The so-called "duty crime" is not a single crime in my country's criminal law system, but a general term for crimes committed by staff of state organs, state-owned companies, enterprises, institutions and people's organizations who use their existing powers to embezzle, bribe, commit favoritism and fraud, abuse their power, neglect their duties, infringe upon the personal and democratic rights of citizens, and undermine state rules and regulations on official activities, and which should be punished in accordance with the Criminal Law.
In practice, the Sajie team has found that currently, crimes of embezzlement and bribery by state agency staff, as well as crimes of occupational misappropriation and bribery by non-state agency staff, are increasingly involving crypto assets - more and more people are using crypto assets as a covert tool for transferring benefits.
Today, Sister Sa’s team will use recent cases that have occurred/solved as an example to talk to you about some key information revealed by these examples of currency-related official crimes in the crypto era.
01. Review of recent major cases of currency-related crimes
What are the characteristics of cryptocurrency? An old and fundamentalist narrative describes it this way: cryptocurrency has the characteristics of decentralization, anonymity, immutability, fast transaction speed, low transaction cost, and global peer-to-peer transactions.
Today, the above perception of cryptocurrency is both right and wrong. At least, with the development and progress of technology, the anonymity of cryptocurrency has become lower and lower. The so-called "anonymity" is becoming a "general means" for ordinary people to protect their transaction privacy. In other words, if the judicial authorities, technology companies and other technologically powerful parties want to check, most transaction information will be exposed.
Case of high-ranking CSRC officials involved in currency-related crimes
Not long ago, the Discipline Inspection and Supervision Group of the China Securities Regulatory Commission and the Guangdong Supervision Committee jointly issued an announcement stating that the former director of the Science and Technology Supervision Department of the China Securities Regulatory Commission had seriously violated discipline and laws, abused regulatory powers such as the right to recommend, formulate, and execute policies, abandoned his responsibilities for science and technology supervision, and sought improper benefits for others in the expansion of business and software and hardware procurement of information technology system service agencies, and used virtual currency to trade power for money.
Judging from the announcement, the CSRC official may be suspected of multiple crimes, and there is a high possibility that he is suspected of bribery.
According to Article 385 of the Criminal Law of the People's Republic of my country, the crime of accepting bribes refers to the act of a state functionary taking advantage of his or her position to solicit money or property from others, or illegally accepting money or property from others to seek benefits for others. If a state functionary, in economic dealings, violates state regulations and accepts kickbacks and fees of various names and keeps them for personal use, he or she shall be punished for accepting bribes.
Generally, the threshold for filing a case of bribery is 30,000 yuan. In terms of sentencing, if the amount is between 30,000 yuan and 200,000 yuan, the offender shall be sentenced to fixed-term imprisonment of less than three years or criminal detention and a fine; if the amount is between 200,000 yuan and 3 million yuan, the offender shall be sentenced to fixed-term imprisonment of more than three years but less than ten years and a fine or confiscation of property; if the amount is more than 3 million yuan, the offender shall be sentenced to fixed-term imprisonment of more than ten years or life imprisonment and a fine or confiscation of property.
Beijing 140 million yuan virtual currency embezzlement case, 89 million yuan recovered
On December 20 this year, the Beijing Municipal People's Procuratorate released a special "enterprise protection" operation case: an employee of a company used his position to defraud the company's property, and used multiple overseas cryptocurrency trading platforms and "coin mixers" to transfer the proceeds of crime.
From 2020 to 2021, Feng took advantage of his position in the service provider and regional operations growth department of a technology company, and conspired with Tang, Yang and others to defraud the company's service provider bonuses totaling more than RMB 140 million.
Subsequently, Feng directed Tang and Yang to use 8 overseas virtual currency trading platforms respectively to convert the money involved in the case from RMB into virtual currency, and obfuscate the source and nature of the funds through overseas "mixing currency" platforms. The funds were transferred through multiple levels in the form of virtual currency. Part of the money involved in the case flowed into accounts controlled by Feng and others in the form of RMB, and part of the money involved in the case was hidden by Feng and others in the form of virtual currency.
After the incident, Feng voluntarily returned 92 stolen bitcoins (BTC) (if the BTC price is calculated at US$100,000 per coin, it is approximately RMB 66.9 million), and a total of more than RMB 89 million in stolen money was recovered, minimizing the economic losses of the victim unit.
Since Feng is not a staff member of a state organ, and the victim company is not a state organ, enterprise or institution, Feng's behavior of using his power to defraud the company's finances is suspected of "occupational embezzlement". Article 271 of my country's Criminal Law stipulates that if a staff member of a company, enterprise or other unit uses his position to illegally take the property of the unit for his own use, if the amount is relatively large, he shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and a fine; if the amount is huge, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than ten years and a fine; if the amount is extremely huge, he shall be sentenced to fixed-term imprisonment of not less than ten years or life imprisonment and a fine.
It is important to note that on April 29 this year, the Supreme People's Procuratorate and the Ministry of Public Security jointly issued the revised "Regulations on the Standards for Filing and Prosecuting Criminal Cases under the Jurisdiction of Public Security Organs (II)", which adopted the same standards for conviction as for state functionary duty crimes such as bribery for five types of non-state functionary duty crimes such as bribery. The new regulations clearly stipulate that if personnel of a company, enterprise or other unit use their position to illegally take the property of the unit for their own use, and the amount is more than 30,000 yuan (the original standard was more than 60,000 yuan), they should be filed for prosecution.
Regarding the sentencing of the crime of occupational embezzlement, after the 11th Amendment to the Criminal Law will be issued in 2020, which will adjust the sentencing range from two levels to three levels, the judicial interpretation has not yet been improved and followed up. Therefore, in practice, the sentencing of this crime generally follows the following provisions and judicial practices:
02. What key information are revealed by examples of currency-related official crimes?
Why do we say that bribery using cryptocurrency is nothing or everything? This is also due to the technical characteristics of blockchain technology that the data on the chain cannot be tampered with and is open and transparent - the encrypted assets themselves are very hidden, but once the facts of the crime are verified, the evidence is irrefutable.
In the cases of duty-related crimes that Sister Sa's team has handled before, finding out the financial links and flows of the suspects' duty-related crimes is often the top priority of such cases. A large number of suspects will use their social connections to conceal and disperse the crimes through various covert measures and establish layers of risk isolation measures.
However, in cases where crypto assets are used to commit official crimes, the capital flow chain is often relatively complete and traceable, and its authenticity is guaranteed. Once it is verified that there is a connection between the flow of funds involved and the official crimes of the suspects (which is often the difficulty in investigating such cases), the relevant on-chain data will become irrefutable evidence of the crime.
Judging from several recent currency-related official crimes, my country's judicial organs have revealed several key information in handling such cases:
1. Detection technology has improved significantly, and coin mixers are no longer a tool for money laundering or concealing criminal proceeds.
From the embezzlement cases disclosed by the Beijing Municipal Procuratorate, it can be found that even if the suspects used multiple cryptocurrency trading platforms or even coin mixers to confuse the capital chain, the criminal facts were still known to the judicial authorities. Therefore, the Sister Sa team believes that for the reconnaissance technology of the judicial authorities in my country (it is reasonable to speculate that other major economically developed countries and jurisdictions also have the same level of technology), the current mainstream coin mixers can only play a role in increasing the workload of reconnaissance, and they can definitely be investigated if they want to.
2. The recovery of illicit proceeds from official crimes involving currency still relies mainly on the initiative and consciousness of the suspects
In fact, this can be seen from the recent cases of unfreezing overseas crypto assets handled by Sister Sa’s team. Crypto assets do have their own particularities that are different from other assets - recovering stolen money and preventing losses depends to a large extent on the cooperation of the suspects.
Taking USDT as an example, if the criminal suspect converts the stolen money into stablecoins such as USDT and hides this part of the assets, even if the flow of the funds can be traced, the funds have been actually controlled by foreign personnel. my country's judicial authorities can only issue a judicial freezing document to the issuer Tether Company, requiring the freezing of the funds. The actual consequence is that foreign criminal suspects cannot use the funds involved in the case, but my country's judicial authorities cannot directly recover them.
If the funds are converted into crypto assets such as BTC and ETH and hidden in cold wallets and controlled by foreign personnel, my country's judicial authorities will not even be able to effectively freeze them, let alone recover the stolen money.
03. Final words
With the advent of the crypto bull market led by BTC and the integration and cooperation between the traditional financial system and crypto assets, the scale of the entire industry is constantly expanding. In my opinion, the Sister Sa team believes that crypto assets will become an increasingly common means of committing occupational crimes in the future.
On the one hand, this requires that our country's Discipline Inspection and Supervision Commission and public security organs should strengthen their awareness and understanding of encrypted assets as soon as possible and upgrade their reconnaissance techniques in a targeted manner; on the other hand, state agency staff and corporate directors, supervisors and senior managers should also realize that encrypted assets are not a panacea for profit transfer and should not cross the criminal red line in the hope of luck.
