Source: Procuratorial Daily

“Virtual currencies often bring not benefits, but legal risks! Use virtual currencies to provide cross-border exchange and payment services to earn exchange rate differences and realize the value of foreign exchange and RMB Conversion is a disguised form of buying and selling foreign exchange, which constitutes an illegal business crime. In recent years, new crimes using virtual currency as a medium may also involve fraud, money laundering, illegal fund-raising, etc. Everyone should remain rational and refrain from participating.” 1 On January 18, the Jianhu County Procuratorate of Jiangsu Province jointly handled a new crime case involving virtual currency transactions, and organized police officers to go deep into communities, streets, banks and other places to provide legal consulting services and publicize the main forms of virtual currency crimes to the public. , interpret the legal risks of virtual currency transactions, guide the public to establish correct investment concepts, jointly create a good atmosphere to resist virtual currency transactions, and curb virtual currency-related crimes from the source.

On November 18, police officers from the Jianhu County Procuratorate went into communities and streets to distribute brochures to explain the main forms of crimes involving virtual currencies. , interpreting the legal risks of virtual currency transactions.

In this case, three "post-95s" guys used virtual currency trading as a medium to engage in the "business" of buying and selling foreign exchange. In just a few months, they completed more than 650 transactions and exchanged nearly 30 million in foreign exchange. Yuan. After being prosecuted by the Jianhu County Procuratorate, Lin and three others were recently sentenced by the court to five years to one year and six months in prison for illegal business operations, and each was also fined.

At the beginning of 2020, 25-year-old Lin had not found a suitable job because of his low education level. At that time, the virtual currency market was booming. He learned on the Internet that many people became rich overnight by speculating in coins, and he wanted to use virtual currency to make a comeback. After being introduced by a friend, he and his high school classmate Yan started a virtual currency "brick" in a local studio.

The so-called "brick-moving" of virtual currency is actually a virtual currency trading model. They buy and sell virtual currencies on two different exchange platforms, Binance and Huobi, and make profits by buying low and selling high. Take the difference. At that time, Lin was only engaged in simple virtual currency "bricks" until August 10, 2020, when Lin accidentally met a Nigerian whose WeChat nickname was "Prince" during a transaction. After the two parties added WeChat, the "Prince" said that buying and selling foreign exchange in a bank or foreign exchange company was expensive, and wanted to exchange the local legal currency Naira into RMB through Lin.

How to circumvent foreign exchange regulations and convert Naira into RMB? Lin quickly came up with a perfect plan: the "prince" used the local legal currency Naira to buy Tether on the Binance exchange, and then transferred it to Lin's account on the Binance exchange, and Lin sold the Tether to Binance. The merchant converts it into RMB and then transfers it to the domestic bank account provided by "Prince". Lin first determined the purchase price based on the 5% decrease in the listing price of Tether that day, and then sold it to a currency dealer at the listing price to earn the difference. The whole process onlyIt requires simple operation and communication, and no advance payment of funds is required, and you can "do nothing". The first transaction was completed in half an hour, and he made 300 yuan. This gave Lin a taste of the sweetness and decided that this was a way to make a fortune.

In September 2020, Lin and Yan decided to resign and go it alone. They purchased a work mobile phone and registered a work WeChat account specifically for contacting Nigerian customers, currency dealers and conducting virtual currency transactions. In January 2021, Lin and Yan's bank accounts were restricted from transactions due to frequent large-amount capital inflows, so they asked their classmate Xie to join and asked Xie to provide a bank card to receive funds.

“I had a formal job at the time, but the income was not high and I was often short of money. I heard they said that I could make money quickly by doing this, and I had free time. I could complete it in my spare time, so I agreed. I didn’t expect it to be a crime.” After the incident, Xie regretted it.

Soon, Xie learned the basic operations from Lin, and the three of them began to take turns operating. One person was in charge for a week, and the operation took less than two hours a day. They made this foreign exchange "business" successful. "The wind and water are rising."

On June 17, 2022, the three people were arrested and brought to justice by the public security police in their respective homes.

In October 2022, the Jianhu County Procuratorate intervened in accordance with the law, coordinated with the public security to discuss and determine the nature of the case, actively guided and tracked the cross-border capital chain, and urged the public security to promptly access overseas virtual currency trading platforms for recharge and withdrawal transactions. Records, suspects’ WeChat chat records and bank account transaction details and other evidence.

After investigation, it was found that from September 2020 to January 2021, Lin and Yan purchased and sold foreign exchange in disguised form for more than 21.29 million yuan. From January to April 2021, after Xie joined, the three of them traded more than 8.38 million yuan in foreign exchange in disguise. “Disguised buying and selling of foreign exchange may seem like there is no physical flow between RMB and foreign exchange, but in fact it bypasses my country’s foreign exchange supervision, affects the stability of my country’s financial market, and leads to inaccurate economic data, affecting financial decisions such as exchange rates and foreign exchange reserve adjustments. The harm is huge," the prosecutor handling the case told reporters.

On January 26, 2024, the case was transferred to the procuratorate for review and prosecution. "I didn't know the origin of Tether was Nigeria. What I did was just 'moving bricks' with ordinary virtual currency to make a profit. It was a legal arbitrage and did not constitute a crime." Lin said in the interrogation room.

Faced with Lin’s sophistry, the prosecutor handling the case compared domestic and foreign transaction records, extracted the content involving foreign exchange exchange in the chat records, and the testimony of the payee related to the exchange records, and checked them one by one. Explain the conversion process of the funds involved, the amount of the crime, and the suspect’s understanding of the source and nature of the virtual currency. In the face of a strict chain of evidence, Lin finally admitted that he knew that Tether was used by Nigerians to pay the payee, and pleaded guilty. Later, Lin and three others withdrew all criminal proceeds.

The prosecutor believes that LinThe three others used virtual currencies as a medium to provide cross-border exchange and payment services to earn exchange rate differences. They used the special properties of virtual currencies to circumvent foreign exchange supervision, affecting the effectiveness of foreign exchange management and the stability of legal exchange rates, disrupting normal operations. To maintain order in the financial market, criminal liability for illegal business operations should be investigated in accordance with the law.

On February 26, the Jianhu County Procuratorate filed a public prosecution against Lin and three other people on suspicion of illegal business operations, and made sentencing recommendations based on the criminal facts and circumstances of the three persons. On April 29, the court adopted the prosecution’s crime determination and sentencing recommendations after trial, and sentenced Lin and Yan to five years’ imprisonment and a fine respectively; Xie was sentenced to one year and six months in prison, suspended, and fined. gold. None of the three appealed and the verdict has taken effect.