Since the P2P field began to explode in 2017, the 2019 Supreme Court issued relevant illegal fund-raising class crime laws and regulations and judicial interpretation, which clarifies what kind of conditions are met and what illegal crimes are suspected. Within the framework of specific judicial interpretations, the public security authorities have focused on combating crowd-related illegal fund-raising economic crimes, which have basically all been implemented to date. The use of virtual currency for illegal and criminal activities is somewhat similar to traditional P2P illegal fund raising, while basically involving network fraud, network marketing, money laundering, the crime of helping information network criminal activities, the crime of illegal business operation, the crime of theft and other acts. This article will analyze them one by one.
The use of virtual currencies for illegal criminal activities is somewhat similar to P2P illegal fund raising cases, and there are also some new criminal means and characteristics. Among them, there are many cases of illegal fund raising using virtual currency, but often because of the relative lag of judicial interpretation and laws and regulations, it cannot be fully characterized, so that there is no law to follow and an iron case can be done.
At the same time, due to some anonymity and other characteristics of virtual currencies, it is difficult to form a complete chain of evidence and capital chain in the investigation and handling of cases using virtual currency crimes. During the booming years of virtual currencies, as virtual currencies have certain financial attributes, leading to the rapid development of different kinds of financial-like derivative transactions of virtual currencies, which often provide new platforms and help for fraud, illegal fund raising, pyramid schemes, money laundering and other criminal acts.
Since the P2P field began to explode in 2017, in 2019 the Supreme Court issued relevant laws, regulations and judicial interpretations on illegal fund-raising crimes, which clarify what kind of conditions are met and what illegal crimes are suspected. Within the framework of specific judicial interpretations, the public security authorities have focused on combating crowd-related illegal fund-raising economic crimes, which have basically all been implemented to date. The use of virtual currency for illegal and criminal activities basically involves network fraud, network marketing, money laundering, the crime of helping information network criminal activities, illegal business crimes, theft crimes, etc. The following analysis is carried out one by one.
Illegal fund-raising and fraudulent crimes suspected by the project issuer
Fund Raising Fraud｜Illegal Absorption of Public Deposit
Blockchain technology is a new and comprehensive computer science and technology, which also contains many financial attributes, thus giving birth to virtual currencies. Unlike the previous Internet technology revolution, every blockchain technology innovation and landing application often issues virtual currencies for financing during the development and establishment process, and the use of projects for financing is the hardest hit area of virtual currency fraud.
We need to pay attention to several points when distinguishing between real and fake projects.
a, the authenticity and non-anonymity of the founding team of the project itself
b. The open source development progress and originality of the project itself
c, the authenticity and legitimacy of the community publicity
d. The reasonableness of the project description
e. Whether the project promises the future value of the virtual currency
f. The authenticity of the business cooperation of the project
g. Whether there is fraud in spot trading and derivatives trading
h、Whether there is community marketing behavior
i. Information and behavior of the main person in charge and members of the market making team in China
j、The relevant virtual currency investment institutions’ investment and joint project parties’ related behaviors
In principle, in the above ten points if no relevant criminal acts are involved, the project is not involved in criminal offences and can be transferred to relevant departments for administrative supervision. During the investigation of such cases, the difficulties lie in the transfer and collection of data evidence, the relevance of the data chain to the suspect, the logic of falsification of the suspected fraud and the expertise of virtual currency and blockchain technology.
Exchanges suspected of fraud, money laundering, facilitating information network criminal activities, illegal business operation, pyramid scheme crimes Virtual currency exchanges, as the top of the virtual currency industry chain, often involve the most numerous and comprehensive crimes.
Fraud｜Illegal operation｜Leading pyramid schemes｜Helping information criminal activities｜Money laundering
The virtual currency exchanges that implement their business activities in China often each have their own unique development ideas, and there is a trend of differentiated business development. Virtual currency exchanges often evade domestic regulation and jurisdiction by registering overseas, or use their registration licenses in certain places overseas as an umbrella for their legal operations.
The Criminal Law provides for four main types of illegal business crimes: first, operating exclusive or proprietary articles or other articles restricted from trading without permission as stipulated by laws and administrative regulations; second, trading import and export licenses, certificates of origin for import and export, and other business licenses or approval documents as stipulated by laws and administrative regulations; third, illegally operating securities, futures, or insurance business or illegally engaging in fund payment and settlement business without the approval of the relevant state authorities; and fourth, other illegal business acts that seriously disrupt the market order.
The third and fourth of them are the most relevant investigation direction for virtual currency exchanges. Some virtual currency exchanges will subcontract the OTC so-called deposit and withdrawal business to third parties in order to avoid the relevant legal risks, because it is the focus of investigation to detect whether the OTC third party has interest connection and business connection with the exchange. At the same time, the virtual currency exchange can also be a key catch for the detection of group events related to the transactions of its platform and the disruption of the normal financial order of the country.
In addition, even if the in and out of the virtual currency trading platform has been subcontracted to third-party teams and individuals, these OTC merchants will also be suspected of money laundering crimes.
OTC acceptors can be divided into bulk over-the-counter acceptors and on-the-counter acceptors, usually bulk over-the-counter acceptors are suspected of money laundering, including those who help accept knowing the illegal proceeds, and those who do not fully verify the identity information of the accepting counterparty. On-site acceptors are registered acceptors in the virtual currency trading platform. Generally speaking, these acceptors have passed the KYC information verification of the exchange before they are listed on the trading platform. These acceptors generally carry out detailed video verification and identity verification with their counterparties before accepting business, and the detection work is relatively easy to carry out.
The crime of helping creditors was added based on the Criminal Law Amendment (IX), as the crime of helping criminal activities in information networks under Article 287 bis of the Criminal Law provides that: “Knowing that others use information networks to commit crimes, providing technical support such as Internet access, server hosting, network storage, communication transmission, or providing assistance in advertising and promotion, payment and settlement, etc., the circumstances are serious If the circumstances are serious, shall be sentenced to fixed-term imprisonment of less than three years or detention, and impose a fine or a single penalty. If the unit commits the crime in the preceding paragraph, the unit shall be sentenced to a fine, and its directly responsible supervisors and other directly responsible persons shall be punished in accordance with the provisions of the first paragraph. The first two paragraphs of the act, and at the same time constitute other crimes, in accordance with the provisions of the heavier penalty conviction and punishment. November 1, 2019 shall come into force.
As a new type of criminal stereotype, the crime of helping to trust fills the gap of industry chain crimes other than money laundering crimes. In addition to OTC offtakers, related trading platforms, virtual currency investment funds, Internet service providers, IDC providers and technology development teams will also be suspected of such crimes.
Among them, there are seven kinds of serious circumstances as follows.
(1) Those who provide assistance to more than three objects
(2) Paying a settlement amount of 200,000 yuan or more
(3) providing funds in the form of placing advertisements, etc., of more than 50,000 yuan
(4) Those who have earned more than ten thousand yuan in illegal income
(5) within two years had been for illegal use of information networks, help information network criminal activities, endangering the security of computer information systems subject to administrative punishment, and help information network criminal activities
(6) be helped by the object of the crime caused serious consequences
(7) Other circumstances of seriousness.
Regarding the network marketing crime involved in the virtual currency exchange, it mainly focuses on the user development structure of the exchange and the user development structure of other products or projects of the exchange.
In summary, the key areas of crime involved in virtual currency exchanges will be more focused on network fraud and help letter crime category, we are familiar with the exchange manipulation of coin prices, pinning, false propaganda, platform coin destruction, etc. are suspected of fraud, through the spot, futures, mining and other types of financial derivatives trading, no matter how to package, also suspected of network fraud. In the process of investigation by the public security authorities, the behavior of not cooperating and not being able to give complete data, etc., is suspected of helping to believe in the crime.
Illegal fund raising, fraud and pyramid scheme suspected of virtual currency mining
Leading pyramid schemes｜Fraud｜Fund raising fraud｜Illegal absorption of public deposits
Virtual currency mining, in addition to the POW mechanism of mining, has been a serious threat to the stability of China’s electricity supply and carbon emission policy, there are also a variety of potential criminal acts. Numerous mining companies and teams often package themselves as storage class data centers and cheat to obtain relevant preferential policies and subsidies.
On May 21, 2021, the Financial Stability Development Committee of the State Council (hereinafter referred to as the Financial Committee) held its fifty-first meeting to study and deploy the next phase of key work in the financial sector. The meeting was chaired by Liu He, member of the Political Bureau of the CPC Central Committee, Vice Premier of the State Council and Director of the Financial Committee, with relevant comrades in charge of the members of the Financial Committee attending the meeting. The meeting called for adhering to bottom-line thinking, strengthening the financial risk all-round scanning and early warning, promoting the reform of small and medium-sized financial institutions to reduce the risk, focusing on reducing credit risk, strengthening the supervision of financial activities of platform enterprises, cracking down on bitcoin mining and trading practices, and resolutely preventing the transmission of individual risks to the social sector. To maintain the smooth operation of the stock, debt and foreign exchange markets, crack down on securities violations, and severely punish financial illegal and criminal activities. To closely guard against external risk shocks, effectively deal with imported inflation, strengthen expectations management, strengthen market supervision, and make good response plans and policy reserves.
Most mining companies will mining machines and the so-called cloud computing power packaged as financial products, with more than three layers of dynamic static rebates so-called bait, while supplemented by the expected high returns, pulling users to invest. Especially with the design of APP cloud computing power products, there will often be backstage modification of output data, secret deductions and other acts, the actual output does not match the displayed output and other phenomena, these phenomena are suspected of fraud, illegal fund-raising and pyramid scheme crimes.
In addition to Bitcoin mining, the recent emergence of IPFS (FileCoin) and related storage virtual currency mining is often the most affected area for this type of crime. Particularly in the sale of mining machines in the pyramid scheme hierarchy, false propaganda and other acts, it is worth focusing on.
Virtual currency quantitative trading has become a new frontier for new types of online fraud
Fraud｜Help Letter Crime
The so-called virtual currency quantitative trading often conducts the concept to users that they will not lose money and will not return to zero, and induces them to invest under the concept of making money in bull markets and coins in bear markets. Virtual currency quantitative trading often leads users to a separately developed APP that guides them to deposit in RMB and recommends the purchase of relevant quantitative strategies.
The alleged crimes committed by quantitative trading APPs mainly include false propaganda, manipulation of coin prices and earnings, and providing traffic entrance shares to virtual currency trading platforms.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/judicial-interpretation-of-illegal-crimes-using-virtual-currency-may-be-issued-soon/
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