Common situations and criminal defense strategies for the crime of job embezzlement by senior executives in the cryptocurrency industry

Source: Lawyer Shao Shiwei

Introduction:

According to Wu Shuo Blockchain, the crypto exchange Bybit sued Ms. Ho, who was responsible for paying wages within the company, for abusing her power by transferring a large amount of USDT to an address she secretly owned and controlled. A total of 4,209,720 USDT was transferred, resulting in $117,238.46 being paid into her personal bank account[1].

Take away for investigation; the U.S. Commodity Futures Trading Commission (CFTC) accused Binance and its founder Changpeng Zhao of illegally operating a digital asset derivatives exchange; OKCoin Group founder Xu Mingxing was taken to Shanghai by the Shanghai police because he was involved in a dispute over currency speculation and rights protection. The Weifang Xincun Police Station of the Pudong Branch of the Municipal Public Security Bureau is under investigation; Yang Zuoxing, the founder of Shenma Mining Machinery, was previously arrested by the Shenzhen Procuratorate for the crime of job embezzlement.

< strong>In criminal cases involving executives in the cryptocurrency industry, job-related crimes are often one of the most common crimes.Today, let’s talk about the crime of job embezzlement in criminal law. The behavior of the crime of job embezzlement is that company personnel take advantage of their positions to take possession of the unit's property as their own. This article talks about several typical situations in the currency circle.

01 Situation1. A dispute occurred within the partners, and the shareholders "ran away with their money"

The author has previously received inquiries about an NFT digital collection platform Due to problems such as internal management chaos and uneven profit distribution, the major shareholder misappropriated the company's money and then cut off contact. The small shareholder was detained by the police for fraud due to safeguarding the rights of Shuzang platform users. It is understood that the major shareholder misappropriated the company's money. used to repay his personal loan. Previously, there was information on the Internet that the former COO of the Sallipay ICO project was suspected of job embezzlement.

The subject of the crime of occupational embezzlement is a special subject, that is, "staff of a company, enterprise or other unit", such as digital collection platforms, which are generally available in China For corresponding registered companies, if relevant company personnel are suspected of job embezzlement, they will be subject to the regulations of my country's criminal law. However, as ICO is a token issuance crowdfunding project, the project sponsor often does not have a legal corporate organizational form, but is a loose cooperation alliance, which does not meet the requirements of the criminal subject characteristics of this crime. If the partner has "receipt of money" In situations such as "running away" that infringes on the interests of the team, other rights protection measures need to be adopted.

02 Situation2. The company's senior R&D personnel used technical means to steal the company's virtual currency

The background of the currency circle technicians is more industry-specific. In similar cases, technicians obtained company system management rights by, for example, tampering with company codes, modifying computer software programs, and transferred all the company's virtual currencies to their own accounts.

A programmer from a company in Shenzhen stole the company's virtual currency by tampering with the code, transferred it to a personal address, and then exchanged the centralized token for on-chain tokens, and then He converted it into USDT and deposited it into his BSC Binance Chain wallet, and finally realized the profit of nearly one million on the Binance exchange. In the end, the perpetrator was convicted of job embezzlement by the court and sentenced to 2 years in prison[2].

The characterization of the perpetrator’s behavior involved in the case is a highly controversial issue in such cases. The crimes involved are often identified among crimes such as theft, illegal acquisition/control of computer information system data, and job embezzlement. Among the above-mentioned crimes, the crime of official embezzlement has the highest starting point for sentencing. Therefore, from the perspective of lawyer defense, on the premise that the perpetrator is guilty, defending from the perspective that the perpetrator constitutes the crime of official embezzlement can strive for a lower sentencing.

03 ScenarioThree. Taking advantage of the convenience of one’s position to commit theft

Self-imposed theft is often more common in the company’s financial director, sales director, human resources director, etc. who enjoy the convenience of their position Senior executives of the company. The so-called "convenient conditions" include convenient conditions for supervising, managing, and handling the property of the unit. For example: the financial director falsely reports expenses and purchase costs; the human resources director fictitiously reports the wages of resigned employees, and illegally possesses company property by falsely claiming employee wages; the sales director sells or gives away company goods to others, or accepts Failure to return the payment to the company, etc.

He serves as an operation and maintenance engineer for a company in Shanghai and is responsible for the management and maintenance of the company's Bitcoin mining machines. In 2021, He took advantage of his position of managing and maintaining Bitcoin mining machines to sell the company's Shenma M21S Bitcoin mining machine many times, making a profit of more than 970,000 yuan. He was prosecuted by the public prosecutor in court for the crime of job embezzlement [3].

According to the criminal law, official embezzlement only constitutes a crime if the amount is relatively large. If the crime amount exceeds 30,000 yuan, he shall be sentenced to fixed-term imprisonment of not more than 3 years; if the crime amount exceeds 1 million yuan, he shall be sentenced to 3 to 10 years' imprisonment. In the above-mentioned case, the crime amount of He was less than 1 million, and the sentencing recommendation of the public prosecution agency was 2 years and 6 months in prison.

04 Criminal lawyer defense strategies

< p style="text-align: left;">If a cryptocurrency industry employee is suspected of job embezzlement, based on the actual circumstances of the case, they can defend themselves from the perspectives of the criminal subject, the characterization of the behavior involved, and the amount involved.

In addition, in practice, we must pay attention to the following two difficulties in determining whether to establish this crime:

1. Whether the perpetrator "takes advantage of the convenience of his position"

Using the convenience of his position requires that the perpetrator himself has certain qualifications. authority and control, the convenience of handling certain matters, or the use of one's own rights to influence others to commit misappropriation. Whether they are regular workers, contract workers or temporary workers, they can all become the subject of this crime.

However, if the perpetrator only takes advantage of the convenience of having easy access to the target of the crime at work, and the perpetrator does not have the responsibility to take care of or store the company-related property, it does not constitute a crime. This crime.

2. Whether the perpetrator "illegally took possession of the unit's property as his own"

This is one of the important conditions to distinguish whether the perpetrator commits this crime or other crimes (such as the crime of misappropriation of funds). Whether it is "for the purpose of illegal possession" will be judged from the following perspectives in judicial practice:

(1) Transferring and possessing the company's property and then absconding with the money;

p>

(2) Trying to cover up and destroy the company's accounts;

(3) Subjectively unwilling to repay Or objectively have no ability to repay;

(4) Squandering property;

Subsequently As our country continues to introduce relevant laws and regulations, our country continues to strengthen supervision of blockchain, virtual currency trading and mining, NFT digital collections, etc. Criminal defense must be based on the industry characteristics of the currency circle and an understanding of relevant laws and regulations, so that effective defense can be achieved and the legitimate rights and interests of the parties can be better protected.

[1]Self-stealing analysis of Bybit’s compensation manager: loopholes and improvements in blockchain enterprise financial management https://mp.weixin.qq .com/s/qzaWXud0a3s-SykhDWLlRA

[2] Virtual currency case | Plea guilty and punished for 5 years, defense to 2 years https://mp.weixin .qq.com/s/S527RvsfppP-M5icMyP98A

[3] Case number: A County Procuratorate and Criminal Suit [2021] No. 29