肖飒lawyer · 13

Second trial verdict handed down in Beijing's first “Bitcoin mining case”! The analysis report is here

Source | Lawyer Xiao Sa | Edited by Xiao Sa | Wang Jilongyan's first Bitcoin “mining” contract case in Beijing handed down a verdict in the second instance. The court of second instance, the Beijing Third Intermediate People's Court, clearly confirmed that the “mining” contract involved in the case was invalid. Regarding this case, Sister Sa's team has also had some discussions before (see “Case | Beijing's First Case, Bitcoin Mining Contract Not Valid”), but now the second trial is final. Unless a retrial is initiated, the dust has settled on the issue of the validity of the “mining” contract, and it has a certain degree of credibility. Therefore, in today's article, Sister Sa's team will once again discuss “mining” and explain related issues. The judgment logic of the first and second trial can be clearly discovered by studying the judgment of the first and second trial. In terms of the logic of determining that the “mining” contract was invalid, the first and second trial followed the same logical line of thought. In other words, the reason for the invalidity of a “mining” contract is that it harms the public interest of society, which in turn violates public order and morals, so the contract is deemed invalid according to the provisions of Article 153 (2) of the Civil Code that “civil legal acts contrary to public order and morals are null and void”. Specifically, the reason why “mining” contracts harm the public interest of society is because: (1) Bitcoin trading activities have a bad impact on the country's financial order and social order. Virtual currency “mining” activities fall under the category of virtual currency-related business activities, and in our country, hype is rampant in virtual currency-related business activities, and has extremely bad effects. It disrupts the economic and financial order, breeds illegal and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering, and seriously endangers people's property safety and national financial security. (2) Virtual currency “mining” activity is a high-energy activity. The act of “mining” at the cost of electricity resources and carbon emissions is contrary to high-quality economic and social development and carbon peaking and carbon neutrality goals, and is contrary to the public interest. Therefore, based on the above two reasons, the “mining” contract should be deemed invalid in order to protect the property safety of the Chinese people and the public interest relating to the country's financial security and environmental resources. 2. The “mining” contract ≠ the mining machine sales contract followed the ruling that the “mining” contract was found invalid. One question worth thinking about is how effective should a mining machine purchase contract closely related to “mining” be? Is the contract still null and void because it violates public order and morals? Regarding this, Sister Sa's team believes that the mining machine purchase contract should still be valid. On the one hand, this is because the mining machine itself is still a legal commodity, and legal commodity trading should be protected by law. Whether it is the “Notice on Further Preventing and Handling the Risk of Virtual Currency Trading Hype” or the “Notice on Remediating Virtual Currency “Mining” Activities, only characterizes relevant behavior and virtual currency, but does not stipulate the nature of mining machines. Even if it is a virtual currency, the aforementioned notice only states that it does not have the same legal status as a legal tender and does not deny its legal nature as a virtual product (this nature was recognized in the 2013 “Notice on Bitcoin Risk Prevention”). Therefore, as a type of computer, a mining machine itself has its own unique value and should be treated as a general commodity. Unless the commodity is clearly defined as a restricted or prohibited item, then the circulation of the commodity is legal in circulation, and the commodity trading act and sales contract involved in it shall be valid. On the other hand, this is also because mining equipment contracts do not essentially violate public order and morals. According to the judgment of the court of first and second instance, the reason the “mining” contract is invalid is because on the one hand, it disrupts the financial order and endangers people's property security and the country's financial security; on the other hand, it wastes resources and is not in line with the goal of carbon neutrality. However, mining machine sales contracts cannot actually be classified as virtual currency-related business activities. So-called virtual currency-related business activities, according to the aforementioned notice, refer to activities such as fiat currency and virtual currency exchange services, virtual currency exchange services, virtual currency trading as a central counterparty, providing information intermediation and pricing services for virtual currency transactions, token issuance and financing, and virtual currency derivatives transactions. Mining machine trading is clearly not part of the above activities, so this act cannot be considered an illegal financial activity. On the premise that the act of trading mining machinery cannot be classified as an illegal financial activity, it is clearly impossible to assume that this act disrupts the financial order, thereby endangering people's property safety and the country's financial security. At the same time, trading mining machinery is not a waste of resources, and therefore does not meet carbon neutrality goals. As mentioned above, the reason the “mining” contract was determined to be none...

1494d ago01区块链#01 Blockchain

The 14th Five-Year Plan for the Digital Economy in Shanghai -- the “arrow” to liberalize NFT transactions?

Source | Lawyer Xiao Sa | Author Xiao Sa Layout | On July 13, Shanghai released the “14th Five-Year Plan for the Development of the Digital Economy in Shanghai” (Shanghai Digital Plan for short). In the digital trade section, it is stated that “supporting leading companies to explore the construction of NFT trading platforms, research and promote the digitalization of NFTs and other assets, the global circulation of digital IP, and digital rights protection” in Shanghai. As soon as the news came out, it sparked a buzz. Insiders in the digital collection industry were divided into two groups: those who are happy to prosper, and are prepared to do their best; the other group is careful and wait-and-see, and may be taken away by the investigation after a few years. So, how should we rationally view local government plans? Let's also listen to Sister Sa's breakdown. 1. The target of the Shanghai Digital Plan is not a commercial entity, but the basis for the Shanghai Digital Plan of various government departments is the “14th Five-Year Plan” (National Digital Plan for short) issued by the State Council. The plan issued by the State Council is for “all provinces, autonomous regions, municipalities directly under the Central Government, ministries, departments, and agencies directly under the Central Government”, or “business to public.” Similarly, let's take a look at the Shanghai Digital Plan. The copy unit is “various departments of the Municipal Committee, the General Office of the Standing Committee of the Municipal People's Congress, the General Office of the CPPCC, the Municipal Commission for Discipline Inspection and Supervision Commission, the Municipal High Court, and the Municipal Procuratorate”. They are also “public to public” documents. They do not directly give instructions to the market, or require further refinement of incentives by various lower authorities in order to accurately locate “specific market players.” Looking at the national digital plan, the focus is on optimizing and upgrading digital infrastructure, giving full play to the role of data elements, vigorously promoting the digital transformation of industries, accelerating digital industrialization, continuously improving the digitization level of public services, improving and perfecting the digital economy governance system, focusing on strengthening the digital economy security system, and effectively expanding international cooperation in the digital economy. Among them, the sixth section of the full article explains “Accelerating the Promotion of Digital Industrialization” and talks about “Accelerating the Cultivation of New Business Formats and Models”, and provides more detailed content: the Digital Economy New Business Format Cultivation Project: (1) Continuing to expand emerging online services; (2) Deepening the development of the sharing economy; (3) encouraging the development of a smart economy; and (4) guiding the new individual economy in an orderly manner. The fourth point talks about “building a prosperous and orderly industrial innovation ecosystem”. Among them, the most relevant to NFTs is encouraging the development of emerging writing platforms such as open source communities and developer platforms, cultivating a digital industry innovation ecosystem where large, medium, and social developers are open to writing, and driving innovative enterprises to grow rapidly. In view of this, content related to NFTs is limited, and we can conclude from the above: there is no encouragement or disencouragement for NFTs in the upper planning. Municipal planning can only refine higher-level plans. In terms of extension, non-homogenized tokens can be interpreted as an innovative ecosystem for the digital industry, but planning is a plan, and legal boundaries are legal boundaries. We acknowledge that the law has a “time lag”. Due to the requirements of legal stability (giving stable expectations to the market), many laws lag behind emerging things. However, the law will also provide relief. After approval by the National People's Congress or the Standing Committee, some laws can be suspended in certain regions or fields. Well, whether the plans of the municipalities directly under the Central Government have been approved by the National People's Congress or the Standing Committee of the National People's Congress, it is currently shown that no matter how the local government plans, they must be explored and tested under the existing legal framework. Based on this, we can conclude that the Shanghai Data Plan did not give the green light to second-level NFT transactions and exchanges, nor did it “approve” the digital sale of assets such as real estate on the chain. 2. Digital NFT can be incorporated into the “cultural digitalization” framework. It is worth supporting “cultural digitalization” as a national strategy. China has a rich cultural heritage and rich IP resources, and should be thoroughly explored. In recent years, digital collections have risen to prominence, passing on national style to a new generation, and loved by people all over the world. Sister Sa supports the export of China's outstanding culture to the digital world. Currently, the NFT method is used to fix property rights in copyright, and the compliance path is expected to be smooth. Apart from the cultural industry, simply speaking of NFTs as non-homogenized tokens, frankly speaking, their significance is limited. Technology serves the real economy, and the cultural industry is also part of the real economy. Science and technology serving the cultural industry is the meaning of today's society. Currently, the digital NFT industry is mixed. There is a trend of “bad money driving out good money”. Companies with big ambitions have opened a secondary market and are linked to foreign public chains and transactions. To domestic users, buying an NFT means buying a financial product that can add value. As prices rise and fall in the secondary market, a K line is formed to cut the leeks. What's more, in a sensitive consumer community...

1498d ago01区块链#01 Blockchain

Illegal operation? USDT Criminal Involvement Analysis

Recently, while communicating with some friends in the cryptocurrency industry, we discovered that their determination of the nature of USDT is different from that of our country's criminal justice practices. In order to avoid the legal risks brought about by this trend, this article will sort out the criminal benefits and monetary nature of disrupting the financial management order, and analyze the criminal possibilities involved in engaging in USDT exchange business. The status of foreign currencies in China's criminal law According to some friends in the currency industry, our country's laws only protect the fiat currency value of RMB; other countries' fiat currencies have no legal significance. Based on this understanding, virtual currencies that anchor foreign currencies are naturally not likely to endanger China's financial management order. Unfortunately, this is not the case with our laws. According to the provisions of Article 7 of the “Interpretation of the Supreme People's Court on Certain Issues Concerning the Specific Application of the Law in Trial of Cases of Counterfeiting Currency”: “'currency' referred to in this interpretation refers to renminbi and foreign currency that can circulate or be exchanged in the domestic market. The currency denomination shall be calculated in RMB, and other currencies shall be converted into RMB using the foreign exchange rate announced by the State Administration of Foreign Exchange at the time of the incident.” It can be seen from this that when evaluating currency crimes in China, the scope of recognition of fiat currency covers foreign currencies, which creates a legal risk of stablecoins anchored to foreign currencies. Analysis of the nature of USDT USDT is the Chinese name “Tether”. It is a digital currency issued by Tether. Tether promises that USDT and US dollars can be exchanged 1:1, that is, every time Tether issues a USDT coin, its company account will deposit 1 US dollar as a security deposit, which has the characteristics of a stable exchange. However, it is also because of this stability that Sister Sa's team believes that the characteristic of being one-on-one linked to the US dollar makes USDT have certain fiat characteristics and financial attributes. As far as the specific circulation of USDT is concerned, USDT has been used as a settlement currency by many foreign virtual currency exchanges, and it has the objective effect of replacing fiat currency as a pricing standard. In our country, individuals have a limit of 50,000 US dollars a year to exchange foreign exchange, but individuals can bypass foreign exchange controls by exchanging USDT at overseas exchanges, which may infringe on the financial management order. Overall, USDT is a virtual currency that is issued by an unofficial entity, has the nature of fiat currency, and can circulate as an alternative to fiat currency. The criminal legal risk of USDT exchange business is based on the above discussion. Sister Sa's team believes that engaging in USDT exchange business in China may constitute an illegal operation crime as stipulated in section 225 of the Criminal Law of the People's Republic of China. Items 3 and 4 of this provision stipulate: “Whoever violates national regulations and disrupts the market order is serious shall be sentenced to fixed-term imprisonment of not more than five years, and a fine of not less than one to five times the illegal proceeds; if the circumstances are particularly serious, the penalty shall be at least five years in prison, and a fine of not less than one to five times the illegal proceeds or forfeiture of property: (3) Anyone who illegally operates securities, futures, or insurance business without the approval of the relevant competent state department, or illegally engages in fund payment and settlement business; (4) Other serious disruptions The illegal operation of market order.” As mentioned above, USDT has the nature of a fiat currency, and the exchange business is often linked to the fund settlement business, and the possibility of replacing fiat currency circulation is also easily covered by the above underwriting provisions. Sister Sa's team believes that the performance of the USDT exchange business is easily compatible with the illegal operations listed in the crime of illegal operation. Furthermore, as far as “violating national regulations” is a prerequisite for the crime of illegal business, Sister Sa's team previously believed that the “national regulations” that were more likely to be applied by the investigation authorities were Document No. 94 issued in 2017. However, according to the provisions of the “Notice of the Supreme People's Court on Matters Relating to Accurate Understanding and Application of “State Provisions” in Criminal Law, acts that violate local regulations or departmental regulations cannot be deemed to be a “violation of national regulations.” Therefore, we believe this is the key to criminalizing the USDT exchange business. However, Article 22 of the “People's Bank of China Law” revision draft published on October 23, 2020 broke this criminal idea: “No entity or individual may produce or sell tokens or digital tokens to replace the circulation of RMB in the market.” Combined with the fact that the “People's Bank of China Law” was promulgated by the Standing Committee of the National People's Congress, its level of effectiveness has reached the standard of “national regulations” in criminal law. The USDT exchange business is an act of aiding the sale of tokens and has the potential to replace the circulation of fiat money. It is no longer a problem for practitioners who operate in this way to “violate national regulations” on the precondition that they are guilty of illegal business. At the end, the criminal risk of USDT exchange business is becoming more and more obvious, and the criminal path for illegal operations is becoming narrower. It basically constitutes a criminal dispute...

2122d agody zhang#USDT #laws

What do you think about central bank digital currency and anti-money laundering?

The Ministry of Commerce mentioned in the “Comprehensive Pilot Plan for Deepening Innovation and Development of Trade in Services” issued on August 14 this year: Digital RMB pilot projects will be launched in Beijing-Tianjin-Hebei, Yangtze River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, and pilot regions where conditions are available. Just a few days ago, the Shenzhen Luohu digital yuan red envelope campaign officially came to an end. Chinese digital currency launched its “first shot” in Shenzhen. In the end, 4,7573 people successfully received the 10 million yuan red envelope rain. This is also the first time that digital yuan has been opened to the public on a large scale At the beginning of this year, six central banks, including the Bank of Japan, the European Central Bank, and the Bank for International Settlements, set up a fiat digital currency (CBDC) working group; since then, with the COVID-19 pandemic sweeping the world, all countries have accelerated financial system research on digital currencies. By March, the Federal Reserve had signed currency swap agreements with nine central banks, including South Korea, Australia, and Brazil. China's digital currency research is at the forefront of the world, but this time they are all excluded. These situations, which spread the “digital currency Cold War” atmosphere, have all promoted the gradual implementation of China's fiat digital currency (DC/EP). However, one question I want to discuss in this article is, what impact will the slightly rapid pace of fiat digital currency issuance have on China's anti-money laundering regulations? We all know about the introduction of the problem. The official determination of China's private digital currency is generally: it is thought that it can easily breed problems such as capital flight, corruption, and underground economy; price fluctuations are large, making it difficult to perform a value scale function; due to its concealment and anonymity, it is easy to cause crime when used as a limited means of payment or investment. Five ministries and commissions including the Central Bank of China issued the “Notice on Preventing Bitcoin Risk” (hereinafter referred to as the Notice) in 2013, and the “Notice on Preventing the Risk of Token Issuance and Financing” (hereinafter referred to as the Notice), which was jointly issued by relevant departments again in 2017, can be seen. At the same time, in China's central bank's announcement to implement digital currency (DC/EP), it is believed that such a digital currency is beneficial to meet regulatory requirements such as anti-money laundering and anti-terrorism. Why exactly did the exact opposite result occur is explained as follows. The obvious difference between the two is that they are issued in different ways. Central bank digital currencies follow the “central bank-commercial bank” binary framework, which is actually consistent with how banknotes are issued and used. Choosing a dual system not only takes into account the problem of avoiding higher DC/EP credit levels than bank deposits, leading to financial disintermediation, but is also an inevitable requirement brought about by large amounts of throughput. However, this is different from the decentralized characteristics of Bitcoin and Ethereum; in fact, it is a centralized management model. Based on this, the DC/EP digital wallet design can arrange grading and limit limits. For example, lower-level wallets may be used for daily micropayment needs; accounts that have been authenticated and verified with electronic currency assets can obtain higher quotas and permissions. Different usage methods. Specifically, the digital currency uses a “one coin, two banks, and three centers” architecture as a method that does not rely on a specific transaction medium or payment channel. “One coin” refers to DC/EP tokens guaranteed by the central bank, “two banks” refer to the central bank's issuing bank and the bank bank bank's bank bank, and “three centers” refer to registration centers, certification centers, and big data analysis centers. For the “three centers” that guarantee DC/EP distribution and circulation technology, the registration center is responsible for recording the registration of the entire distribution, transfer, and return process; the certification center is responsible for centrally managing the identity of DC/EP users, which is to guarantee the anonymity of transactions; and the big data analysis center actually satisfies regulatory requirements for anti-money laundering and anti-terrorist financing through big data analysis of payment behavior. This is also a trade-off between anonymous transactions and anti-money laundering regulations. Anti-money laundering, tax evasion, and anti-terrorist financing is carried out through big data. Although ordinary transactions are anonymous, big data can be used to identify some behavioral characteristics, thereby locking down real identities. Specific examples include telecom fraud. The identification characteristic is that a large amount of scattered money is often collected in one account, then suddenly and quickly scattered and disappeared into many accounts. After big data is identified and locked down, it is possible to trace back to the source and find criminals. Technical advantages of traceability Sister Sa analyzed the relevant case in her previous article. The plaintiff fixed the electronic evidence by fixing a trustworthy timestamp, which in turn confirmed the authenticity of the evidence. In fact, at a time when the Internet is booming, the collection and use of electronic evidence is also receiving more and more attention from the courts. And the technical advantage of having its own timestamp is an inevitable part of the digital currency system. Every penny comes with detailed transaction information from birth, including transaction time and counterparty, etc. No matter how mixed up, it can be traced back to the roots. So with...

2128d agody zhang#blockchain #Digital yuan

Where are DeFi platforms at risk?

Recently, DeFi projects have been booming and have become a hot topic in the global currency industry. Up to now, the service scope of DeFi projects has covered fields such as credit payments, lending, decentralized exchanges, and stablecoins. Although most platforms that operate DeFi projects are registered outside of mainland China, this does not mean that such platforms are not subject to Chinese criminal law. The purpose of this article is to introduce the criminal legal risks of DeFi lending projects in China and provide ideas for the compliance and development of cryptocurrency platforms. DeFi Lending Project Overview The text meaning of DeFi refers to decentralized finance, which corresponds to centralized finance CeFi. Common DeFi projects include MakerDAO, Uniswap, Pound, Aave, etc. In a common DeFi lending model, lenders can pledge their digital currency to the platform. The platform pays them stablecoins or other assets according to a smart contract. After the contract period expires, the lender returns the borrowed currency in exchange for collateral assets. Take MakerDAO as an example. The platform signs a DeFi agreement with users to provide them with DAI, a stablecoin anchored to the US dollar as a loan, while the lender needs to provide tokens such as ETH with 150% or more value as collateral and consideration. When the value of the collateral token is too low, the platform will liquidate the collateral to maintain a stable capital flow. Also, it is worth mentioning how a pound platform operates a DeFi lending project. In addition to general interest income, a pound will distribute governance tokens to users as rewards, and users can exercise part of the power of the decentralized platform through governance tokens. Judging from the results, governance tokens have also attracted the entry of a large number of assets, making a pound monopolize funding in the field of decentralized finance. The essence of criminal risk analysis is that most DeFi projects are replications of traditional financial services in the blockchain field, and the act of running DeFi lending projects on platforms itself is the loan business of traditional financial institutions. Liquidity pools formed as a result of DeFi lending projects and stablecoin exchange channels anchored to fiat currencies are examples of the platform's capital payment and settlement business. According to the provisions of Article 225 (3) of the Criminal Law of the People's Republic of China, a platform illegally engaging in fund payment and settlement business without a financial license may constitute a crime of illegal operation. In line with the provisions of Article 3 of the “Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Certain Issues Concerning the Applicable Law in Handling Criminal Cases of Illegal Payment and Settlement of Funds and Illegal Foreign Exchange Trading”, the criminal amount for illegally engaging in fund payment and settlement business is the amount of illegal operation of 5 million yuan or more, or the amount of illegal proceeds of at least 100,000 yuan. Considering that platforms that operate DeFi lending projects usually have large capital volumes, once a case is opened and investigated by the judicial authorities, it is difficult for the platform and controller to break through in determining the constituent elements. Can domestic laws control it? Some DeFi platforms think that their place of registration or business is overseas, and will not be adjusted by domestic laws and regulations. However, according to the provisions of China's Criminal Law on jurisdiction, the platform still has risks in the following situations: first, according to the territorial jurisdiction of section 6 of the Criminal Law, if the place of business is in the country or where the result of the crime occurred, China's criminal law should be applied; second, if the management of the platform is of Chinese nationality, China's criminal law may be applied according to the personal jurisdiction provisions of section 7 of the Criminal Code; third, if the customer using the platform is of Chinese nationality, China's criminal law may be applied according to the provisions of section 8 of the Criminal Code. Furthermore, it is important to note that in determining the nationality of users, platforms must not simply use the inability to access the domestic Internet as evidence that the platform is not open to domestic users. Generally speaking, in judicial practice, operators are required to fulfill their duty of careful and diligent review. For operators engaged in blockchain business, determining whether users use a VPN to log in is a very simple matter. Therefore, if the platform does have a large number of users using VPNs, the operator subjectively at least indirectly intended. Extend and expand some blockchain platforms do not directly operate DeFi lending projects, but instead provide DeFi platform interfaces. We believe that this kind of behavior cannot avoid criminal liability. Once the actions of a third party DeFi platform are found to be illegal and criminal, as an industry insider, the subjective circumstances of the platform providing the interface will be deemed to be known or should be known. While providing an interface, there is often a transfer of benefits between the two platforms. According to this, platforms that do not directly operate projects may also be identified as aiding offenders in illegal and criminal activities by providing an interface. At the end, decentralized finance with blockchain technology can control assets in the hands of private users through keys, compared to...

2139d agody zhang#DeFi #laws

What kind of model of virtual currency transaction involves the crime of illegal operation?

Recently, friends in the virtual currency industry sent private messages from home and abroad asking: In China, which virtual currency trading models are treated as illegal business crimes? Sister Sa gave a brief reply on this question. Please be sure to pay attention to the red line of the law and not test the law by yourself. There aren't many legal models, but there are. From the perspective of existing laws and regulations and judicial practice, the legal characterization of Bitcoin as a “specific virtual product” has not changed. Sister Sa believes that the Civil Code also allows Chinese people to hold bitcoins. This is a prerequisite for virtual currency to still have room to survive in China. Currently, there are two legal business models involving virtual currency. The first is the virtual currency wallet business, that is, maintaining the security of virtual currency, providing solutions to prevent hacker attacks, etc.; the second is OTC, which exchanges coins for coins. Since these two models are legal, it is legally acceptable to provide information brokering services or other technical services for these two models. However, providing value-added services for wallets, such as “regular interest,” is not permitted by our country's laws. The reason is that the 9.4 announcement denied the financial attributes of virtual currency, so any financial service involving virtual currency is generally suspected of being illegal, but to a different extent. USDT\ USDC is likely to be recognized as a “fiat currency” Sister Sa chatted with several prosecutors and judge friends. There is a consensus that “foreign money is also fiat currency”. There is a legal basis for this; let's not go into detail. Now we are concerned about whether stablecoins such as USDT are actually cryptocurrencies. From an administrative law perspective in the strict sense of the term, of course, a virtual currency anchored to the US dollar cannot be treated as a fiat currency. However, from a substantive perspective, one-on-one anchoring the US dollar has liquidity and payment and settlement functions, so it is likely that USDT will be treated as a foreign currency in the field of criminal law. Therefore, any counterfeiting business using stablecoins (in violation of the Foreign Exchange Administration Regulations) may be deemed a crime of illegal operation in violation of section 225 of the Chinese Criminal Law. Digital currency lending issues In July 2019, the Supreme Law, the Supreme Prosecution, the Ministry of Public Security, and the Ministry of Justice jointly issued “Opinions on Certain Issues Concerning Handling Criminal Cases of Illegal Lending”, which summarizes the act of violating national regulations, without approval from the supervisory authorities, lending funds 10 times within 2 years to an unspecified number of people, with interest exceeding 36% per annum (recent regulatory revisions, now 15.4% annualized) is illegal usury lending, suspected of illegal operation. Due to differences in the legal characterization of virtual currencies such as Bitcoin, mainstream coins such as Bitcoin are “specific virtual goods”; the native token of ICO is “data.” Both have no legal status as “funds.” However, since stablecoins, etc. are directly linked to fiat currencies, and mainstream currencies such as Bitcoin also have mature markets, in practice, there is still a high probability that digital currencies will actually be viewed as “currency,” and issuing various types of virtual coins will also be treated as illegal loans. However, the various native tokens of the Caotai Team ICO will not be treated as currencies; they are likely to be treated as fraud crimes. The virtual currency hedging business described at the end may involve “illegally engaging in futures business.” The quantitative business of virtual currency may be involved in fraud if it colludes with an exchange. ICO itself does not violate the crime of issuing stocks and securities without permission under our country's laws. Source: Lawyer Shaw Sa...

2181d agody zhang#OTC #virtual currency

Is virtual property a property within the meaning of criminal law?

Details of the case Between May 2015 and April 2016, Wang purchased an online game account and password operated by a company illegally obtained by others, and later monetized game equipment and other items in the account for profit through the Internet. During this period, the total amount of game equipment and other items sold reached RMB 69093. On April 29, 2016, Wang was arrested and brought to justice. It was discovered that of Wang's source accounts that sold game equipment and other items, only 10 were lawfully owned by him; the other 60,000 accounts were obtained illegally by others who purchased them. Focus of dispute There are two main points of contention in this case: one is how Wang's act of illegally entering another person's account and selling other people's game equipment should be characterized; the second is how to determine the amount of illegal proceeds in this case, and if it is impossible to determine the amount, how to determine whether the defendant's actions were particularly serious. Since this article mainly discusses the legal nature of virtual assets such as game accounts and game passwords, the following will focus on the first point of dispute. The court ruled that the court of first instance found that defendant Wang violated national regulations and obtained data stored in a computer information system. The circumstances were particularly serious. His actions had already constituted a crime of illegally obtaining computer information system data, and was sentenced to four years in prison and a fine of RMB 50,000 yuan. [Beijing Haidian District People's Court (2017), Beijing 0108, Preliminary Judgment No. 365] After the verdict was handed down, Wang believed that the court of first instance found that the facts were unclear and that the sentence was too heavy, and filed an appeal. After the trial, the court of second instance found that Wang's grounds for appeal were unfounded, so it rejected the appeal and upheld the original judgment. [Beijing No. 1 Intermediate People's Court (2017) Beijing 01 Final Judgment No. 364] Legal Evaluation Although Wang's charges were not questioned during the entire process from the first trial to the second trial, we believe that there is still room for discussion about the characterization of Wang's actions in this case. In judicial practice, there are two main types of adjudication results in such cases: one is to determine that the act constituted a crime of theft, and the other is to determine that the act constituted a crime of illegally obtaining computer information system data. The main reason why these different opinions have arisen is that there are different opinions on the criminal legality of virtual assets such as game account passwords and game equipment involved in the case. Is virtual property property within the meaning of criminal law? Virtual assets refer to information resources with certain economic value stored in the form of data codes in the form of data codes. They mainly have three forms of expression: items, accounts, and money. The game account password in Wang's case is virtual property in the form of an account, while game equipment is virtual property in the form of an item. There are the following three main opinions on the criminal law attributes of virtual property: According to this view, virtual property has the same attributes as physical property in real life, and should therefore be recognized as property. The determination of property under criminal law generally uses the possibility of management, that is, as long as it has the functions of management, value, and exchange, it can be recognized as property. Virtual assets are purchased or created by spending money or time, so they have a certain value; they can circulate in the market, that is, they can be exchanged; once users have virtual assets, they can manage and control virtual assets, so they have the attributes of assets under criminal law. For example, the Beijing No. 1 Intermediate People's Court held this view in Zhang's theft case [Beijing No. 1 Intermediate People's Court (2013) Final Judgment No. 115], arguing that the appellant Zhang, along with Fu XX and Song, hacked into another person's computer system to steal game currency and sell it for profit. Their actions constituted a crime of theft. In terms of property interests, according to property interests, virtual property is a right to an equivalent service provided by a service provider. This view corresponds to claims under civil law. From this point of view, whether it is an account password or game equipment, it is a type of service provided by a game company, and legal users have stable ownership of these services. If virtual property is stolen, the illegal act actually infringes on the operator's possession of the property right to provide services, and users can claim recovery from the service provider in accordance with the service agreement. This view was adopted in Reference Case No. 57, Gu's theft case, which was discussed and approved by the Shanghai Higher People's Court Judicial Committee on May 5, 2017. In this case, the defendant stole not the user's game coins, but the game company's game coins. The court found that the defendant carried out acts such as stealing game coins and selling them for profit for the purpose of illegal possession, infringing on the game company's property rights and interests. Their actions had little impact on the normal operation of online games and computer systems, and constituted a crime of theft. According to this view of non-property, although virtual property is called property, it is traditional as stipulated in criminal law...

2195d agody zhang#cryptocurrency #Bitcoin

The origin of the coin or the flaw in the wallet business legal risks have surged

In an earlier push, we learned about the legal boundaries of virtual currency. However, there is a legend in the industry that virtual currency wallets are legal in mainland China and can be used arbitrarily. However, things are not as simple as you might think. Due to flaws in the origin of the coins, the legal risks of the wallets themselves have suddenly increased. Wallets or blockchain technology providers can also be accomplices of lawbreakers. To prevent good intentions from acting blindly, we're writing today's article to share with you the following key points: Helping someone sexually or aiding a criminal? If the source of the digital asset or the upstream business is flawed, is the blockchain digital wallet helping the upstream business a harmless act of sexual assistance or should the offender be punished? First, let's take a look at these two concepts. Neutral helping behavior, as the name suggests, is unbiased, yet neutral behavior plays a helping role. Academically, according to Professor Zhou Guangquan, sexual aiding refers to everyday acts that do not appear to be criminal offenses, but actually help criminal activities. Such acts are carried out to meet the general needs of social life, and have characteristics such as routine, substitutability, anonymity, and helpfulness. Due to the everyday nature of sexual aiding behavior, the risks it causes are generally permitted by law and regulations, so it cannot be evaluated as a criminal act. The antithesis of aiding is the act of providing material or moral support for the execution of a criminal act. This act of helping is against the interests of the law and should be evaluated as a crime. From the perspective of objective attribution theory, acts of sexual assistance that simply provide technical support are likely to have no risk of strengthening and promoting them not permitted by law, and it is impossible to determine that the perpetrator has a deliberate subjective mentality to establish an aiding offender. Under this theory, the perpetrator can only be blamed if he has a special understanding of the offending act and has gone beyond the maximum freedom of business activity. However, in current practice, the distinction between neutral business behavior and aiding the offender is still mainly subjective, that is, as long as sexual help the perpetrator has a deliberate mentality, is aware of the offending act, and actively helps or allows illegal acts to occur, this act has broken through the boundary of neutrality and constitutes aiding the offender. The main purpose of the blockchain wallet business is to help other virtual currency businesses operate better. Generally, it is a neutral business act. Relevant technicians are practitioners with neutral business practices. As long as these workers act in accordance with technical regulations and do not recognize or help upstream defects, even if they cause risks, they are socially equivalent, and should be permitted by law and regulations. However, once a technician helps an upstream offender, it is a deliberate mentality, and the technical support behavior of blockchain wallets is no longer a neutral business act; it should be established to help offenders. For example, in Mao Jie and Xiao's fund-raising fraud case ((2017) Anhui 0104, No. 577), Mr. Xiao knew that Mao Jie had committed an illegal fund-raising act and still built a platform and provided a place for him. This act can no longer be considered a neutral business act; it should be deemed a crime. How do you determine intent? It is an intentional crime if you know that your actions will have harmful consequences for society, and want or allow such consequences to occur, thereby constituting a crime. Intent is made up of two factors: the cognitive factor and the will factor. Cognitive factors require the perpetrator to know that their actions will cause harm to society. Willful factors mean that they still hope or allow harmful results to occur on the basis that the factors of understanding are established. Intent is divided into two types: direct intent and indirect intent. The difference between the two is mainly the difference in intentional factors. Direct intent is a mentality of active pursuit of harmful consequences; indirect intent is a laissez-faire attitude towards the occurrence of harmful consequences. In practice, practitioners often ignore indirect intent, thinking that as long as there is no “direct intention” or “out of good faith,” there is no problem. In fact, as long as harmful consequences are allowed to occur, they may be held accountable for indirect intent. According to this, if practitioners in the blockchain wallet business recognize that there is a problem with the origin of digital assets or that the upstream business carried out by others is not permitted by law, and still provide technical support to help them carry out activities such as storing and trading digital assets, the technology provided by the technology practitioners will lose neutrality. If another person commits a crime, the technical practitioner establishes an aiding offender for the corresponding crime. How to distinguish indirect intent from overconfident negligence? In judicial practice, it is very easy to confuse the line between indirect intent and overconfident negligence. Overly confident negligence, also known as “conscious negligence,” refers to a form of responsibility where the perpetrator anticipates that his actions may cause harm to society, but is able to avoid such an outcome due to carelessness. The mistake of being too confident...

2203d agody zhang#laws #wallets

If you want to know the boundaries of enterprise data rights, see the Data Security Act

At a time when the “Data Security Law” (draft) and the “Financial Data Security Data Security Classification Guidelines” (draft submitted for review) were disclosed, the issue of data rights boundaries once again sparked a heated discussion in academia and practice. Today, let's just talk about the rights enterprises enjoy in data processing, based on classic cases. Case facts: Mubao Company set up an online trading platform for all kinds of merchants to sell their own products. At the same time, Mubao has also developed a “business consultant” for retail e-commerce data products using transaction information between merchants and consumers. The “Business Counselor” has different sections such as “Industry Market”, “Product Store List”, “Search Term Analysis”, “Buyer Group Portrait”, “Seller Group Portrait”, and “Search Crowd Portrait”. The specific display content is predictive, exponential, and statistical data information in various forms such as trend maps, rankings, and proportion charts. Data information such as the above trend chart provides an important basis for marketers' market predictions and marketing strategy adjustments. In response to this, Mubao sold the “Business Counselor” separately into the standard market price version and the professional version. It is known that the cumulative number of service providers for this product has exceeded 20 million, and the number of monthly service providers exceeds 5 million. Mubao clearly states the “User Usage Specification” in the “Software Service Agreement” as follows: it is prohibited for other individuals or businesses to sell, resell, or copy, or develop the use rights granted by Mubao; it is prohibited to sell, rent, lend, or otherwise provide third parties with the right to use; it is prohibited to disclose, transfer, sell, license, or otherwise provide to a third party for use by any third party without Mubao's permission. Who would have guessed that an information technology company developed a “certain business consultant crowdfunding” website to promote “a certain mutual aid platform” to incite and induce Mubao users who have ordered Mubao's “Business Counselor” products to download the “Mutual Aid Platform” client and obtain commissions through this software to share, share, and rent out their “Business Counselor” product sub-accounts. In addition, an information technology company organizes “a mutual aid platform” user to rent a “business consultant” product sub-account of Mubao company, and an information technology company uses the “lessor” sub-account for the “renter” to view the “lessor” product data content, provide technical assistance, and profit from it for the “renter” by remotely logging in to the “lessor” computer, etc. Mubao Company believes that the above actions by an information technology company have substantially replaced Mubao's data products, directly leading to a decrease in orders and sales of Mubao's data products, greatly harming Mubao's economic interests. At the same time, it has maliciously disrupted Mubao's business model and seriously disrupted the competitive order of the big data industry. Therefore, a lawsuit was filed with the court. Dispute focus In this case, during the litigation process, an information technology company questioned Mubao's data collection practices and Mubao's product rights after processing the collected information. The classic aspect of this case is that market players can learn from adjudication documents that the judicial authorities are correct about how to collect information from Internet users, and whether Mubao Company has legal rights and interests in the “Business Counselor” data product. Case analysis information is the content of data, and data is the form of information. Although the data content of the data products involved in the case comes from raw data collected by Mubao Company, this raw data is an expression of how Internet users have externalized behavioral traces such as browsing, searching, collecting, purchasing, and trading into numbers, symbols, text, and images. The practical value of raw data lies in the content of network user information contained in it, not in its form. Because Internet users have the right to secure and protect their user information according to law. In this case, whether Mubao Company acted improperly during the formation of the “Business Counselor” data product should mainly consider whether its collection and use of raw data information complies with relevant laws and regulations, and whether it infringes on the information security of network users. First, according to the relevant provisions of the “Cybersecurity Law of the People's Republic of China”, when collecting and using network user information, network operators shall bear corresponding security protection obligations according to the different types of information. Article 22 of the Cybersecurity Law stipulates, “Where a network product or service has the function of collecting user information, its provider shall specify and obtain consent from the user; where personal information is involved, it shall also abide by the provisions of this Law and relevant laws and administrative regulations on the protection of personal information.” Article 76 of the Cybersecurity Law stipulates that personal information refers to all kinds of information recorded electronically or by other means that can identify the individual identity of a natural person alone or in combination with other information, including but not limited to the name, date of birth, and body of a natural person...

2237d agody zhang#blockchain #data security

Criminal Law Amendments Solicit Comments or Amend Provisions on Crimes of Illegal Absorption of Public Deposits and Fund-raising Fraud

On the 11th Amendment to the Criminal Law, comments are still being sought as scheduled. Judging from the content of the revisions, part of it is necessary to fulfill China's international legal obligations — in the economic and trade agreement between China and the US, there was a special agreement on the penalization of intellectual property rights. In response to this, the eleven-mile amendment has also been adjusted accordingly. However, Sister Sa only cares about one hectare of her own land. Today, we are not happy with the amendments to the regulations on the crime of illegal absorption of public deposits and the crime of fund-raising fraud. The crime of illegally absorbing public deposits was opened to section 176 of the Criminal Code. Whoever illegally absorbs public deposits or disguised collection of public deposits and disrupts financial order shall be punished with fixed-term imprisonment of not less than three years or criminal detention, and a fine of not less than 20,000 yuan or not more than 200,000 yuan; if the amount is large or there are other serious circumstances, a fixed-term prison sentence of not less than three years and not more than fifty thousand yuan and not more than 500,000 yuan. This provision is to be amended to: Anyone who illegally absorbs public deposits or disguises the financial order shall be punished with fixed-term imprisonment of not more than 3 years or criminal detention, and a fine; if the amount is huge or has other serious circumstances, the penalty shall be fixed-term imprisonment of not less than 10 years and a fine; if the amount is particularly large or there are other particularly serious circumstances, the penalty is not less than 10 years of fixed-term imprisonment and a fine. Note that there are two changes: First, the amount of fines has gone from “a few” to “none,” that is, the maximum amount of fines was 200,000 and 300,000 respectively, but now the fines can be raised or lowered as appropriate. As an old lawyer who has worked for more than ten years, Sister Sa can judge that in future cases, an increase in fines is more likely to happen. As for how much, it is not easy to guess now; there will be judicial interpretations or practical practices in the future. Second, the “extremely large or other particularly serious circumstances” section has been added. In other words, the period of non-smoking sentences mentioned in the industry has risen from a maximum of 10 years to 15 years. In other words, on the basis that the old law divided the crime into two sentences, a sentence file was added. We think this is mainly related to the rise and fall of internet finance in recent years. P2P online lending platforms can easily be involved in hundreds of millions of dollars, or even 10 billion dollars, while the highest-level criminal threshold in the old law was 5 million yuan. Faced with cases at the level of 100 million yuan, the judicial authorities' crackdown measures are still those methods, and have not been strengthened accordingly. In other words, the amount involved in the case ranged from 5 million to 10 billion, and the sentence file was the same. In this way, it is clearly impossible to distinguish the “length of sentence to be imposed” for the amount of the different crimes. The draft adds 10-15 years to this file, which is set for situations where the amount of money involved in the case is particularly large. Based on Sister Sa's experience, it is speculated that the extremely large amount of money for this crime may be set at 50 million yuan. If yes, it's actually impossible to tell the difference between the 100 million yuan and the 10 billion yuan platform boss in the online lending platform case, really “the sentence that should be imposed.” Other particularly serious circumstances, Sister Sa believes, are likely to be incidents such as the death of fund-raising participants. Everyone involved in the online lending platform is requested to pay attention to maintaining the mental state of the fund-raising participants to prevent tragedies. In terms of prison terms, it has been increased to “10 years or more fixed-term imprisonment”; the maximum term of imprisonment is 15 years. In other words, the crime of illegally absorbing public deposits. The future sentence will be raised from a maximum of 10 years to 15 years, and the 10 billion online lending platform is expected to “enjoy” this treatment. For the crime of fund-raising fraud, see section 192 of the Criminal Code. “If the amount is illegal fund-raising using fraudulent methods for the purpose of illegal possession, the penalty shall be fixed-term imprisonment of not less than five years or criminal detention, and a fine of not less than 20,000 yuan and not more than 200,000 yuan; if the amount is huge or has other serious circumstances, the penalty shall be fixed-term imprisonment of not less than ten years and not more than ten years and not more than 500,000 yuan or less; if the amount is particularly large or has other particularly serious circumstances, the penalty is not less than ten years of fixed-term imprisonment or life imprisonment of not less than 50,000 yuan and not more than 500,000 yuan or less Confiscation of property”. It is proposed to amend it to “use fraudulent methods to raise funds illegally for the purpose of illegal occupation. If the amount is large, the penalty is 3 to 7 years in prison and a fine; if the amount is huge or there are other serious circumstances, the penalty is not less than 7 years of fixed-term imprisonment or life imprisonment, and a fine or forfeiture of property.” There are three changes: First, the specific amount of the fine has been removed. The reason analysis is the same as section 176 of the Criminal Code for the crime of illegally absorbing public deposits. Second, the minimum sentence was changed from criminal detention to three years in prison. Currently, the minimum sentence for fund-raising fraud is criminal detention; there is no need to go to a detention center or prison to carry out the rest of the sentence. Since the death penalty was abolished under section 199 of the Criminal Code for the crime of fund-raising fraud, there have been voices in the industry saying, “It's not strong enough; the death penalty has been reinstated. But the legislature withstood the pressure. However, in the face of the rampant crime of fund-raising fraud, it is still necessary to deal a severe crackdown. In this way, the draft directly upgrades the minimum sentence, which is also considered a solution. Third, a particularly large amount of criminal records has been removed. Compared to section 176 of the Criminal Code, illegal absorption...

2241d agody zhang#amendments #laws