What are the final destinations of the cryptocurrencies involved?

Regarding virtual currency, it is not very peaceful recently. Whether it is the recent cross-border online gambling, money laundering case, or USDT money laundering case, virtual currency as a kind of asset involved in criminal cases is becoming more and more** Appeared in judicial practice** (especially various criminal cases involving cybercrime), mainly because, even though countries have strengthened the fight against virtual currency money laundering and established corresponding anti-money laundering systems, due to the virtual currency itself Technical advantages, in the eyes of some people, it is still a tool that facilitates capital flow and payment settlement**.

Then, as a virtual currency of assets involved in criminal cases, how should the judiciary deal with it after it is seized and confiscated? Where to dispose of it? **Today we will give you a detailed account of the special issues of the judiciary, related companies, and financial institutions in the disposal of virtual currency assets involved in the case, so as to prevent the occurrence of "stepping on the line" in the process of disposing of virtual currency assets involved in the case.

Where are the virtual currencies involved in the case finally located?

In the process of asset disposal in criminal proceedings, firstly, the public security organs will take compulsory measures such as sealing up, detaining, and freezing the property involved in the case during the investigation stage; secondly, after the investigation is completed and transferred for review and prosecution, the procuratorate will make suggestions on the disposal of the assets involved in the case; Finally, in the trial stage, the court made a judgment in accordance with the law to deal with the property involved.

According to the "Criminal Procedure Law", "The People's Procuratorate's Provisions on the Management of Property Involved in Criminal Proceedings", "Several Provisions of the Supreme People's Court on the Enforcement of Parts of Property Involved in Criminal Judgments", and "On Further Regulating the Property Involved in Criminal Proceedings" issued by the General Office of the Central Committee and the General Office of the State Council "Opinions on Disposal Work", etc., laws, regulations and normative documents related to the disposal of property involved in the case. Generally speaking, there are three types of disposal results for the property involved in criminal proceedings:

1. All properties obtained from illegal and criminal activities shall be recovered or ordered to be refunded;

2. The legal property of the victim shall be returned in accordance with relevant regulations.

3. If the property involved in the case that is sealed up, seized, frozen, kept, or disposed of by the criminal suspect is found to be irrelevant to the case, it shall be released and returned within three days.

Therefore, when we judge how to deal with the virtual currency involved in the case, we should first judge what crime the suspect committed in the case? Are there any victims? Is the virtual currency the property of the victim or is it linked to property lost? Taking the case of cross-border online gambling and money laundering in a certain city in Hubei Province as an example, the Public Security Bureau of a certain city has seized more than 300 computers and mobile phones, 200 mobile phone cards and bank cards involved in the case during the investigation stage, and has froze the virtual currency accounts involved in the case. The virtual currency involved in the case is worth about 160 million U.S. dollars (about 1 billion yuan). **In October 2022, a people's court made a judgment, **decided to confiscate the virtual currency involved in the case, and this case has become the well-known "first case of confiscating virtual currency" in the domestic market. **

You may be wondering, many common crimes in the currency-related industries may be sentenced to confiscation of illegally obtained property, such as illegal business operations, money laundering, etc., so why did the "first case of confiscation of virtual currency" not appear until 2022? "? In previous cases, why were the judiciary unwilling to directly confiscate virtual currency? This is mainly related to the relevant laws and regulations of our country and the difficulty of realizing the virtual currency caused by the special nature of the virtual currency itself.

**What are the risks involved in realizing the virtual currency confiscated by the judiciary? **

As a very special virtual asset under Chinese law, virtual currency is quite different from ordinary property involved in the disposal method. If virtual currency is not converted into legal tender, on the one hand, due to its frequent price fluctuations, it is very difficult to A substantial depreciation of the value of the currency may occur**; on the other hand, due to the small size of the virtual currency market itself, if the judiciary is eager to convert it into a legal currency on a large scale, it is very likely that the entire virtual currency will be affected. The ecology has a greater impact**, and may even cause greater abnormal fluctuations in the market. In addition, the judiciary and the asset disposal company entrusted by the judiciary, in the process of disposing of virtual currency, in addition to having a greater impact on the ecological environment of the virtual currency itself, may also be suspected of illegally violating the relevant laws and administrative regulations of our country. **.

On September 24, 2021, ten ministries and commissions jointly issued the "Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions" (hereinafter referred to as the "9.24 Notice"). Virtual currency-related business activities such as the exchange business between them, buying and selling virtual currency as a central counterparty, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and virtual currency derivatives transactions are suspected of illegally selling token tickets, unauthorized Illegal financial activities such as public offering of securities, illegal operation of futures business, and illegal fund-raising are strictly prohibited and resolutely banned in accordance with the law. Those who carry out relevant illegal financial activities that constitute crimes shall be investigated for criminal responsibility in accordance with the law. Moreover, the provision of services by overseas virtual currency exchanges to residents in my country through the Internet is also an illegal financial activity. **This provision is not only valid for ordinary citizens, but also for the judiciary of our country and its entrusted asset disposal companies. **

As a result, even the virtual assets confiscated and confiscated by the judiciary cannot be converted into legal currency through public sales, auctions, etc. in the country, and ** can only choose to entrust other asset disposal companies to transfer overseas or Hong Kong, Macau, China Governments in other regions will convert the virtual currency involved in the case into legal currency, and then transfer the legal currency back to the country. This path is not only difficult and extremely risky, but also easily misunderstood by judicial authorities in different regions and departments as "illegal financial activities" and cracking down on mistakes. Therefore, in previous judicial practice, the judiciary generally chose to place the virtual currency involved in the case in an appropriate storage medium without further processing it, which to some extent caused a waste of the assets involved in the case.

In addition, the process of dealing with the virtual currency involved in the case is prone to opacity. In many cases, the amount of virtual currency confiscated does not match the amount of virtual currency owned by the parties, and the realized price of the virtual currency is not consistent with the market price. mismatch problem. Among them, the most famous is the cross-border MLM case of a well-known virtual currency trading platform a few years ago. The technical characteristics of its own price fluctuations and convenient global transactions have caused the company to forget its original intention and professional work in the barbaric growth, and tried to use the virtual currency entrusted by the judiciary to make illegal profits, which eventually constituted a crime.

Write at the end

The disposal of virtual assets such as virtual currency involved in the case has always been a "persistent" problem that plagues my country's judicial organs and the third-party asset disposal agencies entrusted by them. How to ensure that they do not violate relevant laws and regulations (especially 9.24 regulations) , and to establish an effective disposal system is an urgent problem to be solved at present. Sister Sa’s team believes that, in addition to speeding up the adaptation to the status quo of virtual asset development at the legislative level, setting up supporting disposal rules, regulatory rules, and virtual asset pricing regulations, it is also possible to consider establishing a system for lawyers to intervene in virtual asset disposal , allowing lawyers to play the role of legal risk control and review and supervision of related transactions.

At this stage, the state judiciary and the asset disposal companies entrusted by it must conduct corresponding legal risk assessments** on the disposal of virtual currencies.