50 million yuan virtual currency theft case: Beijing court admits property attributes and assigns guilt and sentencing to the amount of stolen goods

21st Century Business Herald reporter Zhu Yingzi from Beijing reported that  on May 5, the Beijing Court Trial Information Network disclosed a judgment document for a criminal case involving the theft of virtual currencies worth 50 million yuan, including Tether, Ethereum, and Bitcoin. .

In the end, the Beijing Chaoyang District People’s Court (hereinafter referred to as the “Chaoyang Court”) rejected the defender’s defense opinion that constituted the crime of sabotaging the computer information system, and supported the Beijing Chaoyang District People’s Procuratorate (hereinafter referred to as the “Chaoyang Procuratorate”) allegations, The defendant was found guilty of theft and sentenced to 12 years in prison, a fine of 200,000 yuan and deprivation of political rights for 2 years.

It is worth noting that in judicial practice, local courts are divided on the determination of Bitcoin theft. Xiao Sa, a partner of Beijing Dentons Law Firm and director of the Bank of China Law Research Association, said in an interview with the media in 2021 that there are currently a large number of Bitcoin theft cases. From the perspective of criminal judgments, there are two main views on the criminal law of stealing Bitcoin. : One is that Bitcoin is recognized as property, which meets the elements of the crime of theft in criminal law, which constitutes the crime of theft; the other is that Bitcoin is a kind of data, and theft of Bitcoin constitutes the crime of illegally acquiring computer information systems. The crime of destroying computer information systems in this case is similar to the crime of illegally acquiring computer information systems.

Thieves hack into platform systems

According to the judgment document, at the beginning of 2019, Ling Yuesheng (pseudonym), who was in his thirties, was unemployed in a temporary residence in Yuncheng District, Yunfu City, Guangdong Province. Teaching how to crack network request packets and hack computer information systems.

Afterwards, Ling Yuesheng discovered a way to tamper with the data in the network request packet, and also told this method to the fellow living with Ling Shishan (pseudonym), Ling Shishan is also a primary school culture. Since then, the two have been trying to hack into the system of a digital asset trading platform serviced and maintained by an information technology company in Beijing.

“I used the mouse to grab the data on the page, clicked and clicked, and finally found the loophole.” Ling Shishan confessed. In October 2020, Ling Shishan discovered a transfer loophole in the system when using Ling Yuesheng’s account. He used a packet capture software to capture data on the platform, and then manually added a “-” at the beginning of the captured data to the platform. You can see the increase in virtual currency in your wallet account on the platform.

According to the reporting materials and system background logs of an information technology company in Beijing, on October 16, 2019, Ling Yuesheng registered an account on the above-mentioned platform to attempt to attack the system it maintained, and it continued until 4:00 a.m. on October 15, 2020, and successfully invaded the system. After registering a real-name account of Ling Shishan, he successfully invaded the system, and successively registered 17 real-name accounts to attack the system loopholes through the two people’s devices taking turns to log in, and then withdraw cash after success.

From 2:00 a.m. to 5:15 a.m. on the 16th, the two stole a total of 620,000 Tether coins, 12687.9956 ether coins and 149.99627927 bitcoins. Ling Yuesheng put the private key of the stolen virtual currency in a golden iPhone and stored it in the safe of his cousin’s temporary residence. In addition, the two of them realized a total of about 2 million yuan, which was used to buy BMW cars and other expenses.

According to the testimony of Tian Mou, the legal representative of the above-mentioned information technology company, at 9 am on the 16th, the company’s platform maintenance personnel discovered that the platform they served had abnormally large withdrawals. At that time, the price of Tether was about 6.7 yuan each, and ether The price of each square is about 2,500 yuan, and the price of bitcoin is about 79,000 yuan each. “Our company is entrusted by XX Global XX Ltd. to provide system R&D maintenance and technical consulting services for a digital asset trading platform. According to the technical service contract signed by our company and the company, for this system intrusion event, our company needs to pay the other party according to the agreement. The company’s RMB 50,259,700.”

After the vulnerability was discovered, the information technology company overhauled the vulnerability, and then Tian reported the case to the public security organ, and locked Ling Yuesheng and Ling Shishan through the company log. Tian also said that in order to repair the system loopholes, the company also hired a third party to perform security repairs on the system, costing 200,000 yuan.

On October 21, 2020, the public security organs arrested Ling Yuesheng and Ling Shishan and brought them to justice. They were detained the next day and arrested on December 8, 2020. They are currently detained in the Chaoyang District Detention Center in Beijing.

Data or property? What about sentencing?

On May 6, 2021, the Chaoyang Procuratorate filed a public prosecution with the Chaoyang Court, arguing that the behavior of the defendants Ling Yuesheng and Ling Shishan violated the provisions of Article 364 of the Criminal Law, and should be investigated for their criminal responsibility for the crime of theft, and submitted to the court to be sentenced according to law.

However, the defendant Ling Yuesheng and his defenders disagreed with the charges. The defender believes that the virtual currency involved in the case is not property, the trading platform involved is an overseas illegal platform, and should not be protected by law, and the amount of the alleged crime lacks factual and legal basis. Therefore, the behavior of the defendant in this case does not constitute the crime of theft, but should be used to destroy the computer. Information system crime conviction and punishment.

Regarding the above defense opinions, the Chaoyang Court stated that according to the “Notice on Preventing Bitcoin Risks” and “On Preventing Token Issuance and Financing Risks” issued by the central bank and other ministries and commissions, the virtual currencies such as Bitcoin, Tether, and Ethereum involved in the case are not subject to It has currency attributes such as legal compensation and mandatory, and does not belong to currency.

“However, the above provisions do not deny the property attributes of virtual currency as a virtual commodity, and Chinese laws and administrative regulations do not prohibit the holding and transfer of bitcoin.” Chaoyang Court stated in the opinion part.

The court also pointed out that the “Notice on Preventing Bitcoin Risks” mentioned that “in nature, Bitcoin is a specific virtual commodity”. Therefore, virtual currency has property attributes and is a property benefit, which is a crime of theft protected legal interests.

The Chaoyang Court held that the defendant, under the control of the purpose of illegal possession, carried out the means of invading and attacking the computer information system and the result of stealing the virtual currency and selling it for profit. Conviction and punishment, while the crime of destroying computer information systems only involves the evaluation of its means and behavior, and does not conduct a complete evaluation of the criminal behavior, so the defense opinion of the defender is not adopted.

Secondly, regarding the opinion mentioned by the defender that “the amount of the alleged crime lacks factual and legal basis”. The court held that the overall value of the defendant’s theft of virtual currency lacked an authoritative and neutral evaluation agency to determine, so this case did not determine the amount of crime committed by the two with the platform transaction value of more than 50 million.

The court further pointed out that it is objective and realistic for the defendant to sell the virtual currency for a profit of more than 2 million yuan. Based on the facts and the law, the amount of stolen goods sold in this case is the basis for the defendant’s conviction and sentencing.

Liu Yang, a lawyer from Beijing Deheng Law Firm, said that it is appropriate for the court to determine the amount realized by the defendant as the criminal proceeds of theft. After repeated transactions, if the initial amount cannot be determined, it is recommended to pursue criminal responsibility for the crime of illegally obtaining computer information systems.

In addition, the Chaoyang Court believes that whether the platform involved is a violation platform and whether the virtual currency on the platform is a property protected by law belong to two categories. Moreover, the defense did not provide solid and sufficient evidence to prove the opinion that the platform involved in the case is in violation of regulations and should be shut down. “But even if it is illegally occupied property, before it is restored to its proper state through legal procedures, the possession is also the legal interest protected by the crime of theft. Therefore, the legal nature of the platform involved does not affect the stereotype of the defendant’s behavior.” Judgment so stated.

In the end, the court sentenced the defendants Ling Yuesheng and Ling Shishan to the crime of theft respectively, and sentenced them to 12 years in prison, a fine of 200,000 yuan, deprivation of political rights for 2 years, and continued recovery of their illegal gains.

Combined with a recent Bitcoin-related civil ruling by the Beijing Arbitration Commission and recent cases involving currency, it can be found that the courts in Beijing generally support the trial idea that “Bitcoin and other virtual currencies are virtual property and are protected by law”, but the judgment The rules have also changed.

Changes to referee rules

“Regarding the theft of virtual digital currency, the adjudication rules in Beijing are not the same in different time periods, and can be roughly divided into three stages.” Liu Yang introduced to the 21st Century Business Herald reporter.

The first stage is before September 4, 2017, and related cases are mostly convicted and punished for theft. For example, Beijing Dongcheng District People’s Court (2015) Dongxingchuzi No. 1252 Judgment shows that the court believes that the defendant secretly steals other people’s property for the purpose of illegal possession, and the amount is relatively large. The crime of theft shall be punished according to law.

The second stage is from September 4, 2017 to 2021, starting with the joint release of the “Announcement on Preventing Token Issuance and Financing Risks” by seven ministries and commissions.

Liu Yang mentioned that the above-mentioned announcement clearly states that “you shall not provide services such as pricing and information intermediary for tokens or ‘virtual currency'”, and the crime of theft is a property crime, which usually requires price appraisal of stolen items, and the price appraisal department is limited Due to the impact of this announcement, it was impossible to issue a price appraisal report, and the handling of currency theft cases became a major problem for judicial organs across the country. Attribute cut, identified as “the crime of illegal acquisition of computer information system” or “crime of destroying computer information system”.

On July 6, 2018, the Beijing Haidian District People’s Procuratorate charged the defendant with the crime of illegally obtaining computer information system data with Jinghaijian Science and Technology Criminal Prosecution [2018] No. 70. Transferred the company’s 100 bitcoins to his e-wallet. In the end, the Haidian District People’s Court of Beijing upheld the accusation.

Liu Yang said that this case has opened up ideas for how the judicial organs across the country should crack down on currency theft cases after the above announcement was issued.

The third stage is after 2021. There are “supporters” for the determination of both crimes, and there are differences in trials in various places. Since 2021, as the price of Bitcoin has been rising, more and more people have joined the army of speculators, and illegal acts in this field have become increasingly common.

“In this case, I personally think that the staff of the judicial organs have also quietly changed in their hearts. For example, in the past, they thought that digital currency was worthless, but now, the specific undertaker of the case knows that virtual digital currency is real. Gold and silver.” Liu Yang mentioned to reporters that some judicial personnel will think that the criminal responsibility of the defendant for the crime of illegally obtaining computer information system data is too light and the punishment for the crime is not appropriate.

At the same time, the judiciary has also strengthened the research on the criminal crime of virtual digital currency.

In May 2021, Li Hui, the first-level prosecutor of the Second Procuratorate of the People’s Procuratorate of Haidian District, Beijing, wrote in the magazine “China Prosecutor”, “On the premise that the amount involved in the case is particularly large, the determination of computer-related crimes will lead to abnormally light sentences. , whether it has punitive significance also needs to be further studied. And the criminal law theory involving crimes against property also needs to be further modified and expanded in the context of virtual currency.”

There are also opponents. At the 2nd Criminal Practice Forum on Preventing and Desolving Financial Risks held in July 2021, Yu Haisong, Director of the Criminal Division of the Research Office of the Supreme People’s Court, proposed that virtual property undoubtedly has property attributes, but whether it is property or not, the pre-requisite law has not yet been clarified. In the case of unknown legal basis, having property attributes does not necessarily mean that it becomes a property in criminal law, and property crimes are not necessarily applicable to relevant acts.

“There is a lot of controversy in the civil law community about the legal nature of virtual property. Criminal law is the guarantee law of other departmental laws. In the case where the prerequisite law has not been clarified, it may not be the best choice for criminal law to rush to the front. We should stick to the criminal law. The attribute of quadratic law, try to maintain a humble position.” Yu Haisong thinks so.

“The fundamental reason for this result is that the legal status of Bitcoin in my country is not clear, and the regulatory policy is ambiguous.” Zhong Haiwei, a lawyer at Shengdian Law Firm, pointed out in an article published in June 2021 that the “stealing” of Bitcoin The approach of characterizing the behavior of bitcoin as the crime of illegally obtaining computer information system data is more like an expedient measure to avoid discussing the property attributes of bitcoin, while the practice of directly characterizing the “stealing” of bitcoin as the crime of theft is unavoidable. In the face of doubts from the perspective and feasibility of criminal policy, both approaches are difficult to say.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/50-million-yuan-virtual-currency-theft-case-beijing-court-admits-property-attributes-and-assigns-guilt-and-sentencing-to-the-amount-of-stolen-goods/
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