ETH Exchange ETH Exchange
Ctrl+D ETH Exchange

Does investing in virtual currency on behalf of customers constitute a crime of fraud?



Case Details

In July 2013, Mao was persuaded by "faith", "Henry", "Xiaohong" and "Weili" on the Internet to start buying virtual currency and doing online investment business. Mao invested 10,000 yuan, and after three or four months, he got back the principal and earned two to three thousand yuan. Later, Mao joined the team of "Xiaohong" and others, and took the position of market leader in Cixi, Ningbo. As of July 2015, Mao had invested about 700,000 yuan. Through the online operation of "Qian Shao" and others, he not only recovered the principal, but also made two to three hundred thousand yuan.

In August 2015, "Qian Shao" introduced: He has more than 20,000 people under him, and he can sell virtual currency that others cannot sell. There is a consortium on the team, as long as he is willing to invest, he can buy any virtual currency. So far, Mao has started to specialize in operating virtual currencies, investing in virtual currencies including OneCoin, MFA, STC, domestic 3M, international super 3M, Korean 3M, German 3M, and American 3M. Mao relies on a high-end computer with its own server to mine virtual mines and e-wallets. The mined virtual currency is transferred to his own e-wallet through the international e-wallet, and the virtual currency in the e-wallet is transferred to the on your computer hard drive.

In October 2016, Mao saw that the situation of the platform was very good and the return on investment was very high, so he sent a group WeChat to invite Chen, Xu, Bao, Zhou and others to invest in the online virtual currency business. Chen and others passed The method of bank transfer is to remit the money to the accounts of China CITIC Bank, Ping An Bank, Agricultural Bank, China Guangfa Bank, Shanghai Pudong Development Bank, Industrial and Commercial Bank of China, and China Construction Bank. Mao allocated a large amount of virtual currency bought on the Internet according to the amount of funds invested by customers, and distributed them corresponding income according to the price fluctuations on the online virtual currency platform, dividends and performance rebates. All investors purchased virtual currency. All payments are converted from RMB into virtual currency and stored in accounts on the virtual currency platform.

Aztec Network announced the integration of lending protocol Aave: On November 17th, Aztec Network, a privacy and expansion solution based on ZK Rollup, announced the integration of lending protocol Aave. Users can use Aztec Connect to deposit private (shielded) ETH or USDC in Aave to earn income while enhancing privacy and reducing gas fees. [2022/11/17 13:17:00]

In October 2016, Mao found that the virtual virtual currency online platform could not withdraw cash, and the price of the virtual currency online platform dropped sharply. Ban Mou" and others also began to lose contact. As a result, readers and friends may have guessed that Mao was arrested for fraud.


Does Mao Mou, who manages money on behalf of clients, constitute a crime of fraud?

Court decision

Mao Mou believes that he does not constitute a crime of fraud. The investment platform is still operating normally, and the investment funds of each victim are used to purchase virtual currency of corresponding value. From the book, everyone is in a state of loss; The victim, they checked the investment situation on their computer; MFA, Onecoin, and KFE were all in normal operation. He had no intention of defrauding and repaid the victim more than 1.33 million yuan.

Precog Finance completed a $3.5 million private placement round: On October 22, Precog Finance, a decentralized encryption automatic trading service provider, announced the completion of a $3.5 million private round of financing. Web3 venture capital company and market maker DWF Labs participated in the investment and To establish a strategic partnership. (einnews) [2022/10/22 16:35:15]

However, the court held that after defrauding victims Chen and Xu of their money on the grounds of investing in virtual currency, Mao allocated the previously purchased virtual currency to the victim's name through the Internet, but the victims Chen and Xu did not The above-mentioned account is actually in possession of the above-mentioned account, which is still actually controlled by the defendant Mao. The victims Chen and Xu paid money due to the defendant Mao’s fraudulent behavior, but did not actually obtain the virtual currency mentioned by the defendant Mao. The court held that their behavior constitute fraud.

Legal Review

We believe that this judgment is actually debatable. A trusts B and gives B money to invest in a project. As a result, B loses everything. At this time, it is determined that B is a fraud, and the loss of the investment failure is regarded as the loss of the victim being defrauded. It is indeed inappropriate. We also need to distinguish between blind profit-seeking and fraudulent behavior.

Data: The top 2,000 ETH whales hold SHIB worth $660 million: On August 7th, WhaleStats shared the position composition data of the top 2,000 ETH whales. The data shows that in addition to stablecoins and Ethereum itself, SHIB occupies the largest share of whale portfolios, accounting for 10%, equivalent to $660 million.

In comparison, SHIB has a market capitalization of roughly $6.6 billion. This means that the top 2,000 ETH whales hold SHIB for 10% of their overall market capitalization. (U. Today) [2022/8/7 12:08:06]

When the perpetrator fabricates something that does not exist or has no investment at all, these actions should of course be identified as fraud. If it is only for risk investment and for more benefits, entrust others to invest, and the investment behavior is also carried out. At this time, it is necessary to be cautious when identifying fraud, especially losses caused by market reasons are not necessarily fraudulent. If the number of people is large and the loss is large, it is rash to commit a crime for the sake of maintaining stability. The principle of legally prescribed crimes and punishments in the criminal law must not be discarded.

In fact, most of the cases involving virtual currency fraud are fund-raising fraud cases. Here we will not discuss the criminal law meaning of the term fund-raising. This article focuses on "fraud". The following cases also more clearly confirm our above point of view.

Around August 2014, LINA and JEFF planned and launched the "Zhongyi International" project in order to defraud money. They made false publicity in the name of jewelry sales, promising customers to purchase any product and obtain membership:

FIBA question: How do you choose players with 15 bitcoins? Guo Ailun and Zhou Qi are on the list: Jinse Finance reported that the International Basketball Federation (FIBA) Asian Cup officially updated social media, throwing out the topic of "building a lineup with 15 bitcoins". "Which Asian stars will you use to form your best team?" FIBA Asia Cup official social media wrote. Among them, Guo Ailun appeared in the position of shooting guard, which needs to be selected with a maximum of 5 bitcoins. Zhou Qi, who appears in the center position, needs to use 2 bitcoins to choose, and in the center position, the highest bitcoin is Haddadi. [2022/6/28 1:35:49]

①Click on the website advertisement every day to get 12 points "service fee", 1 point is equivalent to 1 US dollar, you can click 300 working days in a row to get a total of 3600 US dollars "service fee", and the points can be withdrawn to the bound bank account regularly, deducting halfway payment More than $1,000 in return after fees;

② You can get business "promotion rights", and you will get considerable points rewards after introducing others to buy products, and the points can also be withdrawn regularly;

③In addition, you can invest in the company's upcoming virtual currency "K coin". "K coin" will be in line with Bitcoin in the future, and 1 "K coin" will rise from 1 US dollar to 50 US dollars, so as to attract others to invest and buy 2160 US dollars per order You can become a member of the product (physical order, you can get the corresponding jewelry, but the actual value of the jewelry is only 5%-10% of the sales value), or buy a product of 1160 US dollars per order to become a member directly (discount list, no jewelry), members Unlimited orders can be added, the more orders you place, the higher the value of jewelry you get, and the higher the return.

The decentralized index protocol The Graph will be extended to the Juno Network: Jinse Finance News, the decentralized index protocol The Graph will be extended to the Juno Network, and a subgraph is currently available on Juno. [2022/6/6 4:06:26]

From August to December 2014, defendants Zhou, Ye, and Cai successively invested in the "Zhongyi International" project, gradually established their own sales teams, and actively attracted investment from others in the mainland. Around December 2014, "Zhongyi International" created a fake virtual currency "K coin" and issued it in large quantities, using the reputation and value of the real bitcoin to publicize, manipulating the price of "K coin", and claiming that only the purchase of products Become a member to invest in "K coins", and "K coins" can be withdrawn when they are traded, so as to deceive old members to invest the points obtained by clicking on advertisements into "K coins" or attract new customers to buy products and click on advertisements to earn points and then invest in " K coins".

Around April or May 2015, in order to evade the original promise of "300 days to get service fees of 3,600 US dollars", "Zhongyi International" stipulated that members' points could not be withdrawn, but could only buy "K coins". Later, due to the lack of new customer investment, the price of "K coin" continued to slump, and most of the customer's investment funds were locked up. However, the top executives of "Zhongyi International", such as LINA and Jeff, were unwilling to pay money to promote "K Coin" after earning the money invested by customers. "coin" price to help customers solve their problems.

In order to attract more customers to invest and increase the price of "K coins", LINA, JEFF and others proposed the "Royal Gaode" project. The defendants Zhou, Cai, and Ye realized that the "Zhongyi International" project was designed by others. Participated in the launch meeting of the "Royal Gaode" project in the case of "circling money" scams.

The meeting determined the same planning and operation mode as the "Joy International" project, that is, first lure customers with high returns to buy products and become members, and later launch virtual currency, etc., and clearly stated the respective responsibilities of the participants, LINA, JEFF and others manipulated the overall operation of the project, including establishing jewelry sales websites and member websites, finding jewelry purchase channels, background maintenance, etc., under the arrangement of the high-level "Royal Gaode" project, the defendant Zhou was in charge of the mainland's finances, and the defendants Cai and Ye Responsible for business promotion in mainland China.

In order to support the online payment of the mainland business, the defendant Zhou Mou registered and established Shenzhen Orient Jewelry Co., Ltd. in August 2015 in the name of his younger brother Zhou Mou 1 under the instruction of the senior management of the "Royal Gaode" project. PayEase, an online payment service platform, signed a contract to use the platform for online payment of customer investment.

In August 2015, the "Royal AutoNavi" project was officially launched. In order to disregard the relationship with "Jijo International" and deceive customers to invest, it was announced that the "Royal AutoNavi" and "Jijo International" that launched the project were not the same company The company, "Royal Gold" is a large global jewelry company. This time it is the acquisition of the "Zhongyi International K Coin" project, and promises that customers will buy $2360/order (physical order) or $1360/order (preferential order) to become After becoming a member, you can click on the advertisement on the website every day to get 13 "service fee" points. 1 point is equivalent to 1 US dollar. You can click 300 working days in a row to get a total of 3,900 US dollars "service fee". Half of the points can be withdrawn regularly, and half must be purchased. "K coins" for investment prospects; In addition, introducing others to buy products will receive considerable points rewards, and points can also be withdrawn regularly or purchased "K coins".

Around December 2015, due to the decrease of new customers, it was difficult for "Royal Gaode" to pay the cash withdrawals of previous members, so it created and launched the virtual currency "Gaodecoin" (actually an internal transaction symbol for high-level direct control of prices), like promoting " K currency" also advocated the investment prospects of the currency and deceived customers to invest. In the end, the actor in this case was identified as a fund-raising fraud.

The profit model of the organizers of "Royal Gold" is to first use fictitious high returns as bait to induce customers to pay "membership fees", and then turn most of the "rewards" into virtual symbols with no actual value for investors Continue to hold and defraud most of the "membership fees" of investors; the organizer's behavior is essentially fabricating facts and concealing the truth, and it is illegal to defraud customers of money. The biggest difference between this case and Mao’s case is that the virtual currency claimed by the perpetrator is a non-existent thing. Although there are victims blindly pursuing profits, it is not the root cause of the final loss.

In other words, letting others simply invest in virtual currency cannot be considered fraudulent, especially if such virtual currency is real. The use of the name of virtual currency is definitely fraud. Of course, what is more noteworthy is that the existence of virtual currency at the beginning or the fact that it can be real and effective should not be regarded as fraud. As for concealing the facts later, the subsequent behavior should be It's a scam. We do not deny that the core of the crime of fraud lies in the purpose of illegal possession, but the composition of the crime is a combination of subjectivity and objective. First, check whether the objective elements meet the characteristics of the crime of fraud, instead of directly entering the subjective level to examine whether the party has the purpose of illegal possession. Intentionality may be the correct solution to this type of case.

The above is today’s sharing, thank you readers!


Binance App Download
Newsweek | European Commission hopes to introduce cryptocurrency bill as early as Q3 2020.

Golden Weekly is a weekly blockchain industry summary column launched by Golden Finance, covering key news, market and contract data, mining information, project dynamics.

Golden Trend丨Knowing the history and learning from the present? The last chance to buy low before the BTC big bull starts?

BTC has now completed the third halving of production. The picture above shows the long-term monthly trend of BTC from 2010 to 2020. Through research, it can be found that before each halving.

Golden Observation|Public chains have hard-to-read scriptures

A few days ago, Ethereum's new test network Medalla failed the verification process due to the low participation rate. Although this is just a small accident.

Does investing in virtual currency on behalf of customers constitute a crime of fraud?

Case Details In July 2013, Mao was persuaded by "faith", "Henry", "Xiaohong" and "Weili" on the Internet to start buying virtual currency and doing online investment business. Mao invested 10,000 yuan.

Inner Mongolia suddenly designated 21 mining farms to suspend participation in multilateral electricity transactions, and the electricity bill may increase by 1/3

Wu said the blockchain exclusively learned that the Inner Mongolia Department of Industry and Information Technology issued the "Notice on Matters Concerning Mining Enterprises' Participation in the Inner Mongolia Ele.

Golden Outpost | Good for the encryption industry? The US SEC modernizes the definition of "accredited investor"

On August 26, 2020, Washington, D.C., the U.S. Securities and Exchange Commission (SEC) announced amendments to the Securities Act to define "accredited investors."The SEC noted that this is one of the primary criteri.

How big is the space for this round of Bitcoin and DeFi market? What do the top "players" think?

Dave Portnoy is an online celebrity trader who is active-ethexc on the Twitter platform and became popular this year for live stock trading. His August 13th video talked about Bitcoin, and this time, he asked half-seriously.