Author: Lawyer Shao Shiwei
On November 20, 2024, the official announced a piece of news. Yao Qian, former director of the Science and Technology Supervision Department and former director of the Information Center of the China Securities Regulatory Commission, was expelled from the party and removed from public office. The notice pointed out that Yao Qian spared no effort to support specific technology service providers for his own selfishness, and was willing to be the "key training target" of the hunters, and used virtual currency to trade power for money.
In recent years, virtual currency has attracted much attention due to its anonymity and decentralization, but it has also become a new tool for certain illegal and criminal acts, including bribery.
Today, let's talk about the legal issues related to bribery using virtual currency.
Although according to domestic policies, virtual currency is only regarded as a "virtual commodity" and does not have the same status as legal currency, the value of virtual currency is undeniable. In the eyes of many people, the economic value of mainstream Bitcoin, Ethereum, Tether, etc. can be used for payment or exchange like "money". Therefore, more cases of bribery using virtual currency may be disclosed in the future.
1. Yao Qian - the first director of the Digital Currency Research Institute of the People's Bank of China
In 2016, the central bank first proposed the goal of publicly issuing digital currency, and launched the prototype research and development of the digital bill trading platform based on blockchain and digital currency, and completed the construction of the first generation of the legal digital currency prototype system. In 2017, Yao Qian was appointed as the first director of the Digital Currency Research Institute of the People's Bank of China, and played an important role in China's early efforts to develop central bank digital currency. In 2018, Yao Jian transferred to the China Securities Regulatory Commission to continue to formulate policies related to blockchain technology and digital assets. In addition, Yao Qian has published a number of papers on digital currency and blockchain technology, laying a theoretical foundation for the development of China's digital currency.
In November 2024, Yao Qian was expelled from the party and removed from public office for serious violations of discipline and law. As an authority in the field of digital currency, Yao Qian's disciplinary violations may undermine public trust in digital currency and affect its acceptance and promotion speed. The case may also further reduce the possibility of my country reconsidering its tough stance on the cryptocurrency market.
2. Xiao Yi - Former Vice Chairman of the Jiangxi Provincial CPPCC and Secretary of the Fuzhou Municipal Party Committee
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 CPPCC, to life imprisonment for bribery and abuse of power.
During his tenure as Secretary of the Fuzhou Municipal Party Committee, Xiao Yi knew that Jiumu Group Genesis Technology Co., Ltd. was engaged in virtual currency "mining" activities, but still violated regulations to provide financial subsidies, financial support, power guarantees, etc., causing major losses to public property and causing adverse social impacts. According to insiders, Xiao Yi is suspected of accepting bribes of more than 8,000 bitcoins during his tenure.
3. Hai Mou - a case handler of a public security agency
The Nanjing People's Procuratorate published a case in May 2024. Hai Mou served as a staff member of a public security bureau. His main responsibilities were to grasp the dynamics of computer information network crimes and investigate network crimes. The defendant Hai Mou used the convenience of the above-mentioned position to obtain the electronic data involved in the case containing Bitcoin information through his subordinate Wu Mou, and sent the data to his friend Ji Moumou (the person in charge and technician of a certain network technology company). Later, Ji Moumou cracked the above-mentioned Bitcoin key and stole some Bitcoins. Hai Mou acquiesced to this behavior. Later, the defendant Hai Mou did not report the investigation in time, but asked Ji Moumou for cash and Bitcoin many times. After the incident, the case-handling unit cashed in the Bitcoin and obtained more than RMB 48.2272 million.
Virtual currency is generally considered difficult to track due to its decentralization and secrecy, and is therefore used by interested parties as a covert means of illegal transactions. However, the following reasons may lead to the discovery and investigation of virtual currency-related behaviors:
1. The openness of blockchain technology
Although virtual currency transactions have a certain degree of anonymity, most cryptocurrencies (such as Bitcoin) are based on blockchain technology, and all transactions will be recorded on the blockchain. Regulators can track the flow of virtual currency transactions by analyzing public blockchain data.
In addition, through blockchain analysis tools (such as Chainalysis), regulators can find clues such as suspicious large transfers and frequent transaction addresses, thereby locking down related accounts.
2. Offline evidence exposure
Related to bribery, there will inevitably be other power-for-money transactions. Once the related persons involved in the case are investigated, the act of accepting property through virtual currency may be exposed.
If the person who receives virtual currency cashes out through OTC transactions, the relevant capital flow may appear abnormal through bank transfers, third-party payment platforms, etc., which will arouse the vigilance of the bank's risk control and anti-money laundering systems. The persons involved in the case may also attract the attention of exchanges or platforms due to frequent transactions or large transfers.
3. Illegal behavior of enterprises or projects
The contracts, fund disbursement records and government support documents involved in virtual currency industry projects may become the starting point of the investigation. As in the case of Xiao Yi, the local government provided financial and electricity support for virtual currency "mining" activities. Such violations are easy to be discovered in corporate or administrative audits.
4. Technological progress and regulatory cooperation
With the development of regulatory technology, the anonymity of virtual currency transactions is gradually weakening. Law enforcement agencies can use technical means to obtain key information through network traffic monitoring, exchange data and other channels. Countries around the world are strengthening regulatory cooperation on virtual currencies, and relevant clues may be provided by international law enforcement agencies (such as Interpol).
Bribery cases usually involve the briber. When investigating the bribee, the specific behavior, frequency and scope of the briber can be found. For example, companies or individuals bribe officials or other relevant personnel in order to obtain improper benefits. Therefore, the relevant bribers will also be implicated and found out. In September 2021, the Central Commission for Discipline Inspection and the National Supervisory Commission jointly issued the "Opinions on Further Promoting the Investigation of Bribery and Bribery Together" with the Central Organization Department, the Central United Front Work Department, the Central Political and Legal Affairs Commission, the Supreme People's Court, and the Supreme People's Procuratorate, which clearly required that bribery and bribery be investigated together, with a focus on investigating and punishing multiple bribery, large bribery, and bribery to multiple people. The "Amendment to the Criminal Law of the People's Republic of China (XII)" has made important revisions to the provisions on the crime of bribery and the crime of accepting bribes, added seven circumstances of heavier punishment for bribery, and further increased the punishment of bribery crimes. In addition to the briber, a large number of groups such as virtual currency acceptors (U merchants) and underground banks will also be implicated.
The "Interpretation on Several Issues Concerning the Application of Laws in Handling Criminal Cases of Money Laundering" which came into effect on August 20, 2024, clearly states that "virtual asset" transactions will be listed as one of the ways of money laundering. It also stipulates that if both the crime of money laundering and the crime of concealment are constituted at the same time, the more serious crime of money laundering shall be convicted and punished.
Lawyer Shao previously handled a case in which a U merchant was suspected of illegal business operations. This was because when a local case-handling unit was handling a case of duty-related crime, it was found that the U merchant's upstream company helped the defendant of the duty-related crime to cash in virtual currency in legal currency, which led to the U merchant being implicated.
Although virtual currency transactions are secretive, as ordinary people, we should realize that we should not take the chance and think that we can escape legal investigation by using virtual currency as payment method. Bribery, whether it is in cash or virtual currency, as long as it involves illegal profit transfer, may violate the criminal law and be suspected of crime.
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