Article reprinted from: Xiao Za lawyer.
The so-called 'job-related crime' in our criminal law system is not a single crime, but refers to the act of personnel from state agencies, state-owned companies, enterprises, public institutions, and people's organizations using their existing authority to embezzle, accept bribes, engage in favoritism, abuse power, neglect duty, infringe upon citizens' personal rights and democratic rights, and undermine the regulations governing public activities of the state, which should be criminally punished under the criminal law.
The Sa Jie team has found in practice that currently, the crimes of embezzlement and bribery by state agency personnel, as well as job-related embezzlement by non-state personnel and bribery by non-state personnel, are increasingly involving crypto assets—more and more people are using crypto assets as a secret tool for transferring benefits.
Today, the Sa Jie team will take recent cases that have emerged/broken as examples to discuss some key information revealed by these job-related crimes involving cryptocurrency in the crypto era.
01, Review of Recent Major Cases Involving Cryptocurrency and Job-Related Crimes.
What are the characteristics of cryptocurrency? An early and fundamentalist narrative describes it as follows: cryptocurrencies are characterized by decentralization, anonymity, immutability, fast transaction speeds, low transaction costs, and global peer-to-peer transactions.
Looking at it now, the above understanding of cryptocurrency is both right and wrong. At least, with the development and advancement of technology, the anonymity of cryptocurrency has decreased more and more. The so-called 'anonymity' is becoming a general means for ordinary people to protect their trading privacy. In other words, if judicial authorities, technology companies, and other technically powerful entities want to investigate, most transaction information is not hidden.
CSRC senior official involved in cryptocurrency job-related crime case.
Recently, the disciplinary inspection team of the China Securities Regulatory Commission (CSRC) and the Guangdong Supervisory Commission jointly issued a notice stating that the former director of the CSRC's Technology Supervision Department seriously violated discipline and law, abused regulatory powers such as policy recommendations, formulation, and execution, neglected technological supervision responsibilities, and sought improper benefits for others in the business expansion and hardware and software procurement of information technology system service agencies, using virtual currencies for power-money transactions.
From the announcement, the CSRC official may be suspected of multiple crimes, and the possibility of being involved in bribery is quite significant.
According to Article 385 of our country's criminal law, the crime of bribery refers to state personnel using their position to solicit or illegally accept property from others, or to seek benefits for others, which constitutes bribery. State personnel who violate national regulations and receive various kickbacks and service fees in economic transactions, keeping them for personal use, shall be punished for bribery.
Generally, the case filing standard for bribery is set at 30,000 yuan. In terms of sentencing, for amounts exceeding 30,000 and below 200,000 yuan, the penalty is up to three years of imprisonment or detention, along with a fine; for amounts exceeding 200,000 and below 3 million yuan, the penalty is three to ten years of imprisonment, along with a fine or confiscation of property; for amounts exceeding 3 million yuan, the penalty is ten years or more of imprisonment or life imprisonment, along with a fine or confiscation of property.
Beijing 140 million yuan virtual currency embezzlement case, recovering 89 million yuan.
On December 20 of this year, the Beijing Municipal People's Procuratorate released a case from the 'Protect Enterprises' special action: an employee of a certain company used their position to defraud company property and transferred the criminal proceeds using multiple overseas crypto asset trading platforms and 'mixers'.
From 2020 to 2021, Feng used his position as a service provider at a technology company and the regional operations growth department to conspire with Tang and Yang to defraud the company of service provider bonuses totaling over 140 million yuan.
Subsequently, Feng directed Tang and Yang to use eight overseas virtual currency trading platforms to convert the funds involved from yuan to virtual currency, obscuring the source and nature of the funds through overseas 'mixing' platforms, transferring them through multiple levels in the form of virtual currency. Part of the funds flowed into accounts controlled by Feng and others in yuan form, while some of the funds were concealed by Feng and others in the form of virtual currency.
After the case occurred, Feng voluntarily returned 92 Bitcoins (if the price of BTC is calculated at 100,000 USD per coin, approximately 66.9 million yuan), recovering over 89 million yuan in total, maximizing the economic loss recovery for the victim unit.
Since Feng is not a state agency employee and the victim company is neither a state agency nor a public institution, Feng's act of defrauding the company's finances using his authority is suspected of 'job-related embezzlement.' Article 271 of our country's criminal law states that personnel from companies, enterprises, or other units who illegally take possession of their unit's property through their position, with a large amount, shall be sentenced to imprisonment for up to three years or detention, along with a fine; for a huge amount, the penalty shall be three to ten years of imprisonment, along with a fine; for an exceptionally huge amount, the penalty shall be ten years or more of imprisonment or life imprisonment, along with a fine.
It should be noted that on April 29 of this year, the Supreme People's Procuratorate and the Ministry of Public Security jointly issued the revised regulations regarding the case filing and prosecution standards for criminal cases under the jurisdiction of public security organs, adopting the same entry standards for the crime of bribery and other job-related crimes by non-state personnel. The new regulations clearly state that personnel from companies, enterprises, or other units who illegally take possession of their unit's property through their position, with an amount exceeding 30,000 yuan (the original standard was 60,000 yuan), shall be prosecuted.
Regarding the sentencing for job-related embezzlement, with the upcoming enactment of the 11th amendment to the criminal law in 2020, which adjusts the sentencing range from two levels to three levels, the judicial interpretation has not yet been synchronized and improved. Therefore, in practice, the sentencing for this crime generally follows the following provisions and judicial practices:
02, What key information do the examples of job-related crimes involving cryptocurrency reveal?
Why do we say that using cryptocurrency for bribery is nothing or everything? This is due to the characteristics of blockchain technology where on-chain data is immutable and publicly transparent—the crypto assets themselves are quite concealed, but once the criminal facts are verified, they become solid evidence.
In the cases related to job-related crimes previously handled by the Sa Jie team, clarifying the fund flow and direction of the criminal suspects' job-related crimes is often the top priority of such cases. Many criminal suspects will use their social connections to conceal and disperse the crimes through various secretive measures, establishing layers of risk isolation.
However, in cases involving the use of crypto assets to commit job-related crimes, the flow of funds is often quite complete and traceable, and the authenticity is guaranteed. Once it is verified that there is a connection between the flow of funds involved and the criminal suspect's job-related crime (which is often the difficulty in investigating such cases), the relevant on-chain data will become solid evidence of the crime.
From recent cases involving job-related crimes associated with cryptocurrency, several key pieces of information have been revealed by our judicial authorities in handling such cases:
1. Investigative technology has significantly improved, and mixers are no longer a tool for money laundering/concealing criminal proceeds.
From the public prosecution case of embezzlement released by the Beijing Municipal People's Procuratorate, it can be found that even if the criminal suspect used multiple cryptocurrency trading platforms and even mixers to obscure the funds' flow, the criminal facts are still grasped by the judicial authorities. Therefore, the Sa Jie team believes that for the investigative technology of judicial authorities in our country (and reasonably speculating that other major economically developed countries and jurisdictions have similar levels of technology), the currently mainstream mixers can only increase the workload of investigation, and if they want to investigate, they can definitely find out.
2. Recovering funds in job-related crimes involving cryptocurrency still mainly relies on the active cooperation of the criminal suspects.
This point can actually be seen from the recent cases handled by the Sa Jie team regarding the unfreezing of overseas crypto assets—crypto assets do indeed have a specificity that distinguishes them from other assets—retrieving stolen assets largely relies on the cooperation of the criminal suspects.
Taking USDT as an example, if a criminal suspect exchanges the criminal proceeds for USDT or other stablecoins and conceals that portion of the assets, even if the flow of that fund can be traced, the funds are controlled by foreign individuals, and our judicial authorities can only issue a judicial freezing order to the issuer Tether, requiring the freezing of that fund. The actual outcome is that the foreign criminal suspect cannot use the involved funds, but our judicial authorities cannot directly recover them.
If the funds are exchanged for BTC, ETH, or other crypto assets and concealed in cold wallets, controlled by foreign individuals, our judicial authorities may even be unable to effectively freeze them, making recovery even more difficult.
03, Final Remarks.
With the arrival of the bull market led by BTC and the integration and cooperation between the traditional financial system and crypto assets, the entire industry's scale is continually expanding. According to the Sa Jie team, it is believed that crypto assets will increasingly become a common means in job-related crimes in the future.
On one hand, this requires our disciplinary inspection and supervisory agencies, as well as public security organs, to quickly strengthen their understanding of crypto assets and upgrade their investigative techniques; on the other hand, personnel from state agencies and corporate executives should also realize that crypto assets are not a panacea for transferring benefits and should not recklessly touch the criminal red line with a fluke mentality.
