Virtual currency, as a product of e-commerce, has become increasingly widespread in the market economy, and its application involves more and more fields. Due to the property of virtual currency, how to characterize and divide this part of property in divorce disputes has become a focus of attention.
This article searches on the judicial document website, using “marriage and family” disputes as the reason and “virtual currency” as the keyword. Currently, only 9 cases are retrieved on the website, and none of the cases involve identification and division of this property.
This article will combine civil and criminal cases involving virtual currency, and discuss with everyone the division of virtual currency in divorce disputes from the aspects of the ownership of virtual currency and how to determine and divide its value.
I hope everyone can learn relevant knowledge, but try not to use it. After all, harmony in the family leads to prosperity in all other areas!
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I. Legal Property of Virtual Currency
Virtual currency has property rights in law. Article 127 of China’s Civil Code stipulates that the protection of data and virtual property in the network is regulated by law. In specific cases, some courts cite this provision and believe that virtual currency belongs to virtual property in the network, and therefore has property interests and should be protected by law.
For example, in the second-instance civil judgment of Li vs. Wang in the Shanghai First Intermediate People’s Court (No. (2020) Criminal Hushi 01 Minzhong 12524), the court found that USDT (Tether) involved in the case belongs to virtual property in the network and is protected by law. The law takes a positive attitude towards the protection of virtual property in the network. The disputed USDT (Tether) is a virtual object based on data, and the owner has the exclusive right to possess, dispose of, and use it. It has the characteristics of the object of rights.
In addition, in criminal cases, some courts have convicted defendants who committed crimes against virtual currency of theft, affirming the property rights of virtual currency.
Part II. Virtual currency as joint property of spouses
1. Purchased with joint property
According to Article 1,062, Paragraph 1 of the Civil Code of the People’s Republic of China, profits from production, operation and investment during the existence of the marriage relationship belong to the community property of the spouses. During the existence of the marriage relationship, the purchase of virtual property with joint property of spouses belongs to an investment behavior, and therefore, the property and income generated thereof should be community property of the spouses.
In this situation, it is relatively easy for the party who proposes the division of the virtual currency to provide evidence, as long as it can be proved that the expenditure was incurred during the existence of the marriage relationship. However, if the holder of the virtual currency purchased it privately and did not inform the other party of the specific situation, it would be more difficult for the other party to obtain evidence.
2. Income obtained from investment with personal property
According to Articles 25 and 26 of the Interpretation (I) of the Supreme People’s Court on the Application of the Civil Code of the People’s Republic of China, the income obtained by one spouse through investment with personal property belongs to the community property of the spouses; the income generated by personal property of one spouse during the marriage, except for interest and natural appreciation, should be recognized as community property of the spouses.
In this situation, if one spouse purchases virtual currency with personal property before or after marriage, and engages in business activities during the existence of the marriage relationship ( such as buying and selling, investment behavior, etc. ), the income obtained should belong to the community property of the spouses . However, if one spouse purchases virtual currency with personal property before marriage and then forgets about it and does not manage or trade it again, the natural appreciation of this virtual currency cannot be treated as community property of the spouses ( it seems that holding the currency without trading it has its benefits… ).
In this case, the holder of the virtual currency needs to prove that the original funds used to purchase the virtual currency belong to personal property, while the party applying for division needs to prove that the holder of the virtual currency has managed the investment during the existence of the marriage relationship.
3. Determination of the Value of Virtual Currency
If the court rules that the two parties must divide virtual currency, how should the valuation be determined?
1. Determining Value Based on Market Transactions
In practice, determining the value of virtual currency based on market transaction amounts is one of the more fair ways. For example, in the criminal judgment of the first instance of Ji, suspected of theft, case No. (2018) Shanghai 0104 Xing Chu 203, the court adopted the calculation method and conclusion of the public prosecution organ according to the documentary evidence on the case, based on the official selling price of the virtual currency of the victim unit , which is objective, legal, and effective.
2. Determining Value Based on Evaluation by a Professional Appraisal Institution
Determining the value of virtual currency through appraisal is also one of the commonly used methods in practice. For example, in the case of Li, Zhang, and Huang who aided in online criminal activities, case No. (2020) Sichuan 1425 Xing Chu 1, in Qingchuan County People’s Court of Sichuan Province, the amount of pyramid scheme funds totaled RMB 86511967.3425 yuan [10941570.29 USDT (with a market value of about RMB 65649421.74 yuan), 16845.16883 ETH (with a market value of about RMB 16845168.83 yuan), and 160.6950709 BTH (with a market value of about RMB 4017376.7725 yuan)] as appraised by the computer judicial appraisal center of Panshi Software (Shanghai) Co., Ltd. The number of user levels in the “BHB” trading pyramid scheme activity was 18, and the number of users was 7,967.
3. Determining Value Through Negotiation or Bidding
In divorce disputes, considering the litigation costs and time costs, both parties can also prioritize negotiation or bidding to determine the ownership and corresponding value of the virtual property to be divided.
4. Division of Virtual Currency
If virtual currency is to be divided, how should it be divided? Should the virtual currency be directly divided or should it be converted to RMB for distribution?
1. Payment of Equivalent Value
Payment of equivalent value is one of the most common ways to divide property, so when dividing virtual property, both parties can also use this method, that is, the party holding the virtual currency compensates the other party for the virtual currency that should belong to them.
2. Splitting the Quantity
Splitting virtual currency by quantity does not affect its trading or valuation. Therefore, in divorce disputes, virtual currency can be split by quantity, and each party holds their respective portion.
Article 1062 of the Civil Code of the People’s Republic of China: The following property acquired by the spouses during the existence of the marriage relationship is the common property of the spouses and belongs to the spouses jointly:
Wages, bonuses, and labor remuneration;
Returns on production, operation, and investment;
Returns on intellectual property;
Property inherited or donated, except as provided in item (3) of Article 1063 of this Law (property determined in a will or donation contract to belong only to one party); and
Other property that should be jointly owned.
The spouses have equal rights to deal with the common property.
Article 25 of the Interpretation (I) of the Supreme People’s Court on the Application of the Civil Code of the People’s Republic of China on Marriage and Family: The following property belongs to the “other property that should be jointly owned” as provided in Article 1062 of the Civil Code during the existence of the marriage relationship:
(1) Income obtained by one party through investment of personal property;
(2) Housing subsidies and housing provident fund actually obtained or that should have been obtained by both parties;
(3) Basic pension and bankruptcy resettlement compensation actually obtained or that should have been obtained by both parties.
Article 26: The income generated by one party’s personal property after marriage, except for interest and natural appreciation, should be recognized as common property of the spouses.
Article 1063 of the Civil Code of the People’s Republic of China: The following property belongs to one party’s personal property:
Property owned by one party before marriage;
Compensation or indemnity received by one party for personal injury;
Property determined in a will or donation contract to belong only to one party;
Living items for one party’s exclusive use; and
Other property that should belong to one party.
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