Research: 2024 Overall Situation and Regulatory Trends of Virtual Currency Crimes in China
Author: Sun Jun Lawyer Team
In early January 2025, on January 10, the Ministry of Public Security held a special press conference in Beijing. The spokesperson of the Ministry, Zhang Ming, introduced that fraud groups are continuously updating and upgrading their criminal tools by utilizing new technologies such as blockchain, virtual currency, and AI intelligence. In response to the severe and complex criminal situation involving virtual currency and other online fraud, public security agencies will deepen the implementation of special actions such as "Cloud Sword," "Cutting Off Flow," and "Removing Nails," and maintain a high-pressure crackdown. Following this, on January 13, at the national procurators' meeting, the Supreme People's Procuratorate emphasized that procuratorial organs will increase efforts to punish money laundering crimes and legally combat criminal activities that illegally transfer assets abroad using virtual currency.
It is evident that despite the strict regulatory and crackdown attitude towards virtual currency platform transactions and investments in recent years, related illegal financial activities have shifted from offline to online and from domestic to foreign, developing in a more concealed manner. At the same time, due to the inherent characteristics of virtual currency, such as anonymity and lack of national boundaries, it has rapidly evolved into a new type of criminal tool. Against this backdrop, crimes involving virtual currency have become one of the most typical issues in the current field of cybercrime.
As the end of the year approaches, in anticipation of the New Year, our team has specially written this article to summarize and organize the overall situation of virtual currency-related crimes in China in 2024, the latest dynamics of national regulation and crackdown on illegal activities involving virtual currency, and the latest trends in the legal attribute identification of virtual currency in practice.
1. Overall Situation of Virtual Currency Crimes in 2024
Regarding virtual currency crimes occurring in 2024, due to the proximity of the year and the fact that many cases are still in the trial stage, overall data has not yet been published. However, our team conducted a search on the Westlaw platform using keywords such as virtual currency, criminal, and judgment, resulting in a total of 401 criminal judgments, including 386 first-instance judgments and 15 second-instance judgments. This article provides a preliminary analysis of the overall situation of virtual currency crimes in 2024 based on these cases. We apologize for any inaccuracies in the data statistics and result analysis of the cases.
From the retrieved case data, it can be seen that Henan Province has the highest number of cases in 2024, followed by Hunan Province and Shaanxi Province, and then Shanghai, Jiangxi, and Hebei Provinces.
In terms of case causes, compared to previous years where ICO activities were rampant, virtual currency crimes were largely concentrated in the area of disrupting the socialist market economic order, with illegal absorption of public deposits, fundraising fraud, and organizing and leading pyramid schemes being the main charges. In 2024, virtual currency crimes are more concentrated in the area of disrupting social management order, with particularly prominent criminal behaviors concentrated in the crime of disrupting social management order, accounting for as much as 61.87%. Additionally, property infringement crimes continue to be a high incidence area for virtual currency crimes, accounting for 31.2%.
In the area of disrupting social management order crimes, specifically, cases involving disrupting judicial order accounted for the highest proportion, with a total of 122 cases, accounting for 52.36%. All 122 cases involved concealing or disguising the proceeds of crime and the crime of benefiting from criminal proceeds.
Additionally, in the area of disrupting social management order crimes, cases involving disturbing public order accounted for the second highest number, with a total of 108 cases, including 57 cases of assisting information network crime, 39 cases of operating gambling, 10 cases of illegally using information networks, 1 case of gambling, and 1 case of illegally obtaining computer information system data and illegally controlling computer information systems.
2. Latest Dynamics of Regulation and Crackdown on Illegal Virtual Currency Activities in 2024
In 2024, China mainly strengthened its focus and crackdown on criminal activities related to the use of virtual currency as a criminal tool in the fields of foreign exchange violations and money laundering crimes. The following will combine new regulations and typical cases in 2024 related to illegal activities to understand how virtual currency is used to engage in illegal foreign exchange, money laundering, and the key points of criminal establishment in judicial practice.
(1) Engaging in Illegal Foreign Exchange Activities Using Virtual Currency
On December 11, 2023, the Supreme People's Procuratorate and the State Administration of Foreign Exchange jointly issued 8 typical cases punishing illegal foreign exchange crimes, mainly involving illegal operation crimes (illegal buying and selling of foreign exchange), fraud in purchasing foreign exchange, and related crimes such as assisting information network crime and fraudulently obtaining export tax rebates. Among them, using virtual currency as a medium to achieve the exchange of RMB and foreign exchange has become a frequently occurring and prominent form of illegal foreign exchange activities in recent years. Additionally, to better coordinate development and security, facilitate cross-border trade and investment, prevent and curb illegal foreign exchange activities, and maintain the order of the foreign exchange market, on December 27, 2024, the State Administration of Foreign Exchange issued the "Interim Measures for the Management of Bank Foreign Exchange Risk Trading Reports." Article 3 clearly lists illegal cross-border financial activities involving virtual currency as foreign exchange risk trading behavior and requires banks to monitor and report risks for domestic/foreign institutions and individual clients involved in such activities.
In cases involving illegal foreign exchange activities using virtual currency, perpetrators typically collect RMB from clients domestically and then deposit an equivalent amount of foreign exchange into the client's designated overseas bank account, with funds circulating unidirectionally between domestic and foreign accounts. Formally, the parties are not directly buying and selling RMB and foreign exchange, but in essence, they have completed a form of foreign exchange trading. Commonly, this involves cross-border (overseas) payments, where criminals collude with foreign individuals, enterprises, or institutions, or use bank accounts opened overseas to assist others in cross-border remittance and fund transfer activities. Such underground banks are also referred to as "counter-trade" underground banks, where funds circulate unidirectionally between domestic and foreign accounts without physical movement, typically achieving "two-site balance" through reconciliation. In this model, RMB and foreign currency do not undergo physical cross-border circulation; therefore, on the surface, funds circulate unidirectionally between domestic and foreign accounts. However, such activities essentially belong to disguised foreign exchange trading behaviors, which still pose a risk of disrupting the normal order of the foreign exchange market.
With the development of blockchain technology in recent years and the global proliferation of virtual currencies derived from it, their economic value has gained widespread recognition, and they are increasingly allowed as a payment tool in many countries and regions, functioning similarly to legal tender. Against this backdrop, using virtual currency as a medium to achieve the exchange of RMB and foreign exchange has become a frequently occurring and prominent form of illegal foreign exchange activities in recent years.
Typical Case 1:
From February 2019 to April 2020, Zhao and others organized a group to provide foreign currency Dirham and RMB exchange and payment services in the UAE and domestically. The gang collected cash Dirham in Dubai, while simultaneously transferring the corresponding RMB to the designated domestic RMB accounts of their counterparts. They then used Dirham to purchase "Tether" (USDT, a stablecoin pegged to the US dollar) locally and immediately sold the purchased Tether illegally through domestic groups to reacquire RMB, thus forming a circular flow of funds between domestic and foreign accounts. Through exchange rate differences, the gang could earn over 2% profit on each foreign currency transaction. Investigations revealed that from March to April 2019, Zhao and others exchanged amounts totaling over 43.85 million RMB, with profits amounting to over 870,000 RMB.
On March 24, 2022, the People's Court of Xihu District, Hangzhou, Zhejiang Province, sentenced Zhao to seven years in prison for illegal operation and imposed a fine of 2.3 million RMB; Zhao Peng was sentenced to four years in prison and fined 450,000 RMB; Zhou Kai was sentenced to two years and six months in prison and fined 250,000 RMB.
Typical Case 2:
From January 2018 to September 2021, Chen Guo, Guo Zhao, and others built platforms such as "TW711" and "Fast Platform," using virtual currency Tether as a medium to provide clients with foreign currency and RMB exchange services. Exchange clients would place orders under the website's recharge and payment sections and pay foreign currency to the designated overseas accounts. The website would purchase Tether with the aforementioned foreign currency overseas, and then Fan would sell it through illegal channels to obtain RMB, subsequently paying the corresponding amount of RMB to the designated domestic third-party payment platform accounts of clients at the agreed exchange rate, profiting from the exchange rate difference and service fees. The website illegally exchanged over 220 million RMB.
On June 27, 2022, the People's Court of Baoshan District, Shanghai, sentenced Guo Zhao to five years in prison and fined him 200,000 RMB; Fan was sentenced to three years and three months in prison and fined 50,000 RMB; Zhan was sentenced to one year and six months in prison for assisting information network crime and fined 5,000 RMB; Liang was sentenced to ten months in prison and fined 2,000 RMB.
Key Points of Identification:
China implements strict foreign exchange controls, and without permission from the State Administration of Foreign Exchange, engaging in currency exchange between foreign currency and domestic currency is considered illegal foreign exchange trading. According to the "Regulations on Foreign Exchange Administration of the People's Republic of China," "illegal foreign exchange trading" mainly includes four modes: privately buying and selling foreign exchange, disguised foreign exchange trading, buying and selling foreign exchange in reverse, and illegally introducing foreign exchange trading. Article 225 of the Criminal Law states that illegal operation refers to violating national regulations and engaging in one of the following illegal business activities, disrupting market order, and if the circumstances are serious, one can be sentenced to less than five years in prison or criminal detention, and fined an amount of illegal gains that is more than one time but less than five times; if the circumstances are particularly serious, one can be sentenced to more than five years in prison and fined an amount of illegal gains that is more than one time but less than five times or have their property confiscated: …
Additionally, according to Article 4 of the Standing Committee of the National People's Congress's "Decision on Punishing Fraudulent Purchase of Foreign Exchange, Evasion of Foreign Exchange, and Illegal Foreign Exchange Trading Crimes" and Article 225 of the Criminal Law, the Supreme Court and the Supreme Procuratorate's "Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Illegal Engagement in Fund Payment and Settlement Business and Illegal Foreign Exchange Trading" states that disguised foreign exchange trading, which disrupts the financial market order, is punishable as illegal operation. Therefore, circumventing national foreign exchange regulation and indirectly achieving currency value conversion between foreign exchange and RMB using virtual currency, if the circumstances are serious, constitutes illegal operation.
From the expression of the criminal law provisions, although it does not explicitly state that the subjective requirement of illegal operation is "for profit," the definition of the criminal act as "illegal operation" implies that the perpetrator must have the intention to seek profit through certain activities. If there is a lack of motivation "for profit," it cannot form "illegal operational behavior." Therefore, "for profit" should be regarded as one of the subjective requirements for illegal operation.
In fact, this view has been widely recognized in current theory and judicial practice. The research report of the Criminal Second Division of the Guangdong High Court in 2016 pointed out: "Engaging in currency exchange between foreign currency and RMB through underground banks without the purpose of profit is merely a simple illegal currency exchange behavior. If the exchanger does not seek economic benefits from the exchange itself, it cannot constitute illegal operation."
Therefore, if the perpetrator does not have the purpose of profit, their foreign exchange purchasing behavior is solely for personal use, and even if used for investment, repaying debts, etc., it does not constitute illegal operation but merely an administrative violation.
In summary, in specific identifications, it is still necessary to comprehensively consider whether domestic and foreign operators have profit motives, whether they engage in continuous operational activities, and whether actual exchanges between RMB and foreign currency have occurred, along with other relevant subjective and objective factors, to determine whether a crime has been committed.
(2) Engaging in Money Laundering Activities Using Virtual Currency
On August 19, 2024, the Supreme People's Court and the Supreme People's Procuratorate jointly held a press conference to release the "Interpretation on Several Issues Concerning the Application of Law in Handling Money Laundering Criminal Cases" (hereinafter referred to as "Interpretation"), which took effect on August 20, 2024. Among them, Article 5 clearly includes the transfer and conversion of criminal proceeds and their benefits through "virtual assets" trading and financial asset exchange methods into the scope of new money laundering behavior patterns, further clarifying the negative attitude towards the use of virtual currency for illegal activities and explicitly regulating behaviors that use virtual currency to conceal illegal benefits or engage in unlawful activities.
On January 9, the Chengdu Intermediate Court reported the top ten typical cases of Chengdu courts in 2024, among which the case of Wang and Ma's fundraising fraud and money laundering ranked first. This case is complex and has a severe social impact, causing over 29,000 fundraising participants to lose a total of over 1.7 billion RMB, making it a typical case of new crimes involving virtual currency and self-money laundering.
In this case, in 2020, the defendants Wang and others designed a virtual currency called GUCS and the associated software "Wa11et Pro" APP. This virtual currency was publicly traded on two exchanges in April and June 2020. Wang, along with defendants Yang and Xie, conspired to conceal the truth about their access to and quantity of locked GUCS coins, falsely claiming that the coin could be continuously produced through computing power like Bitcoin and linked to the real economy, global public welfare, etc. They widely promoted the economic value and investment prospects of GUCS coins in Chengdu, Deyang, Meishan, and other places, developing downlines in a pyramid scheme manner, and arranged for Duan and others to manipulate the price of GUCS coins through self-buying and selling, deceiving the public into investing and purchasing, resulting in losses totaling over 1.7 billion RMB for over 29,000 fundraising participants.
In early October 2020, Wang successively transferred approximately 249 million RMB worth of "Tether" obtained from fundraising fraud to defendant Ma. Ma, knowing that the funds were proceeds from crimes disrupting financial management order, changed the nature of the virtual currency through investments on overseas foreign exchange platforms and successively transferred over 90 million RMB to multiple bank accounts designated by Wang through bank accounts he actually controlled. Additionally, from December 2020 to January 2021, Ma repeatedly assisted defendant Xie in converting "Tether" into RMB and transferring a total of over 6.04 million RMB to Xie's wife's account. In December 2020, fundraising participants successively reported to the public security organs, and defendants Wang and others were subsequently arrested.
The Chengdu Intermediate Court found that defendants Wang, Yang, and Xie, with the purpose of illegal possession, used fraudulent methods to publicly promote illegal fundraising of virtual currency to unspecified members of the public, with a huge amount involved. Duan and others, knowing that Wang and others were committing fundraising fraud, still actively provided assistance, and their actions constituted fundraising fraud. Defendant Wang concealed and disguised the source and nature of the funds obtained from fundraising fraud, while defendant Ma, knowing that Wang and others were engaged in crimes disrupting financial management order, assisted in concealing and disguising the source and nature of the criminal proceeds, constituting money laundering. Therefore, Wang was sentenced to life imprisonment for fundraising fraud and money laundering, deprived of political rights for life, and had all personal property confiscated. Ma was sentenced to eight years in prison for money laundering and fined 500,000 RMB. The other defendants were sentenced to fixed-term imprisonment ranging from fifteen years to three years and six months, along with corresponding fines.
After the first-instance verdict, defendants Wang, Ma, and others appealed.
The Sichuan High Court reviewed the case and ruled to dismiss the appeal, upholding the original judgment. This judgment has become legally effective.
Additionally, in judicial practice, there are certain difficulties in distinguishing between money laundering and concealment crimes. It is generally believed that the money laundering crime defined in Article 191 of the Criminal Law and the crime of concealing or disguising criminal proceeds and benefits defined in Article 312 of the Criminal Law represent the relationship between special provisions and general provisions in criminal law, with the main distinction being that the upstream crimes for money laundering include drug crimes, organized crime, terrorist activities, smuggling crimes, bribery and corruption crimes, crimes disrupting financial management order, and financial fraud crimes, and require the perpetrator to have subjective knowledge of the type of upstream crime. Knowledge of the upstream crime can be a general understanding, meaning awareness of the type of upstream crime without needing to know its specific nature and charge. In contrast, the crime of concealing or disguising criminal proceeds and benefits does not limit the type of upstream crime, only requiring the perpetrator to have a general understanding of the situation of illegal gains.
3. Latest Trends in Judicial Practice Regarding the Legal Attributes of Virtual Currency
For various crimes committed using virtual currency as a tool, a prerequisite for determining whether a crime has been established is the issue of the legal attributes of virtual currency itself, namely, the property attributes of virtual currency. Clearly, if the property attribute of virtual currency is denied, it would not only deny the application of property crimes such as theft and fraud in cases of illegally obtaining virtual currency but would also affirm the establishment of the crime of illegally obtaining computer information system data based on the underlying technical characteristics of virtual currency. It would also deny the application of relevant charges in multiple crime scenarios, such as illegally absorbing virtual currency from the public or defrauding others of virtual currency in the form of pyramid schemes.
In this regard, although there has been some controversy over the property attributes of virtual currency in both civil and criminal judicial practices in the past, in recent years, as the property value of virtual currency has been widely recognized and applied abroad, China's judicial practice has gradually shown a trend of recognizing the property attributes of virtual currency.
In this context, in the past year of 2024, there have been several highly representative cases and important articles published in the People's Court Daily reflecting the latest trends in China's judicial practice regarding the legal attributes of virtual currency. The following will summarize these cases.
1. Criminal Case Involving a "Post-00" Issuing Virtual Currency
A "post-00" university student, Yang Qichao, issued a virtual currency abbreviated as BFF on an overseas public chain, leading to imprisonment due to withdrawing liquidity. The prosecution accused him of issuing fake virtual currency, misleading others to recharge 50,000 USDT, and then quickly "withdrawing investment," resulting in a loss of 50,000 USDT for others, constituting fraud. On February 20, 2024, the People's Court of Nanyang High-tech Industrial Development Zone found Yang guilty of fraud and sentenced him to four years and six months in prison, along with a fine of 30,000 RMB.
In this case, the defense lawyer argued that according to current laws and regulations in China, virtual currency investment activities are not protected by law, and both parties are engaged in illegal financial activities, so even if the investor suffers losses, they should not be legally protected. The first-instance court's determination was seen as "indirectly supporting the exchange transaction between virtual currency and legal tender," which contradicts national legal provisions.
However, the first-instance court stated, "According to relevant policies in China, this virtual currency does not have monetary attributes, but in real life, due to its stability, it can be traded on many international trading platforms and bring economic benefits, so its property attributes cannot be denied." Thus, it recognized the value of the 50,000 USDT in RMB as a sentencing factor. The first-instance judgment also stated, "As for whether the victim later traded the BFF coin, whether this coin still shows value according to the trading rules of the Bo Bing platform, and to what extent, does not affect the establishment of Yang Qichao's fraud crime." During the first-instance trial, the judge explicitly required that Luo could not engage in buying and selling before the judgment became effective.
2. Article Published on May 16, 2024, in the People's Court Daily Titled "Analysis of the 'Criminal Law Property Theory' of Virtual Currency"
On May 16, 2024, the People's Court Daily published a theoretical article titled "Analysis of the 'Criminal Law Property Theory' of Virtual Currency," authored by Associate Professor Ye Zhusheng from the School of Law, South China University of Technology. He argued that "recognizing virtual currency as property under criminal law violates the principle of unity of legal order." His reasoning is that "China's civil law and financial policies do not protect activities related to virtual currency, do not encourage, and even crack down on activities related to virtual currency. In civil law, activities related to virtual currency are generally deemed invalid civil legal acts for violating public order and good customs. If criminal law protects virtual currency as property, it indirectly guarantees the safety of virtual currency transactions and promotes activities such as virtual currency trading, which contradicts the goals of civil law and financial policies."
3. A Service Contract Dispute Case Involving Virtual Currency Issuance and Financing Reviewed by the People's Court of Songjiang District, Shanghai
On November 18, an article titled "What is the End of High Financing from Virtual Currency Issuance?" was published on the official WeChat account of the Shanghai High Court, introducing a service contract dispute case arising from the validity of a virtual currency issuance and financing service contract reviewed by the People's Court of Songjiang District, Shanghai. Regarding this case, the judge stated, "Virtual currency, as a type of virtual commodity, has property attributes and is not prohibited by law." Based on this, the judge analyzed the reasons why activities related to virtual currency are strictly restricted and deemed illegal financial activities.
4. Article Published on December 5, 2024, in the People's Court Daily Titled "Criminal Qualification of Illegal Theft of Virtual Currency"
In early February 2023, defendants Chen, Jing, Huang, Luo, and others conspired, with Huang and Luo jointly investing, to steal USTD coins (Tether) using contract codes. On March 20, 2023, around 3 PM, defendants Chen, Jing, Huang, and Luo went to the company where the victim Hu was located in Lianshui County, where Huang and Jing met with Hu to scan codes, while Chen operated in the background and Luo drove. They used previously purchased contract codes to steal a total of 57,307.11 USTD coins from the victim Hu, valued at approximately 393,665.46 RMB. The aforementioned defendants then traded some USTD coins, illegally obtaining over 240,000 RMB.
The author pointed out that the notice issued on September 15, 2021, titled "Further Preventing and Dealing with Risks of Virtual Currency Trading and Speculation," clearly states that virtual currency does not have the same legal status as legal tender, and activities related to virtual currency are considered illegal financial activities, with losses arising from such activities borne by the individuals involved. However, this notice only denies the legal tender status of virtual currency but does not deny its property attributes.
It is generally believed that as economic property, it must possess value, including utility, scarcity, and disposability.
In this regard, the property attributes of virtual currency are reflected in:
- The scarcity of virtual currency is manifested in its fixed total supply, not being infinitely available.
- Disposability is reflected in the use of asymmetric encryption technology for virtual currency, which exists in "wallets" (i.e., addresses), and once the address and private key are obtained, one can control the virtual currency.
- Utility is reflected in virtual currency as specific data encoding, which must be generated through "mining," and "mining" embodies social abstract labor.
- Additionally, in real life, virtual currency can be transferred and traded, yielding calculable economic benefits, possessing both use value and exchange value. Therefore, virtual currency has property attributes, and the act of stealing virtual currency by the defendants constitutes theft.
Furthermore, the author believes that in this case, the defendants' illegal theft of the victim's Tether coins involved using contract codes, which were actually a means for the defendants to obtain management permissions for the server through illegal means, invading the computer information system to obtain electronic data, and subsequently transferring the Tether coins. Thus, virtual currency possesses data attributes, and the act of illegally stealing virtual currency constitutes the crime of illegally obtaining computer information system data.
Therefore, based on the circumstances of this case, the author believes that the actions of the four defendants constitute both the crime of illegally obtaining computer system data and theft, which falls under the principle of imagined competition, and should be recognized as theft according to the principle of selecting one serious crime for punishment.
4. Conclusion
In summary, our team has organized and introduced the overall situation of virtual currency crimes in China in 2024, the latest dynamics of national regulation and crackdown on illegal activities involving virtual currency, and the latest trends in the identification of the legal attributes of virtual currency in practice. It can be seen that the property value of virtual currency has been greatly recognized in China's judicial practice, and the current focus of regulation on virtual currency crimes lies in cracking down on illegal foreign exchange, money laundering, and other criminal activities using virtual currency as a tool.
From this perspective, future crackdowns on such criminal activities will likely be further intensified. In these crimes, whether in terms of the return of victims' legitimate property, recovery, or ordering restitution, confiscation, etc., there is a growing practical demand for judicial disposal of virtual currency. In fact, from January 12 to 13, 2025, the Central Political and Legal Work Conference emphasized that the Ministry of Justice should actively research and propose legislative suggestions for key areas and emerging fields. For instance, it should study new issues such as autonomous driving, low-altitude economy, artificial intelligence, virtual currency, and data ownership. Therefore, as a potential direction for future legislation on virtual currency, the issue of judicial disposal of virtual currency is likely to become a focus of future legislation, which our team will analyze in depth in the next article.