Has accepting bribes with cryptocurrency become a new tool for official crimes in China?

FX168 Financial News Agency (Asia Pacific) reported that Xiao Sa's lawyer team discussed in a WeChat public account article on Wednesday (September 11) whether cryptocurrencies can be used for bribery in China. The team said that Chinese law clearly stipulates that cryptocurrencies are not legal tender, but their property attributes and value make them the object of property crimes in judicial practice, and thus can constitute job crimes.

In the process of handling cases involving currency, lawyers of Sister Sa's team found that a fact that is difficult to ignore at present is that case handlers who have not been exposed to currency circle cases may regard the currency circle as a flood and beast; once they have handled related cases, they often start to learn relevant knowledge, and rush to handle currency circle cases when they appear, and even some people choose to take the initiative to find cases.

"So, can cryptocurrencies be used for bribery? If Chinese state agency staff take advantage of the characteristics of encrypted assets that are difficult to regulate, easy to transfer, and have huge value to accept bribes, can it be identified as traditional job crimes such as bribery when China has made it clear that cryptocurrency is not legal tender?" The article asked.

The official who accepted 6,000 bitcoins in bribes was lucky to have committed the crime early

Source: WeChat official account

The Sajie team pointed out that, as mentioned above, since the technical characteristics of cryptocurrency itself make it difficult to investigate and manage, it is naturally a very convenient tool for money laundering and asset transfer. In theory, it can also be used for bribery and other duty crimes.

However, in China's judicial practice, there have been very few cases of bribery or duty crimes involving cryptocurrency. The Sajie team believes that this may be due to the fact that cryptocurrency itself has a certain technical threshold for use, making it "inconvenient" for most leading cadres to use; on the other hand, the price fluctuations of Bitcoin and Ethereum themselves are large. If one is unlucky, the currency given to the "leader" will depreciate sharply, which is also embarrassing.

However, in the history of the development of encrypted assets in China, there is a very well-known "pioneer": Xiao Yi, former vice chairman of the Jiangxi Provincial CPPCC and secretary of the Fuzhou Municipal Party Committee, is rumored to have received bribes of up to 6,000 bitcoins.

From 2017 to 2021, Xiao Yi used his power as secretary of the Fuzhou Municipal Party Committee to get acquainted with Lin, the actual controller of Genesis Technology Co., Ltd. and a big boss in the currency circle, and carried out a large wave of power realization. Specifically, Xiao Yi used his power to introduce Genesis Technology Co., Ltd. controlled by Lin as a key enterprise in Fuzhou, claiming to "build the largest single data center in Asia", but in fact he acquiesced to Genesis Technology Co., Ltd. secretly building a huge "mine" in Fuzhou for Bitcoin mining. Not only that, Xiao Yi also provided Genesis Technology Co., Ltd. with a large amount of financial subsidies, financial support and the most important power guarantee.

The Sajie team continued that Lin also reciprocated by "giving" a large amount of Bitcoin (rumored to be about 6,000) produced by mining to Xiao Yi. During the first trial, it was found that Xiao Yi had accepted bribes of up to 125 million yuan. Based on this, on August 22, 2023, the Hangzhou Intermediate People's Court of Zhejiang Province publicly sentenced Xiao Yi, former member of the Party Leadership Group and Vice Chairman of the Jiangxi Provincial Committee of the Chinese People's Political Consultative Conference, to bribery and abuse of power, and sentenced the defendant Xiao Yi to life imprisonment for the crime of accepting bribes. Unfortunately, the details of Xiao Yi's bribery cannot be seen from public channels in this case. It is only mentioned that "the illegal acceptance of property totaled more than 125 million yuan."

So why did the Sajie team say that it was fortunate that the case was sentenced early? According to Article 388 of the Chinese Criminal Law, if the amount of bribery is more than 3 million yuan and causes particularly serious losses to the interests of the state and the people, the death penalty can be imposed. Assuming that Zeng Yi did accept 6,000 bitcoins, according to today's market price, the amount of his bribes has exceeded 200 million yuan. If the price continues to rise, it is likely to exceed 1 billion in the future.

In Chinese judicial practice, it is generally believed that 1 billion is the "lifeline" for Chinese public officials to take bribes, taking two recent cases as examples.

"It can be seen that if crypto assets continue to appreciate, and Xiao Yi continues to accept cryptocurrencies after the appreciation, then the amount of his bribes may be extremely high, even touching the "lifeline," said the Sajie team.

Does accepting only cryptocurrencies as gifts constitute a crime of bribery in China?

The Sajie team wrote: "Although it is rumored that a large part of Xiao Yi's bribes are crypto assets, it is not possible to directly query the exact information from public channels. Therefore, we need to seriously discuss a question: If state officials only accept cryptocurrencies as gifts, does it constitute a crime of bribery in China?"

This first requires solving a problem: Does cryptocurrency have the property attribute of criminal law?

From the current judicial practice, the Sajie team believes that cryptocurrency has the property attribute of criminal law and can be the object of property crime.

According to the Supreme People's Court's Criminal Trial Reference No. 138 [No. 1569] Zhang's robbery case, the Supreme Court held that property includes property and property interests. Whether cryptocurrency has the property attributes in the sense of criminal law depends on whether it has the characteristics of property in criminal law, namely, management possibility, transferability, and value.

(1) Cryptocurrency, the holder possesses, controls, and manages cryptocurrency through passwords and secret keys, and has management possibility;

(2) Cryptocurrency is used to achieve the sale, circulation, and currency exchange between different entities through trading platforms, and has transferability;

(3) The acquisition of cryptocurrency requires the payment of corresponding labor or costs, and has value (including transaction value and applicable value).

Therefore, virtual currency has the general characteristics of criminal property, has the property attributes of criminal law, and is a kind of "property" in the sense of criminal law.

So, does cryptocurrency meet the "property" stipulated by law in the field of duty crimes? The Sister Sa team believes that in judicial practice, it is likely to be interpreted as a kind of "property interest".

In practice, China's definition of "property" in official crimes is very broad. Simply put, anything valuable can become "property" in official crimes. According to Article 12 of the "Interpretation on Several Issues Concerning the Application of Laws in Handling Criminal Cases of Corruption and Bribery" issued by the Supreme People's Court and the Supreme People's Procuratorate, "property" in bribery crimes includes currency, items and property interests. Property interests include material interests that can be converted into currency, such as house decoration, debt relief, etc., as well as other interests that require payment of currency, such as membership services, travel, etc.

"Therefore, although there are no precedents of bribery using cryptocurrencies in practice from public channels (it is rumored that some undisclosed precedents have appeared for public security officials), we believe that crypto assets cannot be a shield for official crimes, and the use of crypto assets as a tool to transfer benefits to state officials can constitute a crime of bribery," the Sajie team explained.

With the popularization and expansion of the scope of application of cryptocurrencies, its role in official crimes has become increasingly prominent. The anonymity and global circulation of cryptocurrency make it a tool for some criminals to bribe and launder money. Although Chinese law clearly stipulates that cryptocurrency is not legal tender, its property attributes and value make it the object of property crime in judicial practice, and thus can constitute a job crime.

In short, the Sajie team reminds the market that crypto assets are not a shield for job crimes. Paper can never cover fire. Even the most covert means cannot leave no traces. Today's third-party blockchain companies can already track more accurately through facial data. Do not blindly "trust" the anonymity function of blockchain.