Recently, a case involving trading virtual currencies via a VPN has sparked widespread attention in the cryptocurrency community. A user was found to have used a VPN to access a foreign exchange to buy low and sell high on Bitcoin, and was deemed to have acted illegally by local public security authorities, with all of the RMB profits from the transactions classified as illegal gains and confiscated. In addition, the user was fined 15,000 yuan, and even had their phone and computer confiscated as 'criminal tools.' This incident has undoubtedly caused many participants in virtual currency trading to reflect deeply.

Case Review: Trading virtual currencies via a VPN deemed illegal gains

The incident occurred in August of this year, when a public security agency in a certain area of the country received a report that a user named Zhang San (a pseudonym) was using a VPN to bypass the Great Firewall and access a well-known foreign trading platform, profiting from virtual currency trading. After investigation, the public security agency determined that Zhang San's use of a VPN to bypass the firewall constituted illegal behavior, and consequently deemed all profits earned during his trading activities as illegal gains, which were confiscated.

Even more shocking is that similar cases have occurred in the past. Last year, a programmer was deemed to have violated the law for using a VPN to work, and ultimately, over one million yuan of income earned through work was confiscated. Although the nature of the work differs from trading virtual currencies, both share similarities in the context of 'profiting through bypassing the firewall.'

The focal point of the controversy surrounding trading virtual currencies via a VPN

Although virtual currency trading is heavily regulated in the country, it has not been explicitly identified as illegal behavior. So why are the profits from trading via a VPN deemed illegal gains? The core of the controversy lies in interpreting Article 14 of the 'Interim Regulations on the Administration of International Internet Connections of Computer Information Networks':

'Engaging in activities that harm national security, leak state secrets, and other illegal criminal activities through the international internet is prohibited.'

The public security agency believes that bypassing the firewall itself is an illegal act, and the profits obtained through illegal acts naturally belong to illegal gains. Therefore, Zhang San's profits from trading on foreign platforms are also regarded as illegal gains.

Supporters believe that this interpretation helps to regulate online behavior and virtual currency trading, but opponents question whether this interpretation is overly broad and whether there is an inherent connection between the act of bypassing the firewall and the legality of trading virtual currencies.

Currently, while virtual currency trading is strictly restricted in the country, it has not been explicitly defined as illegal behavior. However, accessing foreign platforms to conduct virtual currency trading via a VPN could trigger a series of legal issues:

  1. The illegality of using a VPN to bypass the firewall
    According to current regulations, using a VPN to bypass the firewall without permission is considered illegal. This act itself constitutes a violation, bringing legal risks to subsequent virtual currency trading.

  2. Profits deemed as illegal gains
    The logic of the public security agency is that since bypassing the firewall is an illegal act, the profits obtained during this illegal act naturally fall under illegal gains. This reasoning may lead to more similar cases, placing virtual currency traders at great risk.

  3. Legal ownership of equipment and funds
    In the aforementioned case, the devices of the VPN user, such as their phone and computer, were deemed 'criminal tools' and confiscated, with all trading profits completely forfeited. This serves as a significant warning to ordinary users.

Warnings and Insights

This incident has sounded alarm bells for virtual currency investors. Although virtual currency trading itself is not illegal, using a VPN to access foreign platforms could lead to being deemed illegal due to the act of bypassing the firewall, resulting in confiscation of profits and even more severe penalties.

For ordinary users, regardless of whether they engage in virtual currency trading, it is essential to fully understand and comply with relevant laws and regulations to avoid falling into legal risks due to negligence or a sense of luck. At the same time, relevant departments may need to further clarify legal boundaries regarding such issues to reduce disputes and misunderstandings.

The legal risks of trading virtual currencies via a VPN are becoming apparent, and this real case has provided all investors and practitioners with a vivid lesson in the rule of law.