The issuance of virtual currency does not constitute a statutory ground for the crime of fund-raising fraud
Author: Mr. Zhang Chun, core lawyer of Guangdong Guangqiang Law Firm's Economic Crime Defense and Research Center, focusing on the defense of economic crime cases
Note: This article is original and may not be reproduced without permission
In recent years, virtual currency dispute cases have been highly prevalent, and most of them are publicized to the unspecified public by using virtual currency, blockchain, investment in shares, high returns, irregular/regular dividends, etc., to attract investors to invest. Since China's laws and regulations on virtual currency are not particularly perfect, under the premise of no supervision and review, the issuance of virtual currency or participation in investment in virtual currency are very criminal risks. Criminal offences related to virtual currencies in judicial practice. The most common are the crimes of fund-raising fraud, organizing and leading pyramid schemes, illegally absorbing deposits from the public, illegal business operations, and money laundering. This article mainly discusses the reasons why the perpetrator does not constitute the crime of fund-raising fraud based on judicial practice and the virtual currency cases that have been handled.
According to the third paragraph of article 4 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fund Raising, "The purpose of illegal possession in the crime of fund raising fraud shall be specifically determined according to the circumstances." Provisions. From this interpretation, it can be seen that in the case of determining that the entire company, "gang" or the main offender is suspected of the crime of fund-raising fraud, other actors involved in the case can still defend other crimes.
According to the Interpretation of the Supreme People's Court of the < on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fund-Raising> understanding and application": "First, the principle of determining the purpose of illegal possession. To determine whether there is a purpose of illegal possession, the principle of subjective and objective consistency should be adhered to, and it is necessary to avoid replacing the determination of the purpose of illegal possession with the determination of fraudulent methods, and to avoid objective attribution based solely on the results of losses, and at the same time, it cannot be based solely on the confession of the perpetrator himself, but should be analyzed specifically according to the specific circumstances of the case. Therefore, to determine whether the perpetrator constitutes fund-raising fraud, it should be based on the existing evidence, starting from the "purpose of illegal possession", and then starting from the objective behavior and subjective intention to argue that it does not constitute the crime of fund-raising fraud.
【From the perspective of objective behavior】
1. For perpetrators who do not have the purpose of illegal possession, it does not constitute the crime of fund-raising fraud, taking Zhang X's participation in the issuance of virtual currency and being accused of fund-raising fraud as an example [(2018) Yue 0304 Xingchu No. 139]
The Prosecutor's Office alleged:
In 2012, Chen Mouhuang (handled in a separate case) established Shenzhen Jinghuang Investment Group Co., Ltd. (hereinafter referred to as Jinghuang Company) in Shenzhen, and Chen Mouhuang served as the legal representative and actual controller of the company. In April 2016, Chen Mouhuang, Ling Mouhe and He Mouming (all handled separately) were illegally profit-making, and after joint organization and planning, launched the Xin coin trading platform through Jinghui's subsidiary Cloud Brilliant Financial Services Co., Ltd. (hereinafter referred to as Cloud Brilliant Company 4).
Knowing that the platform system could not continue to operate and had no financial capacity, Chen Mouhuang, Ling Mouhe and He Mouming instructed the defendants Jiang xx, Zhang xx, Xiao xx, Xu xxlie, Zhou xx, Xu mouming, Long mouyan, and others (all handled in a separate case) to falsely claim to the public that the platform used virtual currency Xin coin as the transaction target by means of online publicity and on-site recommendation meetings, and Xin coin had huge appreciation space, had functions such as withdrawal and shopping, and deceived the public to recharge and purchase Xin coin.
At the same time, in order to encourage investors to invest, Cloud Brilliant Company also encourages investors to buy Xin coin to directly obtain a high commission, recommending that the downline purchase of Xin coin can get the corresponding commission, etc. to encourage investors to publicly attract downline personnel to join Xin Coin investment. Defendant Jiang X entered Cloud Brilliant Company in April 2016, participated in the preparatory activities of the Xin Coin project together with Ling X He, He X Ming, Xiao X and others, and served as the leader of the main marketing team, responsible for business work;
Defendant Zhang Moumou entered Cloud Brilliant Company in April 2016 as a marketing team leader, responsible for training and business reception. It is now ascertained that the defendants Jiang xxx, Zhang xx, Chen xxhuang, Ling xxhe, Xiao xx, Zhou xx, and others used the above means to defraud a total of 3,175,600 yuan of investment funds from Kwong xxx, Lu xx, and other investors, and should be sentenced to the crime of fundraising fraud.
From the above accusation logic, it can be seen that the prosecution's criminalization logic is that when the platform system cannot continue to operate and has no financial capacity, the perpetrator also has the following behaviors: 1) publicizing that the fictitious Xin coin has room for appreciation; 2) publicizing and recommending that the purchase of Xin coin offline can get a high return; 3) Zhang Moumou as the team leader.
The court held that: with regard to the characterization of the case. According to the law, the purpose of illegal possession in the crime of fund-raising fraud shall be specifically determined in different circumstances. Where some of the perpetrators of the joint crime of illegal fund-raising have the purpose of illegal possession, and the other actors do not have the common intent and act of illegally possessing the funds raised, the perpetrators with the purpose of illegal possession shall be convicted and punished for the crime of fund-raising fraud. After investigation, from the perspective of the purpose of the crime, the defendants Jiang xxx and Zhang xx joined the Xin coin project in order to obtain investment income from it by investing in and introducing others to invest in the Xin coin project, and there is no evidence to prove that the defendants Jiang xxx and Zhang xx actually control the funds involved in the case, combined with their own investment, it is confirmed that the two defendants have insufficient evidence for the purpose of illegal possession of the investment funds, so the two defendants should be convicted and sentenced for the crime of illegally absorbing public deposits.
The court finally convicted the defendant of the crime of illegally absorbing deposits from the public for six months in one year and eight months for Jiang for one year.
2. The amount involved in the case is controlled by the boss, the personnel in the case do not have the right to dispose of it, and even some employees know the whereabouts of the funds and objectively cannot occupy the investment funds.
Then there are several types of ways for the main offender to control the funds, one is to go to its designated wallet address, while the virtual currency is bearer and decentralized, who has the key, who controls the wallet; one is to transfer to the private account designated by the main criminal, and the funds are controlled by it. The control of the funds collected is one of the evidence to verify whether there is a purpose of illegal possession, and the establishment of the crime of fraud not only requires the act of fabricating facts and concealing the truth, but also requires the victim to deliver the property and the perpetrator freely controls the funds. However, in the case of virtual currency, except for the main offender, the other actors have no control over the funds, so the other actors have no objective facts of illegal possession.
3. From the analysis of the profit situation, the perpetrator does not have the subjective intention of fraud.
In the cases that the author has handled, the perpetrator has made less profits, but because he participated in the crime, the main offender unilaterally informed him that if he worked well, he would be given a dividend. But in fact, the actor from the entry to the departure of the person without any dividends, a few months after his departure, the case occurred, the perpetrator was accused of being the main offender, the author proposed, when the actor left the job, he clearly knew that the funds absorbed by the platform had millions or even tens of millions, if he was a shareholder, judging from common sense, in this case, he would not only take a few thousand yuan of salary to leave, so the accused actor is the main criminal without any factual basis, too far-fetched.
【From the subjective point of view】
In order to determine whether the perpetrator subjectively has fund-raising fraud, the Opinions of the "Two Supremes and One Ministry on Several Issues Concerning the Handling of Criminal Cases of Illegal Fund-raising" (issued and implemented on January 30, 2019) IV. On the determination of subjective intent: "To determine whether the criminal suspect or defendant has the criminal intent to illegally absorb public deposits, it shall be based on the criminal suspect or defendant's employment situation, professional experience, professional background, training experience, I have received administrative punishment or criminal prosecution for similar acts, as well as evidence such as the method of absorbing funds, publicity and promotion, contract materials, business processes, etc., combined with his confession, to conduct a comprehensive analysis and judgment.
Article 4 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fund-Raising enumerates the fund-raising methods that "take illegal possession as the purpose": Where fraudulent methods are used to illegally raise funds, and in any of the following circumstances, it may be found to be "for the purpose of illegal possession" :(1) Where the funds are not used for production and business activities after fundraising or are used in production and business activities in proportion to the scale of funds raised, resulting in the funds raised cannot be returned; (2) the funds raised cannot be returned ;(3) Those who flee with the funds raised; (4) those who use the funds raised for illegal or criminal activities; (5) those who withdraw or transfer funds or hide property to evade the return of funds; (6) those who conceal or destroy accounts, or engage in false bankruptcy or bankruptcy, so as to evade the return of funds; (7) those who refuse to account for the whereabouts of the funds and evade the return of funds; (8) other circumstances that can be determined to be the purpose of illegal possession. ”
As a defense lawyer, the defender can judge whether the perpetrator has the above acts by judging whether the perpetrator has the above acts through the evidence in the case, and if the perpetrator does not have the above circumstances, then it cannot be found to be the crime of fund-raising fraud.
Taking some of the cases that the author has handled as an example, subjectively unclear views can be put forward from the following seven aspects.
1. In the whole process of the case, the perpetrator did not play an organizational, leadership or main role, the actor was not responsible for the operation of the platform in the whole case, nor did he organize or lead other co-defendants to carry out operations, but only engaged in work under the employment relationship of the boss, received a fixed salary, and was more fungible;
2. The personnel involved in the case do not understand each other's work during the work period. In the case of W suspected fund-raising fraud handled by Mr. Zhang, in order to make it "convenient" for everyone to work, the boss of the company stipulates that a turnip is a pit and cannot inquire about each other's work, so in this case, the perpetrator only knows his job and cannot collude with others. For example, if you are only engaged in customer service work, just answer work questions, then there is no way to know the company's core technology, so it is not known whether the company has defrauded others of money.
3, joint crimes need to have the intention of conspiracy, if the virtual currency issued by the company exists before the perpetrator joins the company, there is a lack of intention to commit a joint crime, then after the perpetrator enters the job, he is engaged in only ordinary work and cannot be identified as the main offender.
In a case handled by Lawyer Zhang, during the work period, the boss promised the employees at the meeting: "You do a good job, and then the performance will be good for you to buy a car and a house..." Such a morale-boosting statement was believed by the prosecution that this was an agreement on dividends, so your employees were "shareholders" should be identified as the main offenders. In cases like this, it is too far-fetched to identify the main culprit, first of all, this is only a unilateral promise; secondly, the boss has not fulfilled the promise; and finally, there is no specific "dividend" price and no agreement has been signed. Therefore, the circumstances in which the perpetrator is alleged to be the principal offender have no factual basis.
4. Since the virtual platform has a withdrawal function, investors can also withdraw cash normally, so the actor clearly believes that the work he is engaged in is normal after entering the job, and he does not have the subjective intention of illegally appropriating other people's money.
5. The purpose of illegal possession means that the perpetrator objectively had actual illegal control over the property when committing the crime, but judging from the evidence in the case, the perpetrator did not have control over the property involved in the case. Thus, objectively speaking, the perpetrator does not have an objective act of unlawful possession.
6. The boss of the company has told the actor from beginning to end that the virtual currency issued is ultimately going to be on the exchange, and the actor subjectively has reason to believe that the virtual currency issued by the company/individual is valuable.
Since 2013, the relevant departments have successively issued the Notice on Preventing Bitcoin Risks, the Announcement on Preventing the Risk of Token Issuance and Financing, the Risk Tips on Preventing Illegal Fund Raising in the Name of "Virtual Currency" and "Blockchain", and the "Announcement on Preventing the Risk of Speculation in Virtual Currency Transactions" to regulate the issuance of virtual currency. In combination with practical cases, the important reason for the illegal fund-raising is that the virtual coins issued do not have value, and the funds that can be withdrawn are filled by new members constantly registering and recharging to fill the vacancies with the withdrawal of old members, so even if the perpetrator has a withdrawal function, the issued disk will collapse sooner or later.
From the above logic, we can also reverse the deduction, as long as the virtual currency has value, can be on the exchange and mainstream Bitcoin, Tether, Ethereum, etc. mutual circulation, then the determination of fund-raising fraud is more far-fetched. The perpetrator simply violated the provisions of the national financial laws and regulations, without the approval of the relevant state departments, privately set up a virtual digital currency network platform to absorb funds from the public in the form of issuing virtual digital coins, disrupting the financial order, and his behavior was suspected of illegally absorbing deposits from the public.
7. Some virtual currency platforms will launch activities such as lottery to attract investors to buy the virtual coins they issue.
In some virtual currency cases handled by the author, the prosecution alleged that the perpetrator could privately set up a backstage, specify the number of winners, and set the probability of winning the lottery to zero. After we intervened, through careful reading of the case file, we found that there were witnesses in the record of the case stating that they had indeed received physical evidence, and we also found that through the identification of the platform, the platform had a shipping address, and one of the columns showed "shipped". Here, one might wonder: "The actor attracts investors to invest large amounts through small profits." However, the author puts forward this point of view to illustrate a fact, the actor as a staff, there is a physical lottery, then it is difficult for the actor to doubt the authenticity of the platform, this winning action, subjectively let the actor firmly believe that it participates in the issuance of virtual currency platform, there is no fictitious fact fraud behavior.
In summary, the author believes that if the perpetrator of the issuance of virtual currency does not have the purpose of illegal possession, then the issuance of virtual currency is only the act of absorbing funds without the approval of the relevant departments in accordance with the law or borrowing the form of legal operation, publicizing it to the public through the media, promotion meetings, leaflets, mobile phone text messages, etc., promising to repay the principal and interest or paying returns in the form of currency, physical objects, equity, etc. within a certain period of time, and absorbing funds from the public, that is, the unspecified targets of the society, does not constitute the crime of fund-raising fraud. Suspected of illegally absorbing deposits from the public or other crimes.
However, in some cases, the main offender subjectively has the purpose of illegally possessing the investor's money, and objectively does control the money that can be raised, so at this time, the other main offenders or personnel involved in the case need to be evaluated separately from the personnel who control the fund-raising funds, and the main offender who controls the funds has the purpose of illegal possession, suspected of the crime of felony of fundraising fraud, and others are suspected of misdemeanor crimes of illegally absorbing public deposits and other crimes.
The above content is a summary of "The Statutory Reasons for issuing Virtual Currency Does Not Constitute the Crime of Fund Raising Fraud" based on judicial precedents and practical experience by Zhang Chun, the core lawyer of guangqiang Law Firm's Economic Crime Defense and Research Center. We hope to provide useful help to the parties and their families.