Investigative agencies usually freeze virtual currency wallets to preserve property and evidence. But the problem is that the legal status of virtual currency is unclear, and the legal basis and rationality of freezing it need to be discussed.
1. What is the reason for freezing virtual currency accounts? What is the legal basis?
The Criminal Procedure Law states that the procuratorate and public security organs can inquire into and freeze the property of criminal suspects, such as deposits and remittances, as needed. However, since the Notice on Preventing Bitcoin Risks was issued in 2013, many courts no longer consider virtual currencies to be property, and crimes involving virtual currencies are no longer sentenced as property crimes. In this case, does the public security organ lack a legal basis for freezing virtual currency accounts?
However, later on, there was a "Regulations on Several Issues Concerning the Collection, Extraction, Review and Judgment of Electronic Data in Handling Criminal Cases", which referred to the traditional property freezing system and established an electronic data freezing system for the first time. This regulation states that freezing electronic data means locking up an online account to prevent the user or owner from tampering with the data in it, in order to preserve evidence. In this way, freezing virtual currency accounts has some legal basis.
But the problem is that it is a bit difficult to connect this regulation with criminal procedure and substantive provisions of the criminal law. There are still many issues that need to be explained in the actual operation of freezing virtual currency.
2. What are the flaws in the legal basis for freezing virtual currency accounts?
In criminal proceedings, freezing is a compulsory measure taken against the property involved in the case used as evidence. However, after the release of the "Electronic Data Regulations", freezing electronic data has become a measure taken by the investigative agency when it is impossible or inconvenient to collect electronic data. However, this investigative measure still has some problems:
Freezing electronic data seems to be different from the original meaning of "freezing". The Criminal Procedure Law states that what is frozen is property, but now virtual currency is frozen as electronic data because of its evidentiary attributes. In this way, freezing seems to have become a measure to preserve evidence, which is different from its original meaning.
The freezing procedures are not perfect enough. The freezing of electronic data is still in its infancy, and the relevant procedures are not perfect enough. For example, there are no clear regulations on how to freeze electronic data and who to target. In addition, the freezing measures are essentially an interference with the property rights of citizens, but the approval is now carried out within the investigation subject, and the judicial supervision role of the procuratorate is not played. For another example, freezing virtual currency requires the assistance of the virtual currency trading platform, but the platform is sometimes suspected of committing a crime, and the assistance obligations and procedures are even more unclear at this time.
So you see, electronic data freezing methods such as freezing virtual currency accounts need to be further improved in legislation and procedural regulations. This will better protect the rights and interests of the parties and ensure judicial fairness!
3. The consequences and remedies of illegal freezing are unclear
Freezing electronic data is meant to preserve evidence. If the rules are not followed when freezing, there should be an explanation, right? The interpretation of the Criminal Procedure Law states that if the electronic data is not obtained in a legitimate way, or the time, place, and method are unclear, it cannot be used as evidence to determine the case. However, this provision is too general and does not clearly distinguish between the various methods of collecting electronic data. In particular, freezing electronic data is a means used by the investigative agency. If it is illegal, the consequences must be made clear. The current problem is that there is no clear definition of what constitutes illegal freezing of electronic data, which has also hindered legislation. I handled a case before, where the victim went to retrieve the defendant's virtual currency transaction data and submitted it. I saw that this was not right, and quickly applied for the exclusion of illegal evidence. If the consequences and remedies for illegal freezing can be more clear, there will be fewer such irregularities.
IV. How to improve the procedure of freezing virtual currency accounts
Having mentioned so many issues above, I will now talk about how to improve the procedures for freezing electronic data such as virtual currency accounts based on my experience in handling cases. First of all, the law must keep up with the times. When the Criminal Procedure Law is revised, the concept and objects of freezing must be expanded to clarify that electronic data can also be frozen. Then, the procedural regulations must also be detailed, such as the review subject, collection method, and assistant system. In addition, now that virtual currency exchanges have moved their platforms and servers abroad, the judicial assistance system for freezing overseas electronic accounts must also be strengthened. Finally, judicial relief is also necessary. If the freezing is illegal, there must be a remedy. The freezing of imperfect electronic data cannot be allowed to become a lawless place that violates the justice of criminal procedure. To put it bluntly, these are all based on the fact that virtual currency is electronic data. But I think the best way is to recognize the property attributes of virtual currency. In this way, virtual currency can be directly subject to traditional freezing regulations, and can also be dealt with as a crime of property infringement in the criminal law.
IV. Conclusion
Generally speaking, freezing the virtual currency accounts involved in cryptocurrency crimes is already the norm. However, because there is no unified understanding of the property attributes of virtual currency in judicial practice, freezing virtual currency accounts requires the use of new electronic data freezing measures. However, this measure was introduced late and there are many problems, such as unclear judicial positioning, imperfect procedural regulations, lack of illegal consequences and relief measures, etc. These must be changed! Fortunately, the cases selected in the People's Court case library now tend to affirm the property attributes of virtual currency, which is different from the previous judgments! This may mean that the understanding of the property attributes of virtual currency will change in the future. If the state clearly affirms the property attributes of virtual currency in the future, then the procedural issues mentioned above will not be a problem!
