Criminal Qualification of Using Virtual Currency for Illegal Fund Settlement


Virtual currency is a highly electronic electromagnetic data generated by complex algorithms based on modern information technology and cryptography, and is widely used in settlement and transfer of illegal funds due to its characteristics of anonymity, decentralization and global circulation. Settlement and transfer of illegal funds through virtual currency have seriously hindered the investigation and punishment of criminal offenses by judicial authorities. The parties who implement settlement activities may also be implicated in crimes such as money laundering, concealment or assistance in information crimes. In practice, there is a criminal qualification dispute over the use of virtual currency to settle illegal funds, focusing on the distinction between the crime of assistance in information crimes and the crime of concealment. This article will discuss the criminal nature of settlement activities based on the nature of virtual currency, in order to help combat cybercrime and achieve accurate conviction and sentencing.

I. The Issue – Practical Qualification Disputes over the Use of Virtual Currency to Settle Illegal Funds

Currently, the use of virtual currency to settle and transfer illegal funds has the characteristics of a large number of people involved, diverse methods, and huge settlement funds. The methods include but are not limited to: lending personal accounts, brushing and selling, using score platforms for transfer, and other methods. Among them, the score platform has become the main way to settle and transfer funds using virtual currency, which is increasingly affecting the normal financial circulation pattern of the Internet. The use of virtual currency to settle illegal funds generally involves three charges: money laundering, concealment of crime proceeds, and assistance in information network crime. First, for money laundering charges, if the funds transferred and settled by upstream criminal activities belong to the seven types of special criminal proceeds and their generated income stipulated in Article 191 of the Criminal Law, according to the principle of speciality over generality, money laundering charges should be applied. There is no dispute here. Second, the main difference in practice is that the source of the proceeds of upstream crimes is related to the crimes of concealment and assistance in information beyond the seven crimes. Different courts in different regions have different punishments for the same settlement behavior, such as providing bank accounts to help transfer funds, which has led to the unclear nature and inconsistent punishment of this behavior. It is necessary to establish a unified standard to maintain the authority of the judiciary.

2. Discussion and Debate – Reasons for Practical Disputes

There is no unified standard for determining the use of virtual currency to settle illegal funds, mainly for the following three reasons: First, virtual currency has special characteristics and is difficult to regulate due to its decentralization, which makes it illegal in China. Using virtual currency to settle funds actually uses its advantages over fiat currency; Second, there are currently various ways of using virtual currency to settle funds, and the social harm of different behavioral patterns is different. Therefore, the court will consider the degree of assistance in fund transfer for different behavioral patterns. Thirdly, there is no unified document regulating the application of the two crimes of concealment and payment-type helper crime, which can dispose of downstream actors using the Internet to help upstream criminals settle accounts, resulting in inconsistent convictions and sentencing. The following will elaborate on the above three points in detail.

(1) Various Ways of Using Virtual Currency to Settle Illegal Funds

According to statistics, in practice, there are various ways of using virtual currency to settle and transfer illegal funds, including simply lending a bank card account, helping with false virtual currency exchange, participating in brushing single transactions, and using score platforms to collect money for others to earn commissions. In terms of social harm and subjective malice, the nature of simply providing a bank card for a fee and personally participating in fund transfer settlement is definitely different. The court also believes that the former constitutes the less severe helper crime, while the latter is an example of a concealment crime. Therefore, different styles of settlement behavior are one of the reasons for inconsistent conviction.

(2) The Special Nature of Using Virtual Currency to Settle Illegal Funds

The essence of using virtual currency to settle funds is to evade the legal pursuit of upstream crimes by using the anonymity, global circulation, and difficult-to-regulate nature of virtual currencies. The principle is that first of all, the threshold for virtual currency account registration is low and does not reflect personal features recognizable by account owners, so people who can register accounts to participate in virtual currency transactions are widely distributed. Secondly, based on the global circulation of Internet information technology, account owners can easily cross geographical restrictions and trade virtual currencies globally, transferring crime proceeds to overseas, making it difficult for supervisory authorities to investigate and deal with. Finally, as a currency issued by non-administrative authorities, virtual currency often operates outside the central financial management system and can hide the whereabouts of funds through multiple transactions. In fact, virtual currency mainly relies on blockchain technology, and blockchain technology is a product of the development of information technology. In the context of the global cooperation of anti-money laundering, the dynamic supervision system of banks continues to improve, and the widespread use of blockchain companies to assist in the case, it becomes easy to trace the source of virtual currency. In this case, does the offender use the Internet to transfer illegal funds to help crime, but does it play a role in concealing and hiding? This is also an important argument for distinguishing the two crimes in later texts.

(III) The Elements of the Crime of Helping Network Crime and Concealing Crime Coincide

The crime of helping network crime punishes acts of natural persons or units who knowingly provide technical support such as Internet access, server hosting, network storage, communication transmission, etc., or provide advertising promotion, payment settlement, and other assistance for others to commit crimes using the Internet, with serious circumstances. It can be seen that the objective aspect of the crime of helping network crime has diverse ways of behavior and can almost cover all the means of assistance required for network crime. “Etc.” is used to prevent omissions. Therefore, this crime is prone to overlap with other crimes in the Criminal Law, such as the crime of concealing or concealing the proceeds of the crime. Specifically, the crime of concealment mainly regulates acts of hiding stolen money that obstruct investigation, mainly manifested in transferring stolen money through various payment and settlement methods. Based on the comprehensive use of the Internet, more and more criminals choose to use network methods to achieve the above purposes, so there are overlaps between the two crimes.

III. Defense and Key Points-The Qualification of Helping Network Crime Is More Reasonable

The criminal nature of defining the use of virtual currency to settle illegal funds is of great significance, which can determine a unified conviction standard for practice, and is conducive to the implementation of the principle of legality in crime and punishment. Combining the characteristics of virtual currency and the similarities and differences between the two crimes, the author believes that no matter how the act of using virtual currency to settle illegal funds is carried out, it should be classified as a crime of helping network crime. As for the social harm of the behavior mode, it should be considered when sentencing. The following will elaborate in detail.

(I) Similarities and Differences between the Crime of Concealment and the Crime of Help Trust

As mentioned earlier, due to the wide range of objective behavior modes of the crime of helping network crime, and the increasing number of cases where criminals choose Internet methods to transfer stolen money, there is a situation where the two crimes overlap in the disposal of the use of virtual currency to settle illegal funds. However, there are still significant differences between the two crimes, mainly: first, the behavior of helping network crime generally occurs in the upstream crime process and is an auxiliary means of upstream crime, while concealing and concealing the proceeds of the crime occurs after the upstream crime is successful and belongs to post-crime assistance behavior. If it participates in advance, it may be regarded as an accomplice of upstream crime. Second, the two crimes are located in different chapters. The crime of helping trust infringes on the network management order, while the crime of concealment infringes on the normal crackdown activities of the judicial organs. Third, the object of payment settlement in the crime of helping trust includes other funds related to network crimes, the scope of which is larger than the proceeds of the crime and its income in the crime of concealment. Fourth, the requirements for subjective knowledge of the crime of helping trust and the crime of concealment are also different. The crime of helping trust only requires subjective knowledge that the upstream criminal may have a criminal fact, and the difficulty of proof is lower than that of the crime of concealment. In summary, there is no need for the Criminal Law to set two identical crime names. The crime of concealment and the crime of help trust still have significant differences in specific application. It is only because of the development of Internet payment and settlement business that there is overlap in this part. Therefore, it is necessary to discuss which crime name should be applied to the use of virtual currency to settle illegal gains.

(2) Reasons and Reasons why the crime of helping letters is better than the crime of concealing

The crime of concealing and concealing the crime mainly targets other criminals who have no collusion with the crime before and who assist in selling after the crime. With the development of information technology, various crimes such as financial fraud and online gambling have emerged, and the criminal proceeds of suspects will also be hidden using the concealment and complexity of the Internet. In practice, it is generally believed that virtual currency has anonymity and decentralization characteristics. Therefore, the act of settling funds by providing virtual currency accounts, assisting in virtual currency withdrawals, and helping off-exchange transactions of virtual currencies is actually to obstruct investigation and evade legal sanctions. However, the author believes that considering the nature of the crime of concealing and the special nature of virtual currency, the settlement behavior is more focused on helping the implementation of online crimes rather than simply evading investigation afterwards, helping the production of crimes for information network crimes, and making the behavior have corresponding criminal regulations.

1. From the perspective of criminal proceeds

The crime of concealing requires the perpetrator to conceal the criminal proceeds and their gains, which refers to the stolen money and stolen goods directly obtained by the perpetrator through the crime. However, combined with the actual crime, the large amount of funds generated by the upstream criminals in the commission of the crime includes not only stolen money and stolen goods, but even the property used for the crime, such as gambling funds. This leads to the fact that the funds transferred by downstream perpetrators when receiving instructions to trade virtual currencies include not only the property used for the crime itself and the criminal proceeds, but the former exceeds the scope of the objects regulated by the crime of concealing. The payment settlement mentioned by the crime of helping letters includes “fund transfer services”, that is, currency payment and fund clearing behavior. Therefore, the payment settlement object of the crime is relatively broad, and any payment settlement that helps criminals can be evaluated as the crime of helping letters, which includes not only “stolen money, stolen goods”, but also property used for the crime. Recognizing it as a crime of helping information network criminal activities is more reasonable.

2. Recognize from the timing of the crime

As explained when discussing the difference between the two charges, the crime of concealment mainly punishes post-action assistance, and can only constitute the crime after the upstream crime has been completed, while the crime of aiding and abetting does not have this requirement. In Internet crimes involving property, generally speaking, if the upstream criminal actually controls the property, it is deemed as a completed crime. However, for the telecommunications network fraud and online gambling crimes that are common in practice, most of them do not achieve their goals directly and require a certain amount of profit to entice victims to increase their investment. Therefore, not every payment is considered as proceeds of crime. As for the crime of gambling, there is even a confusion between gambling capital and profits. Therefore, it is more appropriate to pursue the crime of helping information network criminal activities.

3. Start from the adaptability of upstream and downstream crimes

Concealment crimes are easy to be charged, and the punishment for serious crimes is too high, which may cause the situation where the sentencing of upstream and downstream crimes is not adapted. Taking illegal foreign exchange transactions as an example, according to Article 3, Paragraph 1 of the “Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Laws in Handling Criminal Cases of Illegal Business Operations of Fund Payment and Settlement and Illegal Purchase and Sale of Foreign Exchange”: “Illegal purchase and sale of foreign exchange and illegal business operations with an amount of RMB 5 million or more or illegal gains of RMB 100,000 or more shall be deemed as serious illegal business operations.” The statutory penalty for serious illegal business operations is imprisonment for no more than five years or criminal detention, and a fine of one to five times the illegal gains or separately. However, according to Article 3, Paragraph (1) of the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Laws in Handling Criminal Cases of Concealing and Concealing Criminal Proceeds and Criminal Proceeds Income”, which was revised in 21, “Concealing and concealing criminal proceeds and their generated income The total value exceeds 100,000 yuan, which is considered as a serious case, and the statutory penalty is imprisonment for three to seven years.” In practice, virtual currency involved is generally converted into RMB to calculate the amount of crime. In other words, if a person helps criminals engaged in illegal foreign exchange settle funds with virtual currency, the criminal suspects involved in the crime will only be charged if they engage in illegal business operations of more than 5 million yuan, while the person who did not participate in the crime before may be sentenced to a higher statutory penalty just because of the post-settlement behavior with lower subjective malice. According to the “Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Laws in Handling Criminal Cases of Illegal Use of Information Networks, Assistance in Information Network Criminal Activities, etc.”, “the payment settlement amount is 200,000 yuan or more”, which constitutes “serious circumstances” and is subject to a basic penalty of less than three years, which is more reasonable.

4. Investigation of the policy and application background of the crime of aiding and abetting telecommunications fraud

The crime of aiding and abetting was implemented after the promulgation of the “Amendment IX to the Criminal Law” with the aim of cracking down on the increasingly rampant help behavior of telecommunications and network crimes. Since the “cut-off card” operation in October 2020, the number of cases prosecuted by the procuratorial organs for assisting in telecommunications crimes has increased rapidly, and it has now become the third most prosecuted crime among various criminal offenses (the first two are dangerous driving and theft). Yu Haisong, director of the Criminal Department of the Research Office of the Supreme People’s Court, recently published an article entitled “A Full Solution to Legal Issues in the Application of the Crime of Aiding and Abetting Telecommunications Fraud,” which mentioned that at present, the helping behavior of network crimes has the characteristics of one-to-many, refined division of labor, and great social harm. However, because there is no clear principal offender, it is difficult to directly determine it as a joint crime. Therefore, for the application of the crime of aiding and abetting, it is proposed that (1) the behavior of the assisted object in the crime of aiding and abetting must constitute a crime, but the “crime” stipulated here is understood as the relevant crime being verified as true and not requiring confirmation of effectiveness by a court decision; (2) “crime” should refer to the act that should be punished by criminal law in accordance with the provisions of the Criminal Law, and the act that has not yet constituted a crime but conforms to the type of behavior stipulated in the Criminal Law should be included; (3) the determination of subjective “knowing” should not be interpreted as generalized possible cognition, but should be restricted to relatively specific cognition and inferred through judicial interpretation. At the same time, it emphasizes the need to guard against inappropriate application of the crime of aiding and abetting and effectively promote social governance. It can be seen that the introduction of the crime of aiding and abetting has been able to solve the problem of network payment and settlement assistance in practice. If the judgment of the crime is persisted in, it will not only lead to mechanical crime, but also override the application of the crime of payment and settlement-type aiding and abetting, and cannot achieve a good rule of law effect.

Four. Conclusion

Based on the summary of judicial practice experience, the author proposes the issue of inconsistent identification of the crime of using virtual currency to settle illegal gains. With the deepening of problem orientation, the author found that the main reason for the inconsistent judicial practice standards is that the virtual currency used in this behavior has special characteristics, and with the development of the Internet, there is overlap between the crimes of aiding and abetting and covering up in the field of network payment and settlement. After demonstrating the similarities and differences between the two crimes and in-depth discussion of the nature of using virtual currency to settle illegal funds, the author believes that it is more reasonable to identify this behavior as the crime of aiding and abetting in network crime activities based on the perspective of the time point of the crime, the gains from the crime, and the corresponding punishment.

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