Let me start with a question:
Zhang San stole Li Si's virtual currency. Li Si found out and reported it to the police. So what crime should Zhang San be charged with and how many years should he be sentenced to?
Taking someone else's virtual currency by illegal means is often related to two types of crimes in practice: illegal acquisition of computer information system data and theft. The specific crime is not uniform in practice. Some people are convicted of illegal acquisition of computer information system data, some are convicted of theft, and some courts find that the perpetrators are guilty of both crimes and choose the more serious one for punishment.
But no matter which crime is charged, the amount involved is an issue that cannot be avoided.
Whether it is mainstream virtual currencies such as Bitcoin and Ethereum, or altcoins (such as platform coins and Meme coins), large price fluctuations are their common feature. The sharp rise and fall of the coin price affects the hearts of countless investors (this may be the excitement and fun of cryptocurrency trading).
However, in criminal cases, if the price of a currency fluctuates significantly in a short period of time, how should the amount of money involved in the case be determined? Different amounts calculated by different identification standards may directly determine the future direction of the case.
Article by Lawyer Shao Shiwei
01. Different ways of determining the price of a currency directly affect the direction of the case
Let me tell you a case (to protect privacy, the case content has been slightly modified, only to illustrate the legal issues, the currencies and prices involved in the case do not match the actual case):
Zhang San and Li Si met in a group of people who like to trade cryptocurrencies. Zhang San has been trading cryptocurrencies for several years and is considered a senior crypto person. Li Si is a newbie who knows nothing, so he always asks various 1+1=2 questions in the group. Zhang San is also quite enthusiastic. Whenever he sees questions from newbies in the group, he will patiently help answer them. After a while, the two of them became familiar with each other and added each other as friends.
One day, Li Si asked Zhang San how to operate the transaction. Zhang San asked him to send a screenshot. Li Si took a screenshot of his ImToken wallet page and sent it to Li Si. The next day, Li Si found that the PEPE coins in his wallet had inexplicably returned to zero? ? He immediately reported the case. Then Zhang San was arrested and charged with illegally obtaining computer information system data and sentenced to eight months in prison.
It turned out that when Li Si took a screenshot for Zhang San, he didn't notice that he also took out the private key. After Zhang San saw it, he used the private key to restore (import) the wallet and transferred the PEPE coins in Li Si's wallet address to his own wallet.
According to the second paragraph of Article 285 of the Criminal Law, if the illegal income exceeds 5,000 yuan or causes economic losses of more than 10,000 yuan, the perpetrator shall be guilty of illegally obtaining computer information system data or illegally controlling computer information systems and shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention. The court determined that the PEPE coins transferred by Zhang San were worth 12,000 yuan, and the eight-month sentence for Zhang San was generally appropriate based on this amount.
But is this case absolutely uncontroversial? Of course not.
First of all, Zhang San did not have any illegal income. Because the PEPE coins transferred to his wallet were transferred to the exchange by Zhang San for trading, and he lost all his money. There are relevant transaction records and there is no dispute.
Secondly, the court determined that the value of PEPE coins was 12,000 yuan based on the real-time price at zero o'clock on the day when Zhang San transferred Li Si's tokens on a certain exchange. Is the choice of this time point scientific?
Should the value of the tokens involved in the case be based on Li Si’s purchase price, the real-time market price of the tokens transferred by Zhang San, the price at which Zhang San exchanged the tokens for USDT, or should it be based on the price of judicial audit (but there was no audit in this case, and the amount involved was determined directly in the form of the police’s record of Zhang San) as the basis for the final decision?
As luck would have it, the real-time price of PEPE coin at midnight on that day was exactly the highest price point of that day and that month. According to the other time points mentioned above, the price of PEPE coin had not exceeded 10,000 yuan, which means that it did not reach the starting point standard for conviction and sentencing in this case.
02. What are the ways to determine the price of a currency?
According to policy regulations, although virtual currency does not have the same status as legal tender, civil legal acts caused by related transactions are invalid and losses are borne by the individual. However, as a virtual commodity, its property attributes are recognized by my country, so at the criminal level, virtual currency held by citizens is protected by law.
However, how to judge the value of virtual currency is an awkward issue in practice. After all, the announcements or notices issued by relevant ministries and commissions stipulate that "no organization or individual may provide pricing services for virtual currency." Therefore, no matter which pricing method is used, it violates my country's regulatory policy.
The methods commonly used in judicial practice to determine the price of virtual currency are:
1. The price determination agency or judicial appraisal agency shall issue a report;
2. The consideration paid for purchasing virtual currency;
3. The consideration for the realization of virtual currency;
4. Refer to the prices of mainstream virtual currency exchanges;
5. The value is not calculated and is determined at the discretion of the court;
The second and third methods above clearly define the time nodes for calculating the currency price, which are "at the time of purchase" and "at the time of cashing out", but they are still not accurate enough. The first and fourth methods are just different methods for determining the currency price, but the specific time nodes selected must still be considered when determining.
03. In judicial practice, how to choose the time node for calculating the currency price?
1. According to the amount of illegal income
If the perpetrator sells the currency transferred from the victim and exchanges it for legal currency, this is of course the simplest scenario. The perpetrator has illegal gains, and the amount of illegal gains can be used as the basis for the final decision.
For example, in the case of (2023) Hu0104 Xingchu No. 856, Yang Mou obtained the target virtual currency website permissions by analyzing and exploiting the Yapi remote code execution vulnerability, and then controlled the intranet server by means of lateral penetration of the intranet and implanting Trojans. After finding the server source code, he downloaded and analyzed the victim Su's virtual wallet address, private key, etc., and constructed a false instruction to transfer the virtual currency in the victim's virtual wallet address. Subsequently, he exchanged it for other virtual currencies and sold them, obtaining a total of more than 2.5 million yuan in illegal income. The court sentenced Yang Mou to ten years and six months in prison for the crime of theft.
However, if the cost for the victim to obtain virtual currency is far greater than the price paid by the perpetrator for stealing and reselling the currency due to large fluctuations in currency prices, the interests of the victim cannot be well protected if the case is characterized according to the amount of illegal proceeds.
2. According to the middle price on the day when the illegal act occurred
Due to the large fluctuations in the price of virtual currency, the price may rise or fall by tens or even hundreds of dollars on the same day, depending on the currency. When determining the price based on the date when the illegal act occurred, from a defense perspective, one can of course choose the specific time point when the crime occurred, or the average price of the day.
For example, in the following case, the amount involved was calculated based on the average transaction price on the day the defendant stole the company's Ethereum and the midpoint of the RMB exchange rate against the US dollar announced by the People's Bank of China on the same day.
In the case of (2020) Yue 0304 Xingchu No. 2, the defendant Li used the private key and payment password of the Haode Planet project that he had previously obtained at his residence on June 20, 2019, and logged into the account PK-New Wallet opened by Haode Company on the IMToken virtual trading platform through the Internet on his mobile phone to steal 3 Ethereum coins. The screenshots of the market transaction records on HuobiGlobal submitted by the victim unit confirmed that on June 20, 2019, the highest transaction price of Ethereum was US$270.68, the lowest was US$265.85, and the average price was US$268.265.
3. Unable to set a price, consider it as appropriate
In the above-mentioned case (2020) Yue 0304 Xingchu No. 2, Li, as an employee of the company, not only stole the company's Ethereum, but also stole 4 million Haode coins developed by the company. However, since the Haode coins involved in the case were not publicly traded when they were stolen, the court believed that the value could not be calculated. The court only vaguely stated in the judgment that this circumstance was taken into consideration (Note: After the incident, the defendant had returned all the Haode coins to the company. Judging from the judgment, this lawyer believes that the court should not have considered this circumstance).
4. According to the price at the time of appraisal by the price appraisal agency
In practice, there is another pricing method, which is to determine the price according to the final appraisal date of the third-party appraisal agency. For example, in (2020) Sichuan 1425 Criminal First Instance No. 1, the price of the virtual currency involved in the case was generally determined based on the price on the final appraisal date of the Computer Judicial Appraisal Institute of Panshi Software (Shanghai) Co., Ltd.
Compared with using the price at which the illegal act occurred, or the purchase price of the victim or the selling price of the perpetrator as the basis for the verdict, Lawyer Shao believes that pricing based on the appraisal date loses the objectivity of determining the price of virtual currency and is not reasonable.
04. Final words
In criminal cases, there is no unified standard in judicial practice on how to calculate the amount of virtual currency involved. Even in the same case, the procuratorate and the court are "fighting" with each other.
For example, in the case of 2020 Shanghai 0106 Criminal First Instance No. 551, regarding the amount of Tether stolen by Luo, the procuratorate filed a public prosecution based on the platform transaction price at the time of Luo's theft, which was equivalent to RMB 12 million. However, the court stated that my country does not recognize the transaction price data of virtual currencies on any virtual currency transaction price information publishing platform, so it should not be determined that the Tether involved in the case is worth more than RMB 12 million based on the historical price calculation of the relevant website, and the relevant defense opinions of the defense counsel were adopted. In the end, the amount of the crime was determined based on the actual profit of Luo of RMB 900,000.
Therefore, from the perspective of criminal lawyers, in specific cases, the pricing dispute of virtual currency is precisely where lawyers have room for defense.
Just like the case mentioned at the beginning of this article, if we change our way of thinking, the person involved may be innocent.
