introduction:
On November 20, 2024, the official announced a piece of news. Yao Qian, former director of the Science and Technology Supervision Department and former director of the Information Center of the China Securities Regulatory Commission, was expelled from the party and removed from public office. The announcement pointed out that Yao Qian spared no effort to support specific technology service providers for his own selfish interests, was willing to be the "key training target" of the hunters , and used virtual currency to trade power for money.
In recent years, virtual currency has attracted much attention due to its anonymity and decentralization, but it has also become a new tool for certain illegal and criminal activities, including bribery.
Today, let’s talk about the legal issues related to bribery and corruption using virtual currency.
Author: Lawyer Shao Shiwei
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Cases of bribery using virtual currency
Although according to domestic policy regulations, virtual currency is only regarded as a "virtual commodity" and does not have the same status as legal currency, the value of virtual currency is undeniable. In the eyes of many people, the economic value of mainstream Bitcoin, Ethereum, Tether, etc. can be used for payment or exchange like "money". Therefore, more cases of bribery using virtual currency may be disclosed in the future.
1. Yao Qian, the first director of the Digital Currency Research Institute of the People’s Bank of China
In 2016, the central bank first proposed the goal of issuing digital currency to the public, and launched the research and development of a prototype of a digital bill trading platform based on blockchain and digital currency, and completed the construction of the first generation of the legal digital currency prototype system. In 2017, Yao Qian was appointed as the first director of the Digital Currency Research Institute of the People's Bank of China, and played an important role in China's early efforts to develop central bank digital currency. In 2018, Yao Jian transferred to the China Securities Regulatory Commission to continue to formulate policies related to blockchain technology and digital assets. In addition, Yao Qian has published a number of papers on digital currency and blockchain technology, laying a theoretical foundation for the development of China's digital currency.
In November 2024, Yao Qian was expelled from the Party and removed from public office for serious violations of discipline and law. As an authority in the field of digital currency, Yao Qian's disciplinary violations may undermine public trust in digital currency and affect its acceptance and promotion speed. The case may also further reduce the possibility of my country reconsidering its tough stance on the cryptocurrency market.
2. Xiao Yi - former Vice Chairman of Jiangxi Provincial CPPCC and Secretary of Fuzhou Municipal Party Committee
On August 22, 2023, the Hangzhou Intermediate People's Court of Zhejiang Province publicly pronounced the verdict on the case of Xiao Yi, former member of the Party Leadership Group and Vice Chairman of the Jiangxi Provincial Committee of the Chinese People's Political Consultative Conference, for taking bribes and abusing his power. The defendant Xiao Yi was sentenced to life imprisonment for the crimes of taking bribes and abusing his power.
While serving as the party secretary of Fuzhou, Xiao Yi was aware that Jiumu Group Genesis Technology Co., Ltd. was engaged in virtual currency "mining" activities, but he still provided financial subsidies, financial support, and power supply in violation of regulations, causing major losses to public property and causing adverse social impacts. According to insiders, Xiao Yi is suspected of accepting bribes of more than 8,000 bitcoins during his tenure.
3. Hai Mou——Investigator of a Public Security Bureau
The Nanjing People's Procuratorate published a case in May 2024. Hai worked as a staff member of a public security bureau. His main responsibilities were to grasp the dynamics of computer information network crimes and investigate network crimes. The defendant Hai used the convenience of his position to obtain the electronic data involved in the case containing Bitcoin information through his subordinate Wu, and sent the data to his friend Ji (the person in charge and technician of a certain network technology company). Later, Ji cracked the above Bitcoin key and stole some Bitcoins, and Hai acquiesced to the behavior. Later, the defendant Hai did not report the investigation in time, but asked Ji for cash and Bitcoin many times. After the incident, the case-handling unit cashed in the Bitcoin and received more than RMB 48.2272 million.
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Why would bribery and corruption using virtual currency be detected?
Virtual currencies are generally considered difficult to track due to their decentralization and secrecy, and are therefore used by interested parties as a covert means of illegal transactions. However, the following reasons may lead to the discovery and investigation of virtual currency-related activities:
1. The openness of blockchain technology
Although virtual currency transactions have a certain degree of anonymity, most cryptocurrencies (such as Bitcoin) are based on blockchain technology, and all transactions are recorded on the blockchain. Regulators can track the flow of virtual currency transactions by analyzing public blockchain data.
In addition, through blockchain analysis tools (such as Chainalysis), regulators can detect clues such as suspicious large transfers and frequent transaction addresses, thereby locking down related accounts.
2. Offline evidence exposure
Bribery is inevitably accompanied by other power-for-money transactions. Once the relevant persons involved in the case are investigated, the act of accepting money and property through virtual currency may be exposed.
If the person who receives virtual currency cashes it out through OTC transactions, the related fund flow may appear abnormal through bank transfers, third-party payment platforms, etc., which will alert the bank's risk control and anti-money laundering systems. The person involved may also attract the attention of exchanges or platforms due to frequent transactions or large transfers.
3. Illegal behavior of enterprises or projects
Contracts, fund disbursement records and government support documents related to virtual currency industry projects may all become entry points for investigation. For example, in the case of Xiao Yi, the local government provided funds, electricity and other support for virtual currency "mining" activities. Such violations are easy to be discovered in corporate or administrative audits.
4. Technological progress and regulatory cooperation
With the development of regulatory technology, the anonymity of virtual currency transactions is gradually weakening. Law enforcement agencies can use technical means to obtain key information through network traffic monitoring, exchange data and other channels. Countries around the world are strengthening regulatory cooperation on virtual currencies, and relevant clues may be provided by international law enforcement agencies (such as Interpol).
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Is it the end of the matter once a bribery case is uncovered?
Bribery cases usually involve the briber. When investigating the bribee, the specific behavior, frequency and scope of the briber can be traced back. For example, if a company or individual bribes an official or other relevant person in order to obtain improper benefits, the relevant briber will also be implicated and investigated.
In September 2021, the Central Commission for Discipline Inspection and the National Supervisory Commission, together with the Central Organization Department, the Central United Front Work Department, the Central Political and Legal Affairs Commission, the Supreme People's Court, and the Supreme People's Procuratorate, jointly issued the "Opinions on Further Promoting the Investigation of Bribery and Bribery Together", which clearly requires that bribery and bribery be investigated together, with a focus on investigating and punishing multiple bribery, large-scale bribery, and bribery to multiple people. The "Amendment to the Criminal Law of the People's Republic of China (XII)" made important revisions to the provisions on the crime of offering and accepting bribes, added seven circumstances for heavier penalties for bribery, and further increased the intensity of punishment for bribery crimes.
In addition to the briber, a large number of groups will also be implicated, including virtual currency acceptors (U merchants) and underground banks.
The Interpretation on Several Issues Concerning the Application of Laws in Handling Criminal Cases of Money Laundering, which came into effect on August 20, 2024, clearly states that "virtual asset" transactions are one of the ways of money laundering. It also stipulates that if both the crime of money laundering and the crime of concealment are constituted, the more serious crime of money laundering shall be convicted and punished.
Lawyer Shao had previously handled a case in which a U merchant was suspected of illegal business operations. This was because a local law enforcement agency, when handling a duty crime case, found that the U merchant's upstream supplier had helped the defendant of the duty crime to convert virtual currency into legal tender, which led to the company being implicated.
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Last words
Although virtual currency transactions are secretive, as ordinary people, we should realize that we should not take the chance of using virtual currency as a means of payment to evade legal investigation. Bribery, whether in cash or in virtual currency, may violate the criminal law and be suspected of committing a crime as long as it involves the transfer of illegal benefits.
