Bitcoin-related crime issues and judicial responses

Bitcoin relies on blockchain technology to take the world by storm, and crime in this field is “blowing up”, which has posed a double challenge to traditional justice in terms of law and technology.

Bitcoin-related crime issues and judicial responses

Review and Judicial Response to the Crime Problem Involving Bitcoin Field

–A Sample of Bitcoin-Related Cases in the Haidian District People’s Procuratorate in the Past Five Years

Li Hui: First-class prosecutor of the Second Procuratorate Department of Beijing Haidian District People’s Procuratorate

Tian Kun: Prosecutor Assistant of the Second Procuratorate Department of Beijing Haidian District People’s Procuratorate

Abstract: In recent years, bitcoin has become a global phenomenon based on blockchain technology, and crime in this field has exploded in a “spurt”, posing both legal and technical challenges to traditional justice. In the Haidian District People’s Procuratorate over the past five years, based on the classification of cases involving bitcoin crime, case by case, systemic analysis, digging deeper into the shortcomings of the judicial case, focusing on broadening the practice of electronic evidence, money tracing ideas, explore the practical difficulties of value determination, the interface between execution and punishment, from the activation of technology to assist in handling the case of endogenous power, enhance the effectiveness of accurate crime fighting efforts, cohesion of the whole basin The criminal governance problem is solved in a comprehensive manner.

Keywords: bitcoin, virtual currency, black and gray industry, illegal fundraising, money laundering

Since Satoshi Nakamoto first introduced the concept of Bitcoin, Bitcoin has become the most popular virtual currency in the world, with its trading price soaring and more people joining in the coin speculation. In the context of the general lack of awareness, inadequate legal regulation and weak regulatory response, the field of illegal behavior is increasingly high, the new type of crime is more and more significant, social harm is increasingly prominent, has caused serious negative impact on citizens’ property rights, social public order.

In the past five years, the Haidian District People’s Procuratorate accepted a total of 14 cases involving bitcoin 15 people, covering illegal control of computer information systems, illegal access to computer information systems data crime, extortion, the crime of concealing the proceeds of crime, fraud five crimes. Among them, there were 11 cases and 11 persons in the category of technology crimes, 2 cases and 2 persons in the category of financial crimes, and 1 case and 2 persons in the category of other crimes.

In the process of bitcoin mining, investment, storage and trading, the legal interests are more complex, the means of crime are more technological, and the crimes committed are more diverse. After sorting out, we found that the current judicial practice of bitcoin properties, crime characterization of the controversy in three aspects: transfer and review of the crime inconsistent, inconsistent arrest and prosecution charges, qualitative differences in individual cases. In addition to some cases in which bitcoin is regarded as computer information system data, there is no shortage of cases identified by the review of the crime of property infringement, such as Pan extortion case, the prosecution reached a consensus on the determination of the crime.

I. General Characteristics of Crimes Involving Bitcoin Domain

At present, China is one of the countries in the world with the largest volume of virtual currency transactions and the most active trading. As a typical representative of virtual currency, Bitcoin is a decentralized, anonymous, technical, globally circulating, and many-to-many transaction, which is both an object and a tool of cybercrime.

(1) Black and gray industry becomes the technical support of crime

With blockchain as the underlying technical logic, it fully relies on black and gray industry technology, widens the radius of crime with the help of the Internet, and uses the network to facilitate the implementation of cross-regional crime. As the primary technical tool, the black and gray industry takes computer information system, application, network data or software as the object, and tampers with the code, writes the program, and makes “phishing website” as the means, which becomes the breeding ground for crimes in this field. For example, [Case 1] Pan Moumou illegally obtained computer information system data case [1]. The defendant, Pan Moumou, was hired by others to create a “phishing website” modeled after the Coin Security website (URL: http://www.binance.org.cn), which led users to enter their accounts, passwords, and verification codes to illegally obtain the account numbers and passwords of Zhong’an Rui Technology Co. The company’s virtual currency such as bitcoin and ethereum was stolen, and the illegal income was 77117.92 yuan. Another example is [Case 2] Pan Mou extortion case [2]. The defendant, Pan Mou, sent emails through the Internet and threatened to blackmail three companies, including Hebei Binhai Commodity Market Service Co. It can be seen that the black and gray technology makes the crime flexible and concealed, no frontier characteristics are obvious.

(2) “Financial innovation” conceals illegal fund-raising traps

Under the guise of investment and finance, token issuance and financing, and Internet financial innovation, illegal fund-raising is being carried out, and crimes in this field are increasingly characterized by diversified means, strong concealment, obvious temptation, and rapid spread of risks. Some unscrupulous elements hype the concept of hot spots, packaging bitcoin financial project, tempting society to invest in unspecified objects, the funds collected are not used to buy products or even run away with the money, investors have suffered heavy losses, recovery of stolen goods and losses is difficult to carry out. For example, [Case 3] the People’s Procuratorate of Qingdao City, Shandong Province, for the case of Ma Moumou, Liu Mou illegal absorption of public deposits [3]. The defendant Ma Moumou, Liu Mou, together with others, in Qingdao Dong Hui International Hotel and other places through public propaganda and promotion, etc., to invest in bitcoin financial products (monthly interest rate of up to 7 ~ 10%) to obtain high interest rates and high returns as a lure to attract the public to invest in bitcoin cash financial products, and to seize a high percentage of commission. It can be seen that crimes involving bitcoin has spread to penetrate the financial sector, especially in recent years the more popular token issue (ICO) is more likely to be used by criminals to raise bitcoin, to circumvent financial regulation, fictitious renovation projects, in fact, to defraud others of their money.

(C) coin trading has become a new type of money laundering crime

The global circulation and convertibility of bitcoin provides a new “hotbed” for money laundering crimes. Among many money laundering methods, the “running platform” is widely favored by criminals and has become a black and gray industrial chain for upstream and downstream illegal money flow. By creating illegal websites, criminals attract users to register and rent collection QR codes to launder money for upstream crimes. For example, [Case 4] the case of Wen Moumou, Guo Moumou and seven others who disguised and concealed the proceeds of crime handled by the Luyi County People’s Procuratorate in Henan Province [4]. The defendant Wen, together with Guo, Chang and others, used their cell phones to launder money through software such as “firecoin”, “coin” and “bitcoin”, and repeatedly used their own and other people’s identities to open Alipay Account, bank card to buy, sell virtual coins in the way of “run”, the amount involved in the case up to 9 million yuan, resulting in upstream crime is difficult to investigate, the loss is difficult to recover.

(D) Fraudulent transactions have become a new way of fraudulent crimes

Criminals or “on behalf of the speculation of coins” to deceive the victim’s trust and illegal possession of bitcoin, or to “recharge the vote” as a pretext to deceive the victim to bitcoin way of investment, or build a false trading platform artificial manipulation of the rate of increase, to lure the victim to buy and sell, fraud The method is fancy, the fraud is hidden and difficult to be detected. The three people involved in the case are: Shao Moumou and three others. The three created the Coin Tudou website and planned a top-up voting activity, i.e., in exchange for the right to vote on other virtual currency transactions by way of bitcoin top-up, the top three virtual currencies can be listed and traded, and promised to return the bitcoins afterwards, and then the suspects manipulated the number of votes, created the illusion of server downtime, and took the bitcoins invested by the victim for themselves.

(E) “Guardianship and theft” highlights industry prevention vulnerabilities

The background of bitcoin criminals is more industry-specific, especially in recent years, it has become common for employees within Internet enterprises to use their positions to facilitate theft. For example, the case of Zhong Moumou’s illegal access to computer information system data [5]. The defendant Zhong Moumou was the system administrator of Beijing Bitmain Technology Co., Ltd. and had the administrator rights of all systems within the company. The company suffered economic losses, and some of the bitcoins were difficult to recover. Another example is the case of An Mou’s illegal control of computer information system handled by Haidian Procuratorate [6]. The defendant, An Mou, was a server operation and maintenance manager at Baidu.com, and used his job to maintain the company’s search servers to deploy “mining” programs on the company’s servers by technical means, obtaining virtual currency such as bitcoin by using computer information system hardware and network resources, and then selling some of the The company also sold the virtual currency for profit.

II. Analysis of criminal governance problems and causes in the field of bitcoin

In recent years, crimes in this field have been frequent, focusing on the criminals or through the writing of code, adding and deleting applications to illegally obtain bitcoin, or use its payment and settlement function to disguise the predicate crime, the means of concealment, intelligent way of operation, resulting in investigation and evidence collection difficulties, the judicial face serious challenges. The solution to this problem involves not only the analysis and analysis of the substantive properties of bitcoin, but also its legal application, crime determination, investigation and evidence collection.

(1) The difference in the perception of bitcoin’s properties has become an important judicial disagreement

There are two different perceptions of the legal attributes of bitcoin: one is that it belongs to the data of computer information system; the other is that it is the actual property enjoyed in real life and belongs to the property in the sense of criminal law. The different cognitive bases also lead to different perceptions of the crimes committed in judicial practice. For example, for the theft of bitcoin, some are considered to be the crime of illegal access to computer information system data, while others are considered to be the crime of theft. This judicial controversy has accompanied the entire process of Bitcoin from its creation to its development, and the differences in adjudication are not only reflected in the differences in adjudication across the country, but also in the different results of the same court in similar cases. The evolution of policy documents, from the denial of Bitcoin’s monetary properties in the Notice on Preventing the Risks of Bitcoin to the affirmation of its status as a “virtual currency” in the Notice on Preventing the Risks of Token Issuance and Financing, shows that Bitcoin is no longer limited to data in the general sense, but is both an “economic” and “value-based” currency. However, the debate in judicial practice is far from over as to whether virtual property should be fully included in the broader scope of virtual property. Although some of the adjudication documents still believe that virtual property belongs only to the computer data, but I believe that the amount involved in the case is particularly huge, the premise of computer-related crime will lead to a light sentence, whether it has a punitive significance also needs to be further examined. For the criminal law theory of crimes involving the invasion of property, it is also necessary to further adapt and expand in the context of virtual currency.

(2) The difficulty of tracing the capital chain has become a major constraint in the investigation of cases

Due to the unique properties of Bitcoin, the criminals realize the money transaction through the trading platform, which leads to many obstacles in judicial tracing. In view of the very different monetary regulation system and financial operation rules between countries, once the illegal funds flow into the financial system of other countries will make it much more difficult to trace the funds.

  1. The anonymity of Bitcoin facilitates criminals to hide their identity. Due to Bitcoin’s cryptographic code and peer-to-peer network structure, its design mechanism does not require users to provide identification or verification, and some trading platforms are limited to identifying the authenticity of ID cards and not doing substantive audits, resulting in money launderers usually registering accounts on trading platforms and buying Bitcoin using false information such as other people’s ID cards, and then using other people’s email addresses to register Bitcoin wallets and realize the flow. For example, on the currently famous Coin On website, users can register with their email address only, and only need their real names when trading. In addition, bitcoin randomly generates public and private keys and can be “one secret at a time” to achieve frequent ownership transfers, and users can have multiple accounts at the same time. Suspicious transactions are difficult to track, control, and lock. It is also worth mentioning that victims face many difficulties in proving that they are the legitimate holders of bitcoins, as the downloadable wallet client does not require any real-name authentication, making it difficult to confirm whether the victim is the legitimate holder.
  2. The many-to-many transaction attribute of bitcoin leads to the intertwining of multiple lines of capital chain, unclear adulteration of funds, and difficulty in verifying the flow of funds. Once criminals inject illegal funds into the channel, they use bitcoin “hybrid” technology to conduct multi-level, complex exchange transactions, thereby obscuring the original source of bitcoin and the connection between the payment account and the original source of bitcoin, allowing the laundered bitcoin to circulate in the economic sphere again. For example, in the Haidian Procuratorate’s case of Shao Moumou and three others who were suspected of fraud, the criminals changed bitcoin wallets frequently, eventually transferring the acquired bitcoins in multiple layers.
  3. The global and rapid nature of bitcoin transactions makes them independent of traditional financial regulation, and the cross-border nature of transactions is obvious. Its transactions are done automatically by software, which can complete a large number of complex capital flows in a short period of time, greatly increasing the difficulty of investigation. In addition, due to the inaccessibility of foreign financial institutions and the lack of response to foreign asset tracing, it also increases the difficulty for law enforcement agencies to identify suspicious users and obtain transaction records.

(3) Traditional e-discovery means are difficult to adapt to the requirements of charging crimes

Through the analysis of the five years not arrested cases, the author believes that the reason why it is difficult to lock the suspect in the first time, difficult to build the whole chain of crime, difficult to trace the whereabouts of funds, which in addition to the special properties of bitcoin and cross-border forensic difficulties and other objective factors, the lack of experience in investigation, review technology is weak, forensic methods are not perfect and other serious constraints on the legality and effectiveness of electronic evidence retrieval.

From the cybercrime data recently disclosed by the Supreme People’s Procuratorate, cybercrime has formed a relatively fixed chain of criminal interests: upstream to provide technical tools and collect personal information, midstream to implement fraud and other cybercrime, and downstream to use the payment channel to “launder” funds. In particular, in the context of iterative upgrading of information technology, criminal means of renovation, traditional electronic forensics encountered bottlenecks, faced with electronic evidence deposition difficult, effective crime information is difficult to fix, difficult to extract effective information, the validity of the evidence is questioned by the dilemma. In cases involving bitcoin, it is easy for the investigating authorities to catch the downstream, but difficult to catch the upstream, lacking strong evidence to establish a substantial connection between the suspect and the bitcoin manipulator, even if the subsequent series of additional evidence, but also because the best time to miss the transfer of evidence so that criminals evade detection.

The extraction and fixing of electronic evidence is the primary key to solving such cases, and will also affect the overall direction of the case and the final determination of the criminal facts. As in the case of financial crimes, the electronic data recorded in different carriers such as virtual currency wallets, virtual machine software and mobile devices, network browsing records and cache may be closely related to the storage and transfer process of bitcoin and the means of theft or fraud. Such as technology cases, from the suspect manipulation of computers to theft of data, implantation of viruses to bitcoin transfer cash, electronic evidence not only through the entire process of crime, but also always with the suspect identity lock, behavior track to establish, crime scene restoration and other aspects inseparable. It is worth mentioning that, because electronic evidence has a volatile, time-sensitive, easily tampered with, if not timely extraction and preservation of electronic evidence, once the original storage media is damaged or lost, through technical means is difficult to recover, will inevitably bring great difficulties to the investigation.

In addition, the investigators of electronic evidence extraction procedures are flawed, will also have an important impact on the trial can be successfully charged, for example, in science and technology cases, the source of electronic data and the production process to exclude the possibility of others tampering with the data, the extraction of electronic traces of whether the suspect’s independent operation will also be the focus of controversy between the prosecution and defense.

(4) The value of bitcoin has become a difficult point of review in cases involving bitcoin embezzlement

In judicial practice, there is a wide divergence in the determination of the value of bitcoin, especially in the case of property infringement, which is not only reflected in the difference in the determination of the judges across the country, but also in the inconsistent determination of similar cases in the same region. This is partly due to the specific reality of the case and the different modes of infringement, and partly due to the differences in legal cognition of judicial personnel in the new technological dimension. After combing the Haidian District Prosecutor’s Office in the past five years, it was found that although most of the cases were prosecuted and sentenced with technology, there was still one case prosecuted with extortion and sentenced by the court, and it is more common for other places to deal with theft and fraud, which makes the unified determination of the value of bitcoin particularly important.

Bitcoin as a virtual currency, its price has a dramatic fluctuation space, which brings great difficulty for judicial determination. In the author’s opinion, the value of bitcoin can be determined from the following aspects: the victim’s purchase price, the price displayed on the bitcoin trading platform, the price determination opinion issued by professional institutions, and the amount of stolen goods sold by the suspect. However, judicial practice is divided on which method of determination to adopt. If the price of the trading platform is used, it is still difficult to solve the problem because the exchange rate between bitcoin and legal tender is always fluctuating and can fluctuate greatly on the same day. If the price of the stolen goods is used, not all crimes have a sale process, and the amount of the stolen goods will be lower than the actual market price. If the price appraisal department to determine the amount involved in the case, the lack of qualified professional institutions to conduct price identification of bitcoin is a major problem, and it is difficult to be credited by the court. In the extortion case handled by our court, the victim’s purchase price was adopted as the amount of the crime, and because the suspect repeatedly used the same means to commit the crime, it was also possible to meet the “multiple extortion” factual determination.

(E) Weak regulation triggered the international spread of bitcoin-related crimes

On December 3, 2013, the Central Bank and five other ministries jointly issued the Notice on Preventing Bitcoin Risks, which sets out two requirements for the prevention of bitcoin money laundering risks. On the other hand, branches of the People’s Bank of China are required to include trading platforms within their jurisdictions in AML supervision and urge them to strengthen AML monitoring. on September 4, 2017, the central bank and seven other departments jointly issued the Notice on Preventing the Risks of Token Issuance and Financing, which heavily regulated bitcoin trading platforms, and related domestic platforms have been shut down one after another.

Despite this, crime in this field is still increasing, and the black and gray industry has become the primary umbrella, with new criminal methods, the spread of capital chains abroad, obstacles to tracing cases, and the intertwining of various crimes all making the existing laws weak and ineffective, making it difficult to curb crime at the source early. Not only can Bitcoin be divorced from traditional financial clearing systems, including banks, but its international circulation means that anyone can mine, buy, sell or receive Bitcoin from any computer, anywhere. If Bitcoin service providers are located in areas with weak anti-money laundering regulation, this will further lead to more fragmented information about virtual currency transactions and increase the difficulty of tracing funds. It is important to note that in some cases, the place of crime, the identity of the criminal and the landing place cannot be determined, which makes the traditional criminal jurisdiction face many difficulties, and the legal provisions of each country are obviously different, the protection strength varies, which will also lead to different prosecution results, thus causing conflicts of jurisdiction.

(6) The diversity of crimes involving bitcoin poses new challenges to the precise application of the law

As mentioned above, bitcoin has not only become a tool or means of drug, money laundering, smuggling, taxation, financial fraud, but also an object of financial crime and capital raising. The variety of crimes involved in bitcoin, the complexity of the offenses, and the social hazards of bitcoin should be a matter of great concern to the judicial practice.

The judicial controversy over bitcoin-related crimes is focused on both the different understanding of the legal attributes of bitcoin and the substantive judgment of the criminal act. How to do the criminal law evaluation of the act of stealing or cheating bitcoin through technological means, and whether it constitutes a general property crime or a technological crime? In particular, in recent years, the token issuance (ICO) has sprung up, and since investors can use bitcoin instead of fiat currency to invest, how should this illegal fundraising behavior be characterized? Can the illegal possession of bitcoin by a person who manages a bitcoin account or is responsible for the operation of a computer information system constitute the crime of misappropriation or misappropriation of office? Therefore, a series of issues such as the criteria for determining the “transfer of possession”, the determination of the form of attempt, the judgment of the legal nature, the clarification of this crime and the other crime, will pose a serious challenge to the traditional criminal law theory and judicial practice.

Third, the countermeasures and suggestions to deal with crimes involving the field of bitcoin

In the past five years, the Haidian District Prosecutor’s Office has been handling cases in this field. Some of the cases have failed to enter the subsequent litigation process due to doubtful evidence and controversial characterization during the review and arrest period, or even entered the review and prosecution stage, but the public and prosecutors have major differences in the characterization of the case. The reasons for this are both investigative direction bias, crime forensics, insufficient evidence and other factors, but it goes without saying that the judiciary is generally faced with the current criminal law theory how to apply to new cases, the traditional techniques of forensics, such as how powerful accusations of crime bottlenecks. The author suggests the following aspects as the entry path to seek a breakthrough.

(A) rely on new technical means to achieve the whole chain of illegal funds tracking

Compared with telecommunication network fraud cases, the money laundering crime using virtual currency also has the characteristics of long tracing chain, mixed suspicious funds and complex transfer process, and in recent years the tracing of the capital chain has become a pain and difficulty in handling cases in this field. The use of trading bitcoin money laundering, through multiple transfers to complicate the process of transferring funds, while increasing the difficulty of tracking and monitoring the flow of illegal funds, but also forced us to explore the use of new technical means to innovate the mode of tracking funds, re-establish the capital chain system.

The author believes that address analysis and on-chain monitoring to lock the user’s identity and determine the scope of investigation is the primary prerequisite for solving such cases. Although bitcoin users can generate as many addresses as they want to conceal their identity, the storage, use, transaction and realization of bitcoin on the blockchain are all traceable. The authorities can still find clues to track down the criminals by tracing the registration information associated with bitcoin wallets, analyzing network IP addresses and MAC addresses, extracting chat logs and browsing traces, and resolving server and domain name rental information.

To alleviate the problem also need to start from the base technology, to make full use of blockchain technology, combined with the time node, the number of funds and flow, to improve the transaction mapping analysis capabilities, through data mining, data collision and other ways to find associated clues to accurately identify the facts of the crime. First, the use of technology to assist in handling the case, and professional blockchain analysis agencies to carry out cooperation, in access to blockchain on the basis of virtual currency account information, historical transaction data to find out the virtual currency transfer process between the accounts involved. For example, in handling the suspected fraud case of Shao Moumou and others, fully leveraging the power of external brains, the company took the lead in cooperating with blockchain big data analysis companies and opened up most of the fund transfer links through reasonable tracking of the blockchain. Second, the detailed transaction data was retrieved from the bitcoin trading platform. Since the public bitcoin transaction data on the blockchain cannot reflect the internal transaction data on the same transaction website, especially in the “many-to-many” transaction mode of bitcoin, the mixing of funds flow within the platform becomes a major obstacle, so it is crucial to retrieve the transaction data within the platform. Third, the cooperation with third-party payment platforms can effectively relieve the blockage of fund tracing. In money laundering cases, criminals generally go through multiple coin transactions and money transactions, which often complete transactions through bank cards bound to third-party payment accounts, so access to third-party payment account background data is useful for identifying account transaction information and determining the direction of the funds involved in the case. In summary, I suggest to use new technology to fight new crimes, with the help of blockchain and other technological means, the use of information flow, capital flow mining on the line, tracking the destination of funds, so as to achieve a network-wide crackdown on those involved in the case, the precise accusation of criminal facts.

(B) innovative electronic deposition mode, effectively crack the investigation and evidence collection problems

Through combing it is not difficult to find that the field of crime types, the people involved in a variety of cases, hidden extremely high, the difficulty of combating, how to accurately break through to achieve the full chain of combat, the extraction and fixation of electronic evidence is the most important. This requires not only from the legal level of research and judgment, but also from the technical level to be considered. In this area of case review, whether it is the identity of the suspect lock, money chain tracking, or the seizure of the bitcoin involved, every aspect of the electronic forensics effectiveness and legality of high requirements.

In recent years more and more high-quality technology products used in case investigation and electronic forensics, some companies have been innovative research and development for virtual currency crime electronic data forensics, deposition products and analysis technology, which for our traditional judicial case mode undoubtedly provides a professional support and technology engine. For example, the investigation department can use advanced technology and information to crack the data stored in the server, and lock the criminals by extracting and analyzing IP addresses, servers, and related chat records to effectively improve the efficiency of electronic data forensics. In the use of blockchain technology on the process of capital chain verification, the full extraction of transaction data involved in the process of how to ensure the integrity of data preservation, in the trading platform and third-party payment institutions to retrieve transaction data after how to carry out electronic data re-sorting, these are not only the requirements of electronic evidence forensics entity, but also to the procedural legitimacy of the higher standards. The author believes that to fully regulate the process of on-site inspection and storage media, by having sufficient expertise to extract electronic evidence fixed, if necessary, by third-party institutions to give technical cooperation and intellectual support.

What needs to be noted is that in the process of seizure of the bitcoin involved in the case how to retain its virtual and legal properties of unity, how to ensure that the seizure of substantive validity, seizure procedures are strictly legal, these are the public security organs electronic forensics way to put forward a new test. Due to the virtual, centralized, and distributed nature of Bitcoin, the system is maintained by bills that exist on each network node. If you want to freeze someone’s Bitcoin account, you must control all nodes, which would be an impossible task. The problem is that if the public security authorities do not take control of the bitcoins in question, the criminals will use the public and private keys they have to transfer the bitcoins to foreign countries. In response to this difficulty, we innovated the traditional seizure model based on the unique properties of bitcoin and established a new seizure model in which the public security authorities generate and provide a bitcoin address to which the suspect will transfer the bitcoin in his account, during which the suspect will no longer hold the public and private keys of the final account, thus not only avoiding the possibility of the bitcoin being transferred This not only avoids the possibility of the bitcoins involved being transferred, but also facilitates the public security authorities to collect the hidden bitcoins and control them legally in a timely manner.

(3) Focusing on the differences in crime patterns, prudent determination of bitcoin value

The value of bitcoin is not only related to the defendant’s sentence, but also the victim’s loss calculation and recovery. In judicial practice, each case has its own distinctive features and value assessment model. In the author’s opinion, while referring to the traditional value determination model for property infringement cases, it is necessary to investigate and judge the case from the characteristics of the crime, the clear crime stage, the actual state of possession, and the storage carrier of bitcoin in multiple dimensions.

In this regard, the judicial determination of the value of bitcoin can be considered from several levels: first, if the victim was passively delivered or stolen to obtain the bitcoin stored in the wallet, or if the suspect obtained the bitcoin by post-purchase, the purchase price can be used as the basis for the determination, taking the transaction price of bitcoin at the time of the crime as the reference basis. The purchase price is more likely to be accepted than the transaction price, which is extremely volatile, as evidenced by the transaction records. Second, if the bitcoin has been stored on the trading platform for a long time, and the victim’s purchase records can not be retrieved, although after the suspect in a number of platform sites, and the platform and wallet conversion between the many times still did not achieve the fiat currency cash, can be the basis for the transaction price at the time of the crime, but it should be noted here is due to the large fluctuations in the price of bitcoin, and there is no corresponding conversion transaction mechanism. The price of Bitcoin can fluctuate greatly, and there is no mechanism for converting Bitcoin into fiat currency, so it is more reasonable to use the middle market price as the evaluation standard. Thirdly, in some cases, the suspects have made the final exchange of the illegally possessed bitcoins, and there are records of the sale of the stolen goods to support this. Fourth, with reference to the value of China’s invasion of property cases, if the stolen property does not have a valid price certificate or the amount of theft according to the price certificate is obviously unreasonable, should be commissioned in accordance with the relevant provisions of the valuation agency valuation. However, the author believes that there is no professional authority to appraise the value of bitcoin, and whether the “price determination conclusion” can be supported by the court’s decision, whether the basis for issuing it is objective, and whether the assessment conclusion is objective is yet to be verified, is also a problem that needs to be carefully considered, and needs to be combined with the circumstances of each case.

However, the above assessment models still cannot cover all cases, and the value of bitcoins obtained through mining, for example, faces difficulties due to the cost of mining equipment, electricity costs and other factors.

(D) the construction of social governance pattern, enhance the level of governance rule of law

In recent years, the procuratorial authorities have accumulated some experience in cracking down on crimes in this field, and judging from the verdicts in force in various provinces, the prosecution and the law are gradually reaching unity in terms of characterization and application of the law. However, compared to the rapid development of bitcoin, the endless forms of crime, iterative update of criminal techniques, the procuratorial authorities in the precise fight against new crimes still have a long way to go.

The author suggests that the procuratorial authorities to do a good job of network information technology and criminal law principles of practice graft, relying on the advantages of specialized scientific and technological cases, combined with the case characteristics of early intervention to guide the investigation, especially for the public prosecution identified inconsistent cases, to timely communication and research, to guide the public security organs to regulate electronic evidence retrieval; for the new crime principle research, with the help of experts, to strengthen the ability to combat money laundering crime In order to learn from case by case, case by case communication, and case by case summary, we should actively discuss and study with the courts on the application of laws and sentencing, and unify the standards of prosecution and sentencing in areas with a high incidence of cases, so as to reasonably expand the boundaries of the application of penalties within the legal system.

Single-dimensional reliance on the rules of criminal law and regulations can only treat the symptoms, it is difficult to address the root cause, and actively respond to the high incidence of crime in this area, to rely on criminal punishment to open the way, but also to rely on the construction of judicial and administrative supervision of the joint force, the implementation of the preceding laws and regulations to see results. Although the country has issued a series of policy documents in recent years, but the use of bitcoin money laundering is still in the most marginal area of the anti-money laundering mechanism. The author suggests that, in terms of transaction regulation and risk prevention and control, on the one hand, law enforcement agencies should focus on monitoring the exchange channels between bitcoin and legal tender, and monitor them through traditional means, such as bank transfer records, to achieve real-time supervision and data sharing; on the other hand, they should strengthen the supervision of trading platform websites, of which the supervision of offshore websites and servers is particularly critical, and if necessary, block domain names, change If necessary, block domain names, change access addresses, etc. to reduce access. In addition, the rise of bitcoin intermediaries in recent years should not be underestimated. Some trading websites, although registered outside of China, still engage in buying and selling intermediary services in China by publishing advertisements, resulting in the transfer of funds between buyers and sellers on their personal bank cards, avoiding the exchange link to form a regulatory gap. As a result, a full understanding of the operation of intermediaries and effective regulation of intermediaries could be beneficial in deterring bitcoin money laundering and other types of crime.

At the same time, it is imperative to review the current ecological chain of bitcoin-related crimes, to establish a mechanism for the interface between the executive and the criminal, and to explore innovative criminal paths. Procuratorial authorities and administrative law enforcement departments to actively cooperate closely, if necessary, by the financial regulatory authorities to provide identification services or cooperate with the relevant evidence retrieval, one by one to crack the case of difficult and doubtful issues, so as to enhance the quality and efficiency of criminal cases. Combing the typical characteristics of crime cases in the basin in recent years, in-depth analysis of the bottleneck factors that restrict the handling of new cases, the general consensus of society to build a common prevention and treatment platform is more prominent. It is suggested that daily exchange and mutual appreciation, regular interaction of talents as an opportunity to fully improve the scarcity of network information technology and financial complex talents, which is more meaningful in the long run to break through the traditional thinking of handling cases and adapt to the development of new technologies.

Notes.

[1] See Beijing Haidian District People’s Court Criminal Judgment, (2020) 京 0108刑初第215号.

[2] See Beijing Haidian District People’s Court Criminal Judgment, (2017) 京 0108刑初第725号.

[3] See the Criminal Judgment of the People’s Court of Qingdao City, Shandong Province, (2019) Lu 0203, No. 596.

[4] See the Criminal Decision of Zhoukou Intermediate People’s Court, Henan Province, China, (2021) Yu 16刑终第172号.

[5] See Beijing Haidian District People’s Court Criminal Judgment, (2018) 京 0108刑初第1410号.

[6] See Beijing Haidian District People’s Court Criminal Judgment, (2019) 京 0108刑初第80号.

This article is reprinted from China Prosecutor Public, and the article appeared in China Prosecutor Magazine, May 2021 (Classic Cases Edition)

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/bitcoin-related-crime-issues-and-judicial-responses/
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