What should be done if the virtual currency involved in the case appreciates or depreciates during the period of seizure?

Author: Lawyer Liu Zhengyao

Introduction

In criminal cases involving virtual currencies, most cases require judicial authorities to determine the amount involved. However, according to the current domestic regulatory policy on virtual currencies, no institution may engage in pricing services for virtual currency transactions. Although judicial authorities now entrust third-party companies to dispose of the virtual currencies involved in the case, most of the disposal is carried out after the court's judgment.

According to Lawyer Liu's practical experience, in the criminal case procedure, it is difficult to determine the value of the virtual currency involved at the beginning. So when the virtual currency involved appreciates or depreciates during the entire criminal procedure, how should the court determine the amount involved in the end?

Lawyer Liu discussed this topic from three aspects: the high volatility of the value of virtual currency, the importance of determining the amount involved in criminal cases, and how to determine the amount involved in criminal cases involving virtual currency.

一 High market volatility of virtual currency

At the moment when Lawyer Liu was typing, the price of Bitcoin had fallen to $93,000. Although analyzing the price trend of Bitcoin is essentially a financial analysis, and as a legal worker, Lawyer Liu's financial knowledge is too superficial; but from a metaphysical point of view, the following judgment seems to be convincing: During the Chinese Spring Festival, the price of the currency does not seem to have been much higher.

(The cryptocurrency world on the sixth day of the Lunar New Year seemed to be all red. Although it reflected a certain traditional festive color, it was simply a tragedy for friends in the cryptocurrency world)

High price volatility is a basic feature of mainstream currencies and even more so non-mainstream currencies (except for stablecoins USDT, USDC, etc.), but friends with a little "legal sense" know that the most basic feature of the law is stability, and they hate "ADHD". The high volatility of virtual currency prices will inevitably bring considerable trouble to the implementation of the law. For example, when the public security organs file a criminal case, the seized virtual currency may be worth only 1 million yuan, but by the time the court makes a judgment, the price of these virtual currencies has climbed to 10 million yuan; or when the criminal case is filed, the market value of the seized virtual currency is 10 million yuan, and the value of these coins has returned to zero when the court makes a judgment (this is a common situation in the currency circle).

If it is the first case above, except for the suspect/defendant, his defense lawyer and family members who are unhappy, everyone else will be happy - for the victim, the refund is guaranteed, and for the public security, procuratorate and court, the motivation to handle the case is more sufficient; but the latter situation will be the opposite: the suspect/defendant, his defense lawyer and family members will be happy, and everyone else will be very uncomfortable, because for virtual currency with a value of zero, it may mean that it no longer constitutes a criminal case.

Two Why is it important to determine the amount involved?

Currently, cases involving virtual currency are mostly concentrated in the fields of economic crimes and crimes that disrupt social management order (such as aiding and abetting crimes). A very important factor in the constituent elements of these crimes is the amount involved. For example, under normal circumstances, if the amount involved is less than 3,000 yuan, it does not constitute a crime of fraud; in pyramid schemes, if the amount involved is less than 2.5 million yuan, a prison sentence of more than five years cannot be imposed (here, Lawyer Liu uses the control variable method in science and engineering experiments and does not consider other circumstances).

In addition, for criminal cases, not only the criminal case filing stage of the public security should be considered, but there are also two subsequent processes of the procuratorate and the court. An unpredictable amount of money involved will make prosecutors and judges who pursue high-quality case handling uneasy, just like Schrödinger's cat.

Therefore, a clear amount of money involved is crucial for the filing, prosecution, trial, and even the subsequent execution of criminal cases.

Three What to do after the virtual currency involved appreciates or depreciates?

Through the above analysis, we know that in judicial practice, one thing that must be done is to clarify the amount involved in virtual currency criminal cases. How to do it specifically?

Currently, there are generally the following ways to determine the amount involved in criminal cases:

One ​​is to be determined by the Price Determination Center. According to the National Development and Reform Commission's "Code of Conduct for Price Determination", price determination in criminal cases can be carried out by price determination institutions (i.e. local price determination centers). Specific methods include: market method, cost method, income method, expert consultation method, etc.; however, according to the "9.24 Notice" ("Notice on Further Preventing and Dealing with the Risks of Speculation in Virtual Currency Transactions"), my country currently does not allow any institution to provide pricing services for virtual currency transactions. Therefore, there is a lot of controversy as to whether the price determination center can determine the price of the virtual currency involved. Lawyer Liu believes that the price determination center is not suitable to participate in the price determination of the virtual currency involved;

Second, refer to the market transaction price. At present, some judicial organs will refer to the virtual currency transaction prices of mainstream virtual currency exchanges (with USDT as the pricing benchmark) to determine the prices of the virtual currencies involved, such as the theft case of Li in the criminal judgment of (2020) Yue 0304 Xingchu No. 2 of the Shenzhen Futian District Court. However, this approach has a flaw: my country currently does not allow virtual currency exchanges to provide services to mainland Chinese residents. So can judicial organs use the pricing services of foreign virtual currency exchanges as an exception? Lawyer Liu believes that of course it is not possible;

Third, the price determination is based on the price appraisal opinions of third-party institutions and the price determination in the judicial appraisal opinions.Although third-party appraisal institutions are different from price determination centers with "official backgrounds", they are still essentially provided by domestic third-party institutions for virtual currency pricing services, which is essentially no different from the pricing services of price determination centers in the first model, and it is difficult to circumvent the prohibitive provisions of the "9.24 Notice". In particular, the judicial appraisal agency's determination of the price of the virtual currency involved in the case has exceeded the scope of judicial appraisal. The judicial appraisal agency has no power and qualifications to determine the price of the virtual currency involved in the case;

Fourth, it is determined by the suspect/defendant's sales amount or the victim's loss amount.Because my country does not prohibit virtual currency investment and trading, whether it is a criminal case that requires the return of property (such as fraud and theft) or a criminal case that requires the confiscation of property involved (such as organizing and leading pyramid selling activities, opening a casino, and illegal business operations), if the suspect/defendant has sold the virtual currency involved for cash or has exchanged it for other property, then the cash amount or the value of the exchanged property can be used as the amount involved; if it is difficult to calculate the suspect/defendant's sales amount, but the victim's loss amount can be clearly determined, the victim's loss amount should be used as the basis for determining the amount involved. This is because in determining the amount involved in a criminal case, there is a basic principle, which is the "victim does not profit" principle (while taking into account the "doubt favors the suspect" principle). If the virtual currency purchased by the victim for 10,000 yuan is stolen, and the virtual currency has appreciated to 100,000 yuan when the court makes a judgment, then the court should use 10,000 yuan as the amount involved; if the victim's loss amount (purchase amount) cannot be ascertained, the market value of the virtual currency at the time of judgment can be considered as the amount involved.

Fourth Written at the end

The price fluctuations of virtual currencies are large, which means that in criminal cases, all parties involved in the litigation must pay attention to the value of the virtual currencies involved. Even for stablecoins such as USDT and USDC, it cannot be taken for granted that their value can always be constant and equivalent to the US dollar. After all, no one can guarantee that Tether or other centralized institutions will not go bankrupt. Therefore, it is necessary to promptly, accurately, legally and compliantly determine the value of the virtual currency involved in the case, and properly handle the appreciation or depreciation of the virtual currency involved during the period of detention in the criminal case.

In current judicial practice, there are mature plans for legally and compliantly disposing of the virtual currency involved in the case, which is crucial to protecting the legitimate rights and interests of victims, suspects/defendants in criminal cases. （END）

<span rootId":"Qn07d0nroo4uoGxJ7LTcE8l6naf","text":{"initialAttributedTexts":{"text":{"0":"Based on the above content, the disposal of the virtual currency involved in the case, if in accordance with criminal procedures, is best handled after the judgment; however, for some cases where the conviction and sentencing can only be based on the amount of virtual currency involved in the case, the investment can be made before the judgment; if it is handled by the judicial organ, the current judicial practice is that the public security organs handle it. Of course, it is not ruled out that in the future, when the business capabilities of the procuratorate, especially the court, continue to improve and there are no technical obstacles to the custody and disposal of virtual currency, the court will be directly responsible for the disposal of the virtual currency involved.