Crypto employment minefield for college students: 4 years in prison for withdrawing coins, full warning for six types of crimes involving coins
ORIGINAL | Odaily Planet Daily (@OdailyChina）
Author | Wenser (@wenser 2010）
Original title: The “minefield” of crypto employment for college students: coin issuance and withdrawal = 4 years in prison, inventory of six types of crimes involving coins
The cryptocurrency industry has always been a dark forest. It is necessary not only to prevent on-chain security threats, but also to be wary of real-world legal swords. The boundaries of criminal risk behind acts such as issuing coins, OTC transactions, and manipulating liquidity pools are often blurred, especially for young people who are unfamiliar with the world.
In order to raise awareness of risk prevention, Odaily Planet Daily will sort out typical domestic currency-related judicial cases in recent years and analyze key legal risk points (Note: This article is for legal popularization purposes only and does not constitute legal opinion; the specific provisions are subject to official interpretation)
Charge 1: Reselling foreign exchange constitutes a crime of illegal operation, involving more than 200 million yuan
Issued by the Supreme CourtTypical case displayThe Sichuan Leshan Intermediate Court upgraded the trial of a case involving the use of USDT to illegally trade foreign exchange.
Between 2020 and 2021, Wan Mouyuan and others illegally traded foreign exchange through the “RMB - USDT - US dollar” method, involving more than 234 million yuan. The court found that it constituted a crime of illegal business. The main offender, Wan Mouyuan, was sentenced to 13 years and 6 months in prison and a fine of 1.14 million yuan; the defendants, Huang Mouyuan and Chen Mouwen, were sentenced to 5 years and 6 months in prison, 2 years and 6 months, as well as fines of RMB 710,000 and RMB 250,000, respectively. After the verdict was handed down in the first instance, the defendant waited the sentence. The procuratorate did not protest, and the judgment has taken legal effect.
Two other cases were also crimes of illegal business, which are also listed here:
First, in December 2022, the Dapu County People's Court metThe case of buying and selling virtual currency in cashA verdict was handed down. The principal offender, Chen, was sentenced to eight months' imprisonment and a fine of 20,000 yuan; the accomplice Li was sentenced to six months and ten days in prison and a fine of 1,000 yuan; and 5101,770 yuan of stolen money was confiscated and handed over to the national treasury according to law.
According to reports, in November 2021, Chen started the business of trading virtual currency in cash. He bought USDT from retail investors he knew and then resold it to the buyer to earn the difference in price. The price of each transaction is set by the buyer. The buyer compares the price of 1 U coin with the current market price of other virtual currencies to calculate the profitable price. Since every transaction involved a large amount of cash, Chen hired Li as a bodyguard to escort the cash transactions with retail investors for fear of being robbed. After the trial, the court found that Chen and Li used the form of virtual currency trading to trade foreign exchange in disguise. The circumstances were serious and had already constituted a crime of illegal business.
Second, the three “post-95” guys used virtual currency transactions as a medium to engage in the “business” of trading foreign exchange. In just a few months, they completed more than 650 transactions and exchanged nearly 30 million yuan in foreign exchange. Following a public prosecution by the Jianhu County Procuratorate, Lin and three others were eventually convicted by the courtIllegal business crimeThe sentence ranges from 5 years to 1 year and 6 months in prison, each with a fine. The prosecutor's investigation found that Lin and the three others used virtual currency as a medium to obtain exchange rate differences by providing cross-border exchange and payment services, using the special properties of virtual currency to bypass the country's foreign exchange supervision, affect the effectiveness of foreign exchange management and the stability of legal exchange rates, disrupt the normal financial market order, and should be held criminally responsible for illegal operations in accordance with the law.
Daily Planet Daily's critical review: As we all know, domestic foreign exchange regulations limit individual exchange amounts to about 50,000 US dollars per year, and the decentralization and anonymity of cryptocurrencies provide certain convenience for foreign exchange processing and transactions, so there are certain legal risks. Since the amount of money involved in the first case was huge and the time span of the crime was long, it was used as a typical case of upgraded jurisdiction with accurate application of the law, proper adjudication orientation, and outstanding exemplary significance. The situation in the second and third cases was similar, but the corresponding penalties were also relatively light, or for reasons of relatively minor circumstances.
Charge 2: Money laundering, bank turnover 25,000 yuan, illegal profit of more than 5,000 yuan
Jiangsu Liyang Municipal People's Court met on July 26, 2024Virtual currency money laundering caseMake a verdict. An unemployed man with the pseudonym Xiao Wu was sentenced to six months in prison, suspended for one year, and fined RMB 2,000 for participating in virtual currency money laundering activities.
The case shows that in November 2023, Xiao Wu contacted a “money laundering company” via Telegram in order to repay credit card debts due to investing in foreign exchange and virtual currency during college. He buys U coins on trading platforms, then transfers and sells them through the “U-MATOU” app to earn the difference in price.
On December 22, 2023, the Zhongguancun Police Station of the Liyang Public Security Bureau received reports from the public that they had been defrauded of 3,830 yuan by “swiping out the bill.” After preliminary investigation by the public security authorities, it was discovered that 2,520 yuan was credited to Xiao Wu's bank card, involving Xiao Wu's bank card. According to the investigation, Xiao Wu's bank accounts had a total of 13 transactions, totaling more than 25,000 yuan, and his personal illegal profit was more than 5,000 yuan.
Odaily Planet Daily commented: Money laundering is also one of the high-frequency crimes in the cryptocurrency industry. Whether at home or abroad, regardless of the size or background of the people involved, there is a certain risk of money laundering. In particular, individuals help illegal companies at home and abroad to transfer funds through their own bank cards, which can easily constitute a crime of aiding credit.
Charge 3: Crime of fraud. Post-00 college students withdrew their liquidity in seconds after issuing Dogecoin, and were sentenced to 4 years and 6 months and fined 30,000 yuan
Yang Qichao, a post-00 college student, issued a “Dogecoin” BFF on BNB Chain. Due to the withdrawal of liquidity, others lost 50,000 USDT. The Henan Nanyang High-tech Industrial Development Zone People's Court found him guilty of fraud in the first instance, and was sentenced to 4 years and 6 months in prison and a fine of 30,000 yuan.
On May 20, 2024, the case was heard in the second instance of the Nanyang Intermediate People's Court. Yang Qichao's defense attorney is still defending his innocence, arguing that the virtual currency issued by the defendant Yang Qichao in this case has a unique and immutable contract address, and there is no so-called “counterfeit money,” yet both the defendant and the person reporting the crime are veteran players in the coin industry, and they are clearly aware of the risks of speculating on virtual currency. Furthermore, the platform allows liquidity to be added or withdrawn at any time, and the defendant's actions did not violate the platform's rules. However, the BFF coins held by the victim appreciated due to increased liquidity after the incident. If the transaction could be used to redeem more USDT coins than before, then the victim had no losses. Yang Qichao, born in 2000, was a freshman about to graduate from a university in Zhejiang before the incident. At the beginning of May 2022, he paid attention to a community autonomous organization called the Regional Future DAO to promote and warm up the issuance of decentralized virtual tokens. He created a token BFF with the same English name as Zedong Future, and added the liquidity of 300,000 BSC-USD and 630,000 BFFs. At the same moment that Yang Qichao added liquidity, Luo spent 50,000 USDT to exchange 85316.72 BFFs. After only 24 seconds, Yang Qichao withdrew the BFF's liquidity, causing Luo to use 81,043 BFFs to only redeem 21.6 USDT. While tracing back the source, Luo found Yang Qichao through a mutual WeChat friend. Luo asked Yang Qichao to return his losses, but it was rejected.
On May 3, 2022, Luo reported that his investment in virtual currency was defrauded of more than RMB 300,000 (converted to 50,000 USDT). Soon, the police opened a criminal case on suspicion of fraud and arrested Yang Qichao in Hangzhou, Zhejiang in November of that year.
Odaily Planet Daily critical review: Yes, the coin issuing pool is also a crime in the strict sense of the word. In particular, some people have suffered property damage as a result and were able to target specific issuers. According to people familiar with the matter, Yang is a “dog store that runs fishing fraud on a chain” and often uses the name of a regular project to open and withdraw the pool at the same time, so he can be called a “professional criminal.” According to previous news sources, the perpetrator even threatened, “I just cut my older brother back from my cut point; I have been cut quite often.” Users are reminded that they must abide by domestic laws and regulations and not participate in coin issuance activities.
Charge 4: The crime of organizing and leading pyramid scheme activities. The maximum amount involved was more than 210 million yuan
In November 2024, according to the official account of the Yunnan Provincial People's Procuratorate, 10 people including Mr. Li, who were recently prosecuted by the Shidian County ProcuratorateCase of organizing and leading pyramid scheme activities. Following a court trial, Mr. Li and 10 other defendants were each sentenced to 6 years in prison to 2 years' fixed-term imprisonment, and fines ranging from RMB 500,000 to RMB 100,000 for the crime of organizing and leading pyramid scheme activities.
Since May 2021, Mr. Li has collected Mr. Huang, Mr. Jin, and others to use “blockchain” and “virtual currency” as a gimmick to obtain illegal benefits, set up 5 capital pools on the online platform on the grounds of buying and holding virtual digital coins A and issuing virtual digital coins B and C, and use on-site meetings, WeChat groups, etc. to create the personality of successful people, and use their special professional background to promote slogans such as “One Dollar, One Luxury Home, One Dollar, One Luxury Car” and “Easily Earn Hundreds of Thousands of Millions a Day” Reward systems and profit prospects tempt the masses By purchasing, destroying, and adding funds to the pool, you are eligible to join, complete the tasks issued, and receive static dividends and dynamic returns directly or indirectly based on the number of people developed and the amount invested, forming 5 rebate tiers.
According to an assessment, the total amount of MLM funds collected by Mr. Li and others using online platforms amounted to more than RMB 210 million. The investigation by the Shidian County Procuratorate found that Mr. Li, along with nine other defendants, used online platforms to defraud property and disrupt the economic and social order. The total amount of pyramid scheme funds reached more than 210 million yuan. The circumstances were serious. The actions of Mr. Li and 10 others violated the provisions of Article 224 (1) of the Criminal Law of the People's Republic of China and constituted the crime of organizing and leading pyramid scheme activities. Following a court hearing, the above judgment was handed down.
In September of the same year, the Zhongxiang Procuratorate of Hubei Province prosecuted the case of Chen and his three others organizing and leading the pyramid scheme crime. After being judged according to law, the three criminals including Chen were convictedThe crime of organizing or leading pyramid schemesThey were all sentenced to 3 years in prison, suspended for 5 years, and fined RMB 350,000. According to police investigations, a pyramid scheme organization headed by Chen, Ding, and Fu decided to issue its own virtual currency to obtain revenue. The three agreed on matters such as promotion models, reward systems, and benefit-sharing mechanisms, and traveled abroad to find Mr. Lu, the head of a software design company (handled separately) to develop a virtual currency software app. In February 2022, the app was officially launched. On February 19 of the same year, Chen and three others held a press conference for the app, invited friends and friends to participate in the virtual currency project, and also set up the MLM organization “Certain Community” under the name of investing in virtual currency projects. In order to improve promotion efficiency, Chen's three people used internet platforms and offline training sessions all over the country to promote virtual currency projects, develop members through the “certain community”, and induce others to invest and buy virtual currency to become members and develop offline. According to the undertaker prosecutor, Chen's three will give corresponding rebates to online members according to the number of offline developments and the amount of fees paid by offline members, forming an upstream and offline level. After months of careful promotion, the organization grew rapidly. In order to facilitate management, the three divided the organization into five major war zones and 16 pioneer groups according to the region, and selected key members to take charge separately. The five major war zones organized morning meetings for members every day through online chat software to call on members to complete the performance tasks assigned to them.
Up to the incident, the app had more than 10,000 registered member accounts. The highest number of levels was 17, and the amount involved reached more than 57 million yuan. “The virtual currency has no real value, and the project has no physical business activity. It all depends on continuous development and offline maintenance. What is earned from going online is actually money invested offline. Once there is no steady stream of offline investment, the project will collapse.” According to the undertaker prosecutor, Ding, Fu, and Chen directly or indirectly developed and disconnected more than 41 people through the app, and their organizational form has already formed a pyramid scheme organization within the meaning of criminal law. On January 11, 2023, Chen, Ding, and Fu were arrested and brought to justice by police. After arriving at the case, all three truthfully confessed the facts of the crime and voluntarily withdrew all illegal proceeds of more than 22.59 million yuan. On December 22, 2023, the case was transferred to the Zhongxiang Procuratorate for prosecution. The undertaker prosecutor held that the acts of Chen, Ding XX, and Fu were clearly factual, and the evidence was accurate and sufficient. Their actions violated the provisions of Article 224 (1) of the Criminal Law of the People's Republic of China and constituted the crime of organizing and leading pyramid scheme activities. The court later filed a public complaint in accordance with the law, and the local court handed down the above ruling.
Odaily Planet Daily critiques: Cryptocurrency is also often the hardest hit area for pyramid scheme crimes and a common packaging method. This is also a major reason why many people in China “talk about the color change of currency.” In the above two cases, one level of pyramid scheme reached as many as 5 levels; the other level of pyramid scheme reached an exaggerated level 17, far exceeding the limit of level 3 of domestic distribution, and the scale of capital involved in the case was tens of millions or even hundreds of millions of yuan, so it was also classified as a major representative case.
Charge 5: The crime of concealing or concealing the proceeds of crime. The maximum amount involved is more than 15 million yuan
In March 2021, the Luyi County People's Procuratorate of Henan Province ruled in the second instance on the use of Bitcoin to “score points”The verdict in case 2 shows: The seven suspects used mobile phones to “score points” by buying and selling virtual currency through virtual currency trading platforms and other “Bitcoin” software. The amount involved was over 9 million, but the 7 suspects who received commissions as “running points” only received the most income of 8,500 yuan, and the least was only 500 yuan. The People's Procuratorate of Luyi County of Henan Province sentenced seven suspects to a maximum of 4 years in prison and a maximum fine of RMB 10,000 yuan for concealing and concealing the proceeds of crime.
In March 2022, the husband and wife used their virtual currency accounts to launder more than 15 million yuan of money for upstream crimes to earn so-called “brick removal fees.” Prosecuted by the Hangzhou Xihu District Procuratorate. In early March of this year, the case wasA verdict was handed down in the case of the virtual currency “Killing Pig Pan” money laundering. In the end, Zhang and Chen were each sentenced to 3 years and 10 months in prison and a fine of 10,000 yuan; 3 years in prison, suspended for 3 years, and fined 8,000 yuan for concealing and concealing the proceeds of crime.
In August 2023, the Mawei District Procuratorate in Fuzhou City, Fujian Province suspected defendant ChenThe crime of concealing or concealing the proceeds of crimeFile a public complaint with a court of law. In February 2022, Chen received a phone call from Lin instructing him to download a chat app and send two bank cards under his name to the chat group as required. Soon, the two bank cards received 7 transfers, generating a bank turnover of 99,609 yuan. Afterwards, Chen continued to follow Lin's instructions to transfer the money on the card to Alipay and WeChat accounts under his name, and then from the above accounts to his third bank card. Finally, Chen purchased virtual U coins worth 9,4988 yuan from the seller and sent a screenshot of the transaction to the chat group to complete the transaction, earning a commission of 147.1 yuan. In the end, the court sentenced Chen to 9 months' imprisonment, 1 year suspended sentence, and a fine of RMB 5,000. The prosecutor said: Fraud gangs use virtual currency to transfer and launder stolen money. This act of online money laundering in the name of buying virtual currency and knowing that others are using information networks to commit crimes and to help them is already in violation of the law.
Odaily Planet Daily critically commented: The person involved in this case made a minimum profit of less than 150 yuan, but in the end, the sentence reached 9 months, and the fine was far higher than the profit commission. I have to say that whether they are engaging in “running points” commission activities or helping others launder money, it is an extremely risky act, and I hope everyone will take it as a warning.
Charge 6: The crime of illegally obtaining computer information, with maximum profit exceeding 2.5 million yuan
In October 2023, a gang of five people, including Lin and Chen, funded someone to set up a false scoring website and implanted a purchased Trojan virus in the website link. Afterwards, they used chat software to lure victims to click on the link, and then remotely control the computer to steal virtual currency. The five people stole 3,000 USDT coins worth 18,000 yuan. In March 2022, five people were arrested by the public security authorities, and the Public Prosecution Service later sued the five in court.
The Guangzhou Haizhu court finally ruled that the five defendants wereThe crime of unlawfully obtaining computer informationSentenced to 6 months to 2 years in prison, and fines ranging from 3,000 yuan to 12,000 yuan.
2024/6Three employees of Cybersecurity Enterprise 360 for stealing other people's virtual currencySentenced. The People's Procuratorate of Xuhui District of Shanghai charged that from February 9 to 20, 2023, Hong, along with Yang and Zhang (all handled in separate cases), controlled the intranet server by means of horizontal intranet penetration and implantation of Trojans after using the Yapi remote code execution vulnerability. After finding the server source code, they downloaded and analyzed 1 virtual wallet address, private key, etc. of the victim's virtual wallet, and constructed false instructions to transfer virtual currency from the victim's virtual wallet address. Afterwards, it was exchanged for other virtual currencies and then sold, obtaining a total of more than RMB 2.5 million in illegal proceeds.
Odaily Planet Daily's critical review: It's worth mentioning that cryptocurrencies have now been recognized as personal assets by many local courts. Therefore, the act of stealing cryptocurrency profits through Trojan viruses and the like is not only considered a crime of illegally obtaining computer information, but also has a certain probability of being treated as a crime of theft or robbery.
For example, the Beijing Shijingshan District People's Court and the Beijing No. 1 Intermediate People's Court tried a case in 2022Litecoin Investment Civil Disputes. In the end, it was determined that, judging from its nature, Litecoin should be a specific virtual commodity. It does not have the same legal status as currency, and cannot and should not be used as currency in circulation in the market. However, Litecoin has the attributes of virtual property and virtual goods, and should be protected by law. The People's Court of Chaoyang District of Beijing once heard a caseBitcoin heist caseIn the end, it was determined that virtual currency is not a form of illegal currency, but it does not affect the property attributes of virtual currency. Virtual currency has property attributes in the sense of criminal law and can be the target of property crimes; in the end, a group of defendants used violence or coercion to rob other people's bitcoins and were convicted and punished for the crime of robbery.
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