Using cryptocurrency for bribery has become a new tool for occupational crimes?

Author: Xiao Za Lawyer

During the handling of cryptocurrency-related cases, the lawyer team of Sister Za has discovered a current undeniable fact: personnel who have not been exposed to cryptocurrency cases may view the crypto world as a formidable beast; however, once they have handled related cases, they often begin to learn relevant knowledge and will eagerly take on cryptocurrency cases when they arise. Some even choose to actively seek out cases…

So, can cryptocurrency be used for bribery? If state officials utilize the characteristics of cryptocurrency—difficult to regulate, easy to transfer, and of significant value—to accept bribes, can it be recognized as a crime of bribery or other traditional occupational crimes in our country, given that it has been clearly stated that cryptocurrency is not legal tender?

Today, the Sister Za team will discuss the situation of committing occupational crimes using cryptocurrency.

An Official Who Accepted 6000 Bitcoins in Bribes, Fortunately Committed the Crime Early

As mentioned earlier, since the technical characteristics of cryptocurrency make it difficult to trace and regulate, it is inherently a very convenient tool for money laundering and asset transfer. Therefore, it can theoretically also be used for bribery and other occupational crimes.

However, in judicial practice, cases involving bribery or occupational crimes related to cryptocurrency have been rarely exposed. The Sister Za team believes this may be partly due to the technical barriers associated with using cryptocurrency, making it "inconvenient" for most leaders; on the other hand, the significant price volatility of Bitcoin and Ethereum means that if a bribe is given in cryptocurrency and its value drops significantly, it can be quite embarrassing.

Nevertheless, in the history of cryptocurrency development in our country, there is a very well-known "pioneer": former Vice Chairman of the Jiangxi Provincial Political Consultative Conference and Secretary of the Fuzhou Municipal Committee, Xiao Yi, who is rumored to have accepted bribes amounting to as much as 6000 Bitcoins.

From 2017 to 2021, Xiao Yi, using his position as Secretary of the Fuzhou Municipal Committee, became acquainted with Lin, the actual controller of Genesis Technology Co., Ltd., a big player in the crypto world, and engaged in a wave of power monetization. Specifically, Xiao Yi used his authority to introduce Genesis Technology Co., Ltd., controlled by Lin, as a key enterprise in Fuzhou, publicly claiming to "build the largest single data center in Asia," while in reality, he tacitly allowed Genesis Technology Co., Ltd. to secretly construct a massive "mining farm" in Fuzhou for Bitcoin mining. Moreover, Xiao Yi provided substantial financial subsidies, funding support, and, most importantly, power guarantees for Genesis Technology Co., Ltd.

Of course, Lin reciprocated by "gifting" Xiao Yi a large amount of Bitcoin generated from mining (rumored to be over 6000 Bitcoins). During the first-instance trial, it was found that Xiao Yi accepted bribes totaling up to 1.25 billion yuan. Accordingly, on August 22, 2023, the Hangzhou Intermediate People's Court in Zhejiang Province publicly sentenced Xiao Yi, a former member of the Party Leadership Group and Vice Chairman of the Jiangxi Provincial Political Consultative Conference, to life imprisonment for bribery and abuse of power. Unfortunately, the details of Xiao Yi's bribery cannot be discerned from public sources, merely summarized as "illegally accepting property worth over 1.25 billion yuan."

So, why does the Sister Za team say it's fortunate that this case was judged early? According to Article 388 of China's Criminal Law [Bribery Crime], if the amount of bribery exceeds 3 million yuan and causes particularly significant losses to the state and people's interests, the death penalty may be imposed. Assuming Xiao Yi indeed accepted 6000 Bitcoins, based on today's market price, the amount of bribery has already exceeded 200 million yuan, and if the price continues to rise, it could very likely exceed 1 billion in the future.

Judicial practice generally considers 1 billion to be the "life and death line" for bribery cases involving public officials in China, as exemplified by two recent cases. It can be seen that if cryptocurrency continues to appreciate, and Xiao Yi continues to accept cryptocurrency after its appreciation, the amount of bribery could be extremely high, potentially reaching the "life and death line."

If Gifts Are Only Accepted in Cryptocurrency, Does It Constitute Bribery in Our Country?

Although there are rumors that a significant portion of the property Xiao Yi accepted as bribes was in cryptocurrency, there is no direct way to verify this information from public sources. Therefore, it is necessary to seriously discuss a question: If state officials only accept gifts in cryptocurrency, does it constitute bribery in our country?

This first requires addressing a question: Does cryptocurrency have property attributes under criminal law?

From current judicial practice, the Sister Za team believes that cryptocurrency has property attributes under criminal law and can be the object of property crimes.

According to the Supreme People's Court's "Criminal Trial Reference" Volume 138 [Case No. 1569] regarding Zhang's robbery case, the Supreme Court stated that property includes both physical objects and property interests. Whether cryptocurrency has property attributes in the criminal law sense depends on whether it possesses the characteristics of property defined in criminal law, namely, the possibility of management, the possibility of transfer, and value.

(1) Cryptocurrency allows holders to possess, control, and manage it through passwords and keys, indicating the possibility of management;

(2) Cryptocurrency can be bought, sold, circulated, and exchanged through trading platforms, indicating the possibility of transfer;

(3) Acquiring cryptocurrency requires payment of corresponding labor or costs, indicating value (including transactional value and applicable value).

Therefore, virtual currency possesses the general characteristics of property under criminal law and has property attributes, qualifying it as a type of "property" in the criminal law sense.

So, does cryptocurrency meet the legal definition of "property" in the context of occupational crimes? The Sister Za team believes that in judicial practice, it can likely be interpreted as a form of "property interest."

In practice, the definition of "property" in occupational crimes in our country is very broad. Simply put, anything of value can be considered "property" in occupational crimes. According to Article 12 of the Supreme People's Court and the Supreme People's Procuratorate's "Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Embezzlement and Bribery," "property" in bribery crimes includes currency, goods, and property interests. Property interests include material benefits that can be converted into currency, such as home renovations and debt forgiveness, as well as other benefits that require payment in currency, such as membership services and travel.

Therefore, although there are currently no publicly available cases of bribery using cryptocurrency in practice (rumors suggest that some unpublicized cases involving public security personnel have emerged), it is our opinion that cryptocurrency cannot serve as a shield for occupational crimes. Using cryptocurrency as a tool to transfer benefits to state officials can constitute bribery crimes.

Final Thoughts

With the proliferation of cryptocurrency and the expansion of its application, its role in occupational crimes is becoming increasingly prominent. The anonymity and global circulation of cryptocurrency make it a tool for some criminals to engage in bribery and money laundering. Although our country's laws clearly state that cryptocurrency is not legal tender, its property attributes and value allow it to be recognized as an object of property crimes in judicial practice, thereby constituting occupational crimes.

In summary, the Sister Za team reminds everyone that cryptocurrency is not a shield for occupational crimes; paper can never contain fire. Even the most concealed methods cannot leave no trace. Nowadays, third-party blockchain companies can conduct relatively precise tracking through facial data, so do not blindly "trust" the anonymity features of blockchain.