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Golden Observation | Three cases to understand the legal status of Bitcoin in China



In recent years, with the increasing acceptance of concepts such as bitcoin and blockchain, the investment and transaction of "virtual currency" led by bitcoin is in the ascendant.  On the other hand, according to the search-ethexc of China Judgment Documents Network, it is found that cases involving Bitcoin are showing an upward trend year by year: from 12 documents in 2014 to 618 in 2019. From the perspective of case classification, criminal cases accounted for more than half of the total 1206 documents, reaching 619; civil cases and administrative cases accounted for 573 and 3 respectively. Among them, theft, fraud and disrupting market order in criminal cases are the main cases involving BTC in recent years, reaching 202, 139 and 58 cases respectively. Based on the following three cases, what is the legal status of Bitcoin in China? Case 1: Bitcoin attributes? Case Review: At about 21:30 on June 12, 2018, Yan Dong, Lu Fang, Zhang Fei, and Fu Yun (Malaysian nationality) went to the residence of Pete (American nationality) and his wife Wang Xiaoli, beat and threatened Pete and Wang Xiaoli, and forced the two The person transferred 18.88 bitcoins and 6,466 skycoins they held to the account designated by Yan Dong and others. Yan Dong and other four were criminally punished, and promised to voluntarily return the Bitcoin and Skycoin obtained from Pete and Wang Xiaoli. However, it was just a blank check. Pete and Wang Xiaoli took Yan Dong and others to court, requesting the return of Bitcoin and Skycoin.  Golden Morning News | List of important overnight news on December 14: 21:00-7:00 Keywords: Europe, options, Fan Yifei, Filecoin 1. The Governing Council of the European Central Bank: If the digital euro is introduced, a "new business model" may emerge "; 2. The trading volume of Ethereum options reached a record high of 1.76 billion US dollars in November 3. Reuters: The U.S. Treasury Department was attacked by a hacker supported by a foreign government; 4. Fan Yifei: Improving the level of financial technology to accelerate digital development; 5. Opinion: British investors are investing in BTC due to Brexit panic and weak pound; 6. Eight scammers involved in the OneCoin case were arrested by Argentine police; 7. Analyst PlanB: Bitcoin may rise to 300,000 by the end of 2021 USD; 8. The reason why Binance stopped Filecoin withdrawals for more than 24 hours without an announcement is unknown. [2020/12/14 15:06:22] The court of first instance ruled that Yan Dong and the other four should jointly return 18.88 bitcoins and 6,466 skycoins to Pete and Wang Xiaoli. According to the closing price of Bitcoin and Skycoin trading and the U.S. dollar price of the day announced on March 12, the compensation is 42,206.75 yuan for each bitcoin and 80.34 yuan for each skycoin. Golden Noon News | A list of important developments at noon on August 4: 7:00-12:00 Keywords: 2gether, Filecoin, 51% attack, Hurun 1. Hackers have stolen 1.2 million euros worth of cryptocurrency from 2gether. 2. In 2019, the number of fraudulent companies involved in virtual currency investment in South Korea increased sharply. 3. Meng Yan: There are still many challenges in the use of industrial blockchain in industrial and commercial scenarios. 4. The State Grid E-Commerce Company was awarded the country's first blockchain electronic contract authorization patent. 5. Bitcoin Diamond (BCD) successfully completed its halving. 6. Bitfinex hackers moved $12 million in Bitcoin over the past six days. 7. The accelerator project Filecoin Launchpad will be officially launched on September 21. 8. ETC 51% attack investigation: Independent miners only spent 17.5 BTC to reorganize 3594 blocks. 9. "2020 Hurun Global Unicorn List" released four blockchain companies including Coinbase. [2020/8/4] Yan Dong and other four refused to accept the appeal. In the second trial, Pete and Wang Xiaoli voluntarily gave up the pursuit of Skycoin, but insisted on pursuing Bitcoin. The court of second instance made corresponding changes to the relevant contents of Skycoin in the first-instance judgment, and maintained other judgment contents. In response to this case, a lawyer told Jinse Finance that, as far as the law is concerned, the significance of this case is: by recognizing virtual currency as legal "property", it is given legal protection. Golden Morning News | January 13 Overnight Important Updates: 21:00-7:00 Keywords: Jing Xiandong, Litecoin, BEOS Chain, Ripple 1. Liu Danjun, member of the Hunan Provincial Committee of the Chinese People’s Political Consultative Conference: It is recommended to apply blockchain technology to The field of agricultural product circulation. 2. Jing Xiandong, Chairman of Ant Financial Services: use AI and blockchain to promote the upgrading of digital government affairs in Zhejiang. 3. Director of the Litecoin Foundation: More than half of the LTC has not moved for more than a year. 4. The BEOS chain released by BM father Stan Larimer has processed the first blockchain transaction in space. 5. CEO of Ripple: XRP exists independently of Ripple, and XRP holders have no ownership over the company. 6. BTC is now at $8,120, up 1% in the past 24 hours, with a market value of $147.187 billion. [2020/1/13] At present, the theft in terms of property-given bitcoins is a crime of theft, which is already a well-known fact in the chain circle and legal professionals. For a long time, the theft and robbery of other virtual currencies have not been punished as corresponding property crimes in judicial practice because they do not have property attributes. The reason why Bitcoin is special is that in December 2013, the People's Bank of China, the Ministry of Industry and Information Technology, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission jointly issued the "Notice on Preventing Bitcoin Risks". In the notice, the nature of Bitcoin was identified: Bitcoin is not a currency, but a virtual commodity. Based on the acknowledgment of the nature of the commodity, any financial institution and payment institution are not allowed to use Bitcoin as a price for products or services, nor can they buy or sell Bitcoin as a central counterparty; however, ordinary people can buy and sell freely at their own risk. Golden Finance Live Report Senior Vice President of IBM: "Trust and Transparency" will become the "Currency of Encrypted Economy" in 2025: Golden Finance Live Report, Today at the Coindesk 2018 Consensus Conference, IBM Senior Vice President Bridget van Kralingen delivered a speech. She stated that her dream is that microfinance and business acceleration can be scaled up, which can be done through blockchain. With the increase of blockchain applications, "trust and transparency" will become "the currency of the encrypted economy" by 2025. Kralingen said he is very excited about the token economy. [2018/5/15] Therefore, the "Notice on Preventing Bitcoin Risks" issued in 2013 actually confirmed that Bitcoin is a real and specific property interest that can be dominated, controlled, and transferred.  The legal protection just requires the calculation of "property interests". As its legal basis, for example, according to the provisions of Article 264 of the "Criminal Law": "Stealing public or private property, the amount is relatively large; or repeated theft, burglary, theft with a murder weapon, or pickpocketing; shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention. Or control, and a fine or a fine.” In this crime, “property” refers to the specific property interests that can be controlled by people; it can be seen that if tokens such as Bitcoin are to be protected by law as property, the premise is that they constitute " "Property" in the crime of theft under Article 264 of the Criminal Code.   Golden Finance News: Xunlei CEO Chen Lei said that he has never considered doing an ICO, and the reward of Wankecoin does not violate the policy; according to the announcement on the CEX official website, Xunlei Wankecoin (WKC) will be launched on the CEX trading platform on November 6. [2017/11/6] Case 2: Do other cryptocurrencies have the same status? Case Review: On August 16, 2018, the Haidian Court announced the first Bitcoin Cash BCH dispute case, ruling Beijing Lekuda Network Technology Co., Ltd. (hereinafter referred to as "Lekuda", the operator of OKCoin) to Feng Mr. Feng's registered account issued 38.7480 bitcoin cash, and at the same time rejected Mr. Feng's claim for compensation for losses. This is a dispute in which investors claim that "the "receipt" button for bitcoin cash withdrawals has disappeared, and they demand OKCoin to compensate for the loss of BCH price drop during the unclaimed period", while OKCoin stated that "it has fulfilled the responsibility of notification and guidance". In this regard, the Haidian Court held that after the trial, Bitcoin is a transaction object in the contract law and has "civil interests" that should be protected by law. Mr. Feng's lawsuit has a basis in the contract law. However, the plaintiff (Mr. Feng)'s claim for compensation for the price loss of Bitcoin lacks factual and legal basis, and the court does not support it. In the end, the Haidian Court ruled that Lekuda issued 38.7480 bitcoin cash to Mr. Feng's registered account, and rejected Mr. Feng's claim for compensation. For such cases, the relevant legal professionals of Jinse Finance and Economics Consulting concluded that in 2013, Chinese law defined BTC as a "specific virtual commodity", and in the past one or two years of judicial practice, ETH has also been given similar property attributes. For other virtual currencies other than these two (such as Litecoin, etc.), or altcoins, property attributes are not given; instead, they are characterized as a set of numbers with ownership. However, in real cases, it is still necessary to discuss specific distinctions.  In law, the value attributes of these tokens as "property" in criminal law are generally denied for the following reasons: (1) Tokens lose specific value when they are separated from the system; they are not specific. (2) The value is different for different users, and has no value for non-platform users; it is not general. (3) According to different identification methods, the value varies greatly; it is not measurable. Compared with BTC, other tokens lack one or more of the above three characteristics; none of them can recognize its "property" attribute. Since the current general token market is not large enough, it is difficult to meet the above three standards at the same time. Therefore, although other virtual currencies are actually circulating in the market, they are not generally protected by law. Moreover, the current ICO behavior has been published on September 4, 2017 by the People's Bank of China, the Central Cyberspace Administration of China, the Ministry of Industry and Information Technology, the State Administration for Industry and Commerce, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the China Insurance Regulatory Commission. In the "Announcement", it is defined as "illegal financing behavior"; it is required to immediately stop related financing activities and make arrangements such as liquidation as soon as possible.  There have also been some changes in convictions in currency-related cases in recent years. Specifically, the concept of conviction has gradually changed from the crime of theft and fraud in property crimes to the crime of illegally obtaining computer information system data and other computer information system data crimes. In practice, in addition to the legal risk of the token itself, it may also be taken out of the exchange during the investigation process. Because the exchange provides corresponding services, it must also bear corresponding legal responsibilities; in addition to being banned in accordance with the law, the exchange may also be sealed up, seized, and frozen as a joint crime to cooperate with the investigation; in addition, its operation of illegal tokens Behavior, may also be involved in Article 225 of illegal business operations. This is because, at present, ICO in my country does not have a legal status; the main body of the currency is not allowed to carry out marketing in China without legally obtaining a license in China. It should be emphasized that even if the issuers of these virtual currencies are abroad, they cannot escape criminal sanctions; it is difficult to avoid legal risks. This is because, although foreign companies cheating foreigners in foreign countries has nothing to do with China, but foreign companies cheating Chinese in foreign countries has something to do with China. Article 7 of the Criminal Law stipulates "personal jurisdiction", which shows that as long as this matter has nothing to do with Chinese consumers, it is difficult to avoid the risks of our country's criminal law. In addition, the court did not affirm the currency status of virtual currency, so virtual currency cannot be protected by currency; general altcoins cannot be protected like BTC/ETH. However, the use of ICO and other means to commit crimes such as fraud, pyramid schemes, and illegal business operations does not mean that the funds and properties invested by consumers are not protected by law. Counterfeit currency has an illegal status; the behavior of issuing coins and operating counterfeit currency is an illegal act, and the income obtained by using such illegal activities will be recovered as "illegal income". Article 64 of my country's "Criminal Law" stipulates the confiscation and refund of illegal proceeds from crimes: "All property obtained illegally by criminals shall be recovered or ordered to be refunded." However, due to the need for evidence to determine the amount of crime, in practice, generally The funds involved in the case will be confiscated first; the entire amount involved in the case will be found out before disposal.  Case Three: Is Bitcoin Mining Protected?  Review of the case: On January 4, 2018, the plaintiff Chen bought a bitcoin "mining machine" on the website operated by the defendant Zhejiang Communication Technology Co., Ltd. The time and delivery method shall be agreed upon. The next day, the plaintiff Chen paid the full price of the goods to the defendant company A. After the plaintiff paid all the money in advance, he learned that the People's Bank of China had issued the "Announcement on Preventing the Risks of Token Issuance and Financing" in conjunction with multiple ministries and commissions, demanding that all types of token issuance and financing activities be stopped immediately. The plaintiff, Chen, believes that the machine involved in the case has no use value as a special "mining machine" for Bitcoin, and the equipment transaction is suspected of being illegal, so he applied for a refund, but the defendant refused. The plaintiff, Chen, believed that the two parties shopping through the website should abide by the relevant regulations on the management of online transactions. Consumers have the right to return the goods without reason within seven days from the date of receipt of the goods. Defendant Company A should refund the purchase price. After the trial, the court held that the plaintiff and the defendant entered into the Bitcoin “mining machine” sales contract in the form of data messages through the Internet, which was the true intention of both parties, and the contract was established according to law. Conclusion: The behavior of "miners" to generate bitcoins through "mining" is similar to the behavior of labor production. The bitcoins generated by "miners" "mining" condense the abstract labor of human beings. According to the theory of labor value, they have commodity attributes. Although Bitcoin cannot be used as currency to purchase goods, Bitcoin as a commodity can be legally purchased by recipients using currency. my country's laws and administrative regulations do not prohibit the production, holding and legal circulation of Bitcoin, nor prohibit the sale and purchase of Bitcoin "mining machines". In addition, the mining machine is a special machine and equipment used to generate bitcoins. Its behavior belongs to the behavior of investing funds to purchase production tools in the means of production. The scope of protection of the Consumer Protection Law does not apply to the relevant provisions of the seven-day no reason return.


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