China's recent first case of confiscating profits from wall-jumping cryptocurrency trading has sparked heated discussions. The individual involved used a VPN to bypass restrictions and engage in cryptocurrency trading, with illegal gains of 90,000 yuan confiscated and fined. Legal analysts suggest this may lead some users, out of conflicts of interest or jealousy towards successful traders, to initiate a wave of reports against wall-jumping. (Background context: A young Chinese man was sentenced to five years in prison for 'indirectly exchanging' USDT for RMB using Binance) (Background information: Trading USDT in China can lead to more than five years in prison; a court in Guangdong ruled it constitutes illegal foreign exchange trading, endangering national financial security) Recently, a case involving the confiscation of profits from wall-jumping cryptocurrency trading in China has sparked widespread debate. According to local lawyer Wu Enxiang, in August of this year, a public security agency in a certain area of the country ruled that using a VPN to engage in virtual currency trading is illegal and has the right to confiscate the profits. Details of the VPN wall-jumping case show that the public security agency found that the individual Zhang San used a VPN to illegally connect to the internet without approval, contacted buyers through offshore platforms to purchase virtual currencies at low prices, and sold them at high prices on overseas trading apps, profiting from the transactions. Investigations revealed that Zhang San's actions involved the sale of virtual currencies, and during the operation, he illegally profited 90,000 yuan. Eight mobile phones and eight sets of computers in his studio were seized as tools of the crime. Profits of 90,000 yuan were confiscated. After being summoned, Zhang San came to accept the investigation. The public security agency determined, based on Article 6 and Article 14 of the (Interim Regulations on the Administration of International Internet Connections) and Article 11, Paragraph 1 of the (Public Security Administration Punishment Law of the People's Republic of China), that Zhang San's actions constituted unauthorized use of illegal channels for international internet access, issuing a warning and imposing a fine of 15,000 yuan, while also confiscating the illegal gains of 90,000 yuan and the tools used in the crime. Could this trigger a wave of reports against wall-jumping? This case has sparked heated discussions in the Chinese community as it links the act of 'wall-jumping for cryptocurrency trading' to the determination of 'illegal gains.' Some believe this enforcement action may lead some users, either due to conflicts of interest or jealousy towards successful traders, to initiate a wave of reports against wall-jumping. In the future, Chinese users engaging in cryptocurrency trading using VPNs may need to be more cautious, as this case could become a benchmark for future enforcement. If the determination of illegal gains from wall-jumping and cryptocurrency trading becomes commonly applicable, then in China, wall-jumping for cryptocurrency trading will face the risk of confiscation of profits. Lawyer Wu Enxiang stated that this could almost be seen as the Chinese authorities about to issue clear regulations: wall-jumping for cryptocurrency trading is illegal, and the profits from such trading will be confiscated. Can profits from wall-jumping for cryptocurrency trading be confiscated? Lawyer Wu Enxiang analyzes whether profits from wall-jumping for cryptocurrency trading can be confiscated based on the following three points: 1. Wall-jumping behavior According to relevant regulations, internet users must use internationally approved channels for international internet access. Some argue that wall-jumping utilizes existing domestic telecom networks and does not establish new channels, thus not constituting illegality. However, enforcement agencies typically regard wall-jumping as illegal. The key point of this case is not whether wall-jumping itself is illegal, but whether the profits generated from illegal wall-jumping can be categorized as 'illegal gains.' 2. Determination of illegal gains According to regulations, if there are illegal activities that generate income, enforcement agencies may confiscate the 'illegal gains.' In this case, enforcement agencies believe that Zhang San's wall-jumping behavior directly led to the profits from cryptocurrency trading and thus consider it illegal gains. However, Wu Enxiang points out that trading cryptocurrencies is not illegal in itself, and classifying subsequent legitimate profits as illegal gains solely due to wall-jumping lacks legal basis. According to relevant laws, 'illegal gains' should be limited to profits that are highly related to illegal activities, such as the direct act of selling VPNs, rather than indirectly generated profits. If this logic is expanded, should the income of foreign trade operators who negotiate and sign contracts with overseas clients via wall-jumping also be regarded as illegal gains? Such a determination is clearly unreasonable. For example, if someone uses a fake license plate to evade tolls, administrative agencies can punish the illegal act but cannot confiscate their salary during working hours, as there is no direct causal relationship between the two. Similarly, profits from cryptocurrency trading do not have a direct correlation with wall-jumping behavior. 3. The Administrative Punishment Law (Article 6 of the Administrative Penalty Law) states that administrative penalties should 'correct illegal behavior and adhere to the combination of education and punishment,' aiming to promote compliance among citizens and institutions, rather than merely punishing for the sake of punishment. Therefore, if enforcement agencies confiscate the profits from subsequent legal activities solely due to wall-jumping behavior, it may deviate from the educational intent of administrative penalties. Related reports: Borrowing 80,000 USDT without repayment is not a crime! Chinese court rules: virtual currencies have no legal claim, losses are self-borne. Scholars point out four major problems in the Chinese economy: 'content too explicit' goes viral in communities. Tsinghua University in China’s 'Bitcoin online course' climbs to Douyin's hot list, public pleading for investment channels. 'Wall-jumping for cryptocurrency trading is illegal! Chinese judges rule that all profits from crypto investments are confiscated, could this trigger a wave of reporting?' This article was first published on BlockTempo (the most influential blockchain news media).