On December 5, 2024, the People's Court Daily published an article entitled "Criminal Characterization of Illegal Theft of Virtual Currency". The case described in the article is not particularly complicated. It means that A stole B's virtual currency USDT and sold it for profit.
However, the analysis of the case by the court personnel in the article gives people a chilling feeling, revealing a sense of: " Although I don't understand blockchain and virtual currency, I think you should be sentenced severely! ", which makes people feel a little uncomfortable.
Let us discuss two viewpoints in this article.
Author: Lawyer Shao Shiwei
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Court’s opinion 1: USDT is obtained through mining, and the total amount is constant
Whether stealing other people's virtual currency should be charged as theft or illegal acquisition of computer system data has always been a controversial topic, and there has been no clear conclusion in trial practice. Therefore, this article is also a cliché, analyzing what crime the defendant should be charged with in this case. The author of the article believes that the crime should be theft, which is understandable, but the basis for the author's conclusion that the crime constitutes theft gives people a sense of " irrelevance ":
(Screenshot from the article)
According to the above figure, the author believes that in this case, virtual currency has the characteristics of scarcity and utility:
Scarcity: The total amount of virtual currency is constant and is not infinitely supplied;
Utility: virtual currency, as a specific data code, must be generated through "mining", and "mining" condenses social abstract labor;
Although...in this case, the defendant stole USDT Tether, not Bitcoin !
(1) Is Tether scarce? Is its total supply constant?
(Source: Thther official website)
USDT (Tether) is a stablecoin issued by Tether Limited, which aims to solve the volatility problem of traditional cryptocurrencies. The supply of USDT is also adjusted by Tether according to market demand, that is, the company will decide whether to increase the supply of USDT based on market demand.
In addition, Tether has promised that each unit of USDT is backed by a reserve of $1, so in theory, the issuance of additional USDT should also correspond to the issuance of its US dollar reserves.
At present, the price of BTC has exceeded 100,000 US dollars . Although the country still holds a negative attitude towards virtual currency investment, it has to be admitted that more and more people will choose Bitcoin as an investment asset. According to relevant data, USDT ranks first in Bitcoin transactions. Therefore, the increase in BTC demand will also increase the supply of USDT.
Therefore, the total amount of Tether is not constant but changes dynamically.
(2) Does Tether have to be generated through “mining”?
Whether a cryptocurrency relies on mining depends on the consensus mechanism it uses, the type of currency (such as stablecoins vs. non-stablecoins), and whether decentralized participants (miners) are needed to maintain the security and integrity of the network. Proof of Work (PoW) is the most common mining mechanism. Miners verify transactions and generate new blocks by competing to solve a complex math problem (hash problem). This process requires a lot of computing resources and is usually done by computer hardware (such as CPUs, GPUs, or ASIC miners). Whenever a miner successfully solves this math problem, they will be awarded the right to generate a new block and add the transaction information in the block to the blockchain. Miners who complete this task usually receive a certain amount of cryptocurrency as a reward. For example, Bitcoin, Ethereum, etc. are virtual currencies that rely on mining.
USDT does not need to be generated or issued through mining, because it is not a cryptocurrency generated through proof of work (PoW) or other mining mechanisms. As mentioned above, USDT is a stablecoin, and its issuance and destruction are controlled by Tether.
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The court’s second view: The defendant should be punished for one of the most serious crimes
After demonstrating that the defendant's actions constituted both theft and illegal acquisition of computer system data, the author of this article believes that the principle of imaginary concurrence should be followed to impose the more serious crime, so the case should be convicted of theft.
The law is rigorous, and a correct conclusion should not be reached through an erroneous reasoning process.
Moreover, the conclusion that such cases constitute theft may not be absolutely correct . After all, in a considerable number of cases, the trial judges directly identify the defendant's act of stealing virtual currency as the crime of illegally obtaining computer information system data because they do not recognize the value of virtual currency or simply avoid discussing whether virtual currency has value.
Yu Haisong, director of the Criminal Division of the Research Office of the Supreme People's Court, also said, "In the case of unclear prior legal basis, having property attributes does not necessarily mean that it becomes property under the criminal law, and property crimes do not necessarily apply to related behaviors."
The maximum sentence for theft is life imprisonment , and the maximum sentence for illegally obtaining data from a computer information system is seven years .
It is really hard to convince the public that the trial officers concluded that the defendant should be sentenced heavily due to their misunderstanding of the nature of the virtual currency involved in the case .
In daily work, some consultants often equate virtual currency and Bitcoin as the same concept when asking lawyers because they do not understand virtual currency. For example, the following is a description of a problem that a client encountered when consulting Lawyer Shao. When the client contacted me by phone, I found out that it was a misunderstanding. What was frozen for him was 126,000 USDT, not Bitcoin.
But if the judges also "misunderstand" this, it would be terrible. Criminal law, as the most severe legal means, is directly related to the freedom, property and even life of citizens. Moreover, even if you don't speculate in cryptocurrencies or understand blockchain, these conceptual distinctions can be easily understood by searching on Baidu, and they are not particularly profound.
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Off topic
I thought of a case that was heard in a certain place last month about a virtual currency exchange suspected of running a casino. During the questioning session in court, the judge repeatedly stopped my colleagues and I from asking questions to the defendant, and repeatedly asked: Are the questions you ask related to this case?
As defense lawyers, during the court session, we listed an extremely detailed list of questions to ask the defendant about the facts of the case. The reason is that the model and gameplay of this case are "world-first" and there is no precedent. However, to prove whether the model constitutes gambling, it is necessary to understand the specific gameplay of the platform. This is the most basic. However, due to the lack of understanding of the platform model by the staff in charge, the relevant questions were not recorded in the transcript. Therefore, the defense attorney needs to restore the relevant case facts through court questioning. In this way, the court can fairly convict and sentence the defendant on the basis of ascertaining the facts of the case and listening to the defense attorney's defense opinions, so that the parties can accept the verdict and stop the lawsuit. Otherwise, even if the first-instance judgment is made, the defendant will continue to appeal the second instance and apply for a retrial.
In short, it is true that this world is just a huge makeshift team.
