What kind of criminal law was violated in the PlusToken case?

2020 can be said to be a year full of disasters for financial investors. The oil crash, gold plunge, US stock market circuit breaker, etc., have suffered reshuffle blows in many investment fields.

In the digital currency market, the "PlusToken" platform, known as "the largest fund in the currency circle", has been investigated by the police since the beginning of 2019 for being suspected of engaging in Internet pyramid schemes, and 82 backbones have been arrested this year. The price fell again and again. After more than a year of vicissitudes, investors have to accept that this may be an "investment" that loses all their money, and some people will even face prison punishment.

From the police report, we can see that from the filing of the case to the arrest, the police arrested a total of 27 people outside the country and 83 criminal suspects inside the country, including not only 3 platform builders, but also a large number of criminal suspects identified as Other participants of backbone members. For the latter, this may have become an unwarranted disaster. The original intention was to use the smart dog to move bricks to obtain income, and use Bitcoin as a virtual currency to increase property value. Why did it end up being a crime? What kind of criminal law was violated in this series of actions?

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In fact, Bitcoin, as a new era currency based on the idea of decentralization and blockchain technology, has had a huge impact on the world financial circle after its birth, and its value potential is huge. However, in the process of development, due to the management loopholes brought about by the lack of direct predictability of the law, coupled with the recklessness of speculators, this electronic currency has gradually become a skin covered in criminal activities.

In the "PlusToken" case, first, its organizational development took advantage of the above-mentioned legal loopholes. According to the description of relevant parties, in addition to obtaining income through "coin deposits", investors can obtain more income through the "move brick bonus system" when they develop offline. According to the investor's description, the so-called "moving brick bonus system" means that users invest in the Plus Token smart brick moving wallet, in addition to the principal, they can also get 10% to 30% of the monthly income, and directly develop a downline reward 100%, 10% rewards for downlines from the second floor to the tenth floor. And this high reward mechanism promotes the continuous development of the level, even reaching three thousand levels. At the same time, the "threshold fee" (at least equivalent to 500 US dollars in digital currency) that new users must pay to open the "smart dog" is also in line with the legal expression of the crime of organizing and leading pyramid schemes in Article 224 of the Criminal Law. same.

News | PlusToken transferred more than 10,000 BTC yesterday and has been split into single digits: The Beijing Chainsmap monitoring system found that after 4:34 am on February 12th, Beijing time, PlusToken started to further split the BTC related to money laundering yesterday. After splitting 11,999 BTCs into 7 groups of large-value Bitcoins, they were further split into single-digit to double-digit Bitcoins. In addition, PlusToken still has an address with more than 7,000 bitcoins, and it is very likely that there will be further actions in the near future.

According to Beijing Lianan data analyst SXWK, at this stage, the money laundering strategy of PlusToken this time is similar to the previous one, which is to form small UTXOs after multiple transfers and splits of huge amounts of Bitcoin. According to its previous strategy, the next step will be to continuously merge and split these small BTCs, and gradually start to launder money from the exchange. From the perspective of the previous process, it generally needs to go through about 20 layers of transfers. The first batch of bitcoins will arrive on exchanges within the week. Of course, it is not ruled out that this money laundering strategy will be changed, and we will monitor further. [2020/2/12]

Second, since the legal interests protected by the crime of organizing and leading pyramid scheme activities include not only the safety of personal property, but also the normal economic order of the market, the scope of its attack is wider. Specifically, the arrest of a large number of so-called backbones in the "Plustoken" case is based on this consideration. The criminal subject of this crime is the organizer and leader of pyramid selling activities, which is different from the literal definition in law. According to the "Opinions on Several Issues Concerning the Application of Law in Handling Criminal Cases of Organizing and Leading Pyramid Selling Activities" issued in 2013:

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"The following persons can be identified as organizers and leaders of pyramid sale activities: (1) Personnel who initiate, plan, and manipulate pyramid sale activities; (2) Personnel who undertake management and coordination duties in pyramid sale activities; (3) ) Personnel who undertake publicity, training and other responsibilities in pyramid selling activities; (4) have received criminal punishment for organizing and leading pyramid selling activities, or received administrative punishment for organizing and leading pyramid selling activities within one year, and have directly or indirectly developed and participated in pyramid selling activities (5) Other personnel who play a key role in the implementation of pyramid selling activities, the establishment and expansion of pyramid selling organizations, etc."

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It can be said that this kind of regulation is not only an inevitable choice under the policy of vigorously cracking down on pyramid schemes, but also a legal presumption on the subjective state of actors. Willfully blind to the truth. And this just shows that this subjective aspect is an important prerequisite for the determination of the crime. If a person believes unreservedly and has no possibility of recognizing the existence of pyramid selling, he should not be hit by the criminal law.

Third, under the premise that the above-mentioned criminal law expands the scope of attack, it does not necessarily result in the arrestee being punished by prison. The law has not completely blocked the possibility of the above-mentioned perpetrators who are identified as organizers and leaders and are subject to criminal prosecution after passing the case and voluntarily reporting and confessing truthfully to obtain mitigation or even exemption from punishment. On the contrary, in Internet MLM cases, due to the large number of people involved, a large number of such perpetrators were eventually convicted but exempted from criminal penalties. A typical example is the many defendants in the Pacific Direct Purchase case in 2013. According to the "Summary of the Symposium on Handling Internet-related Financial Crime Cases" issued by the Supreme People's Procuratorate in 2017 to understand its spirit:

"Due to the large number of persons involved in Internet-related financial crime cases, they should be classified and dealt with according to the principle of differential treatment." The severity and the necessity of criminal prosecution," "Comprehensive use of criminal prosecution and non-criminal means to deal with and defuse risks."

Based on the above-mentioned "PlusToken" example for legal analysis, we remind everyone that first, we must beware of this new type of scam that only puts on the cloak of Internet finance; Asking for advice is the answer.

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

Xiao Sa, an in-depth legal service provider of vertical "technology + finance", appeal member of China Internet Finance Association, director of China Banking Law Research Association, special researcher of Industrial Finance Research Base of Chinese Academy of Social Sciences, part-time tutor of China University of Political Science and Law School of Master of Laws, financial technology The first batch of members of the 100-member Forum of Shared Finance, a special member of the People's Venture Capital Blockchain Research Institute Committee, and a member of the "China Blockchain Industry White Paper" writing committee of the Information Center of the Ministry of Industry and Information Technology. Was rated as the best columnist of Weiyang.com by PBC School of Finance, columnist of Hujin News Agency, Babbitt, Caixin, Securities Times, Sina Finance, and Phoenix Finance.

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