. At the same time, some regions are increasingly strict in their compliance regulation of the web3 industry. In the future, internal compliance management in the encryption industry is likely to converge with that of traditional internet companies, and may even be stricter. Practitioners should enhance their legal awareness, exercise strict self-discipline, and jointly maintain the healthy development of the industry.