Analysis of Legal Risks in the Crypto Assets Industry

In recent years, with the rapid development of the Crypto Assets industry, related legal risks have become increasingly prominent. This article outlines some typical cases to remind practitioners and investors to enhance their risk awareness.

Crime of Illegal Business Operations

The Intermediate People’s Court of Leshan, Sichuan, heard a case involving the illegal buying and selling of foreign exchange using USDT. Between 2020 and 2021, Wan Mouyuan and others illegally traded foreign exchange through the “RMB-USDT-USD” method, with the amount involved exceeding 234 million yuan. The main offender, Wan Mouyuan, was sentenced to 13 years and 6 months in prison and fined 1.14 million yuan. The other two defendants were sentenced to 5 years and 6 months and 2 years and 6 months in prison, respectively.

There are two other similar cases:

1. The Dapu County Court ruled in a cash transaction case involving virtual currency, sentencing the main offender Chen to 8 months in prison and imposing a fine of 20,000 yuan.

2. Three individuals born after 1995 engaged in foreign exchange trading using Crypto Assets as a medium, completing over 650 transactions within a short period and exchanging nearly 30 million yuan in foreign currency. They were ultimately sentenced to prison terms ranging from 1 year and 6 months to 5 years.

Money Laundering Crime

The Jiangsu Liyang City Court ruled on a virtual currency money laundering case. An unemployed man, in order to repay his debts, bought U coins through a trading platform and transferred them for profit. The bank transactions involved more than 25,000 yuan, with the individual illegally profiting over 5,000 yuan. The man was sentenced to 6 months of imprisonment, with a one-year probation, and fined 2,000 yuan.

Fraud

The Nanyang High-tech Zone Court in Henan has heard a fraud case involving a “post-00s” university student who issued “土狗币”. The student issued the BFF token on the BNB Chain, added liquidity, and then immediately withdrew it, causing others to lose 50,000 USDT. He was sentenced to 4 years and 6 months in prison and fined 30,000 yuan in the first trial.

Crime of Organizing and Leading Pyramid Schemes

In a case prosecuted by the Procuratorate of Shidian County, Yunnan, 10 defendants organized a pyramid scheme using “blockchain” and “virtual currency” as a gimmick, with the amount involved exceeding 210 million yuan. The defendants were sentenced to fixed-term imprisonment ranging from 2 to 6 years and fined between 100,000 and 500,000 yuan.

In another case prosecuted by the People’s Procuratorate of Zhongxiang City, Hubei Province, three defendants issued their own virtual coin to organize a pyramid scheme, involving an amount of over 57 million yuan. The three were each sentenced to 3 years of imprisonment, with a 5-year probation, and fined 350,000 yuan.

Concealment and Hiding of Criminal Proceeds

In a case heard by the Lu Yi County Procuratorate in Henan, 7 criminal suspects engaged in “scoring” through a virtual currency trading platform, with the amount involved exceeding 9 million yuan. The highest sentence was 4 years of imprisonment, along with a fine of 10,000 yuan.

In a case prosecuted by the Hangzhou West Lake District Procuratorate, a couple laundered over 15 million yuan for a “pig butchering” scam. The husband was sentenced to 3 years and 10 months in prison, with a fine of 10,000 yuan; the wife was sentenced to 3 years in prison, with a 3-year probation and a fine of 8,000 yuan.

Crime of Illegally Obtaining Computer Information

In a case heard by the Haizhu District Court in Guangzhou, a gang of five used Trojan viruses to remotely control victims’ computers to steal Crypto Assets, making a profit of 18,000 yuan. The five were sentenced to prison terms ranging from 6 months to 2 years and fined between 3,000 and 12,000 yuan.

In a case prosecuted by the Xuhui District Prosecutor’s Office in Shanghai, three employees of a cybersecurity company exploited vulnerabilities to illegally obtain others’ Crypto Assets, profiting over 2.5 million yuan.

It is worth noting that courts in multiple regions have recognized Crypto Assets as personal property. Illegally obtaining someone else’s Crypto Assets may constitute the crime of illegally obtaining computer information, theft, or robbery.