From the perspective of public security: is it "right" to sell coins involved in the case?

Author: Lawyer Guo Zhihao

PS: This case is a real case encountered by Guo’s lawyer team, in order to protect privacy, all names are pseudonyms, and reprinting and quotation are prohibited.

I. Basic facts of the case

Xiaowen is an OTC dealer in the cryptocurrency circle, and has long been engaged in virtual currency acceptance trading business on BN, OK, HB and other platforms. One day in 2022, he was suddenly taken away by the public security organ and detained on the grounds of “opening a casino”. After 37 days, the procuratorate did not approve the arrest pending trial.

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During the period of release on bail pending trial, after verification by the public security organs, Xiaowen has long helped an online gambling platform to launder hundreds of millions of gambling funds through virtual currency transactions on behalf of Wang. But Xiaowen does not know Wang’s true identity, and only thinks that Wang is a rare and stable big customer.

Finally, after a year, Xiaowen was acquitted due to insufficient evidence in this case.

**Second, **** From the perspective of public security, will you easily let Xiaowen go? **

First of all, because China’s Criminal Law and Criminal Procedure Law do not have specific provisions for confirming criminal suspects, after a criminal case is filed, as long as it is possible to commit a crime, it can be recognized as a criminal suspect by the investigating organs.

Second, according to article 82 of the Criminal Procedure Law and article 124 of the Provisions on the Procedures of Public Security Organs in Handling Criminal Cases, "the public security organs may first detain a flagranto or a major suspect in any of the following circumstances: (2) The victim or a person who saw it with his own eyes identified him as having committed a crime; (3) Where evidence of a crime is found around or at one’s residence; (5) There is a possibility of destroying or forging evidence, or colluding in confessions. ”

The point is that in the currency circle case, bank transactions and other transaction records are the best evidence involved in the case, in the case of this direct evidence or multiple indirect evidence, it is easy to set the second and third situations, in order to find out the facts of the case, the public security organ believes that it is a major suspect, first detained is not wrong, right? If there is evidence and there are people on the run in the whole case, is it okay for the public security organs to detain them first in order to prevent destruction, forgery of evidence, or collusion of confessions, right?

Finally, Xiaowen did conduct long-term and large-scale virtual currency transactions with Wang; The public security organ asked Xiaowen why he didn’t confirm the source of funds with Wang? Xiaowen replied, “I asked, and the customer only said that it was definitely legal.” "The public security organ asked: Xiaowen’s bank card has been frozen in many places many times, did they suspect that Wang had a problem? Xiaowen replied: “It’s not good to keep asking, it seems disrespectful, I’m afraid that if I ask more, the customer will run.” The public security organ asked Xiaowen if he knew that virtual currency transactions were illegal financial activities, and Xiaowen replied, “I know that it is illegal, but I don’t know that it is a crime.” ”

If you are a public security organ, will you be detained first when you have sufficient objective evidence and only lack evidence that Xiaowen is subjectively aware of? Let’s not change the issue of compulsory measures (release on bail pending trial) here, at least the authority of the public security organs to detain first is really large.

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**III. Case Summary: Currency Compliance is a False Proposition **

The charges in this case have gone through a number of changes such as opening a casino, helping letters, concealing and concealing criminal proceeds, illegal business and so on, but after a long and complicated communication with the public prosecution law, Xiaowen was finally acquitted, and the core of innocence is actually that the public security organs ultimately cannot find evidence that Xiaowen has subjective knowledge, and cannot prove subjective intention, which cannot constitute the crime of opening a casino, helping letters, concealing and concealing criminal proceeds, etc., and there is no clear national regulation for the crime of illegal operation.

I have to say that Xiaowen is lucky, because like Xiaowen, there are many case-handling authorities who have been forcibly judged when the evidence is insufficient, including some large OTC providers, project parties, and even the heads of well-known exchanges. Many people in the currency circle often ask Guo how to do compliance, and Guo advises them to change careers, because at a time when legal provisions are lacking, when all virtual currency business activities are identified as illegal financial activities, currency circle compliance is simply a false proposition. Even if you are careful and careful, notice a lot of potential compliance risks, and prepare enough evidence, can you absolutely avoid encountering an encounter like Xiaowen? You know, the law is only one aspect of society, and many objective factors outside the law are even more difficult to prevent.

The law is lagging behind, and a new industry needs to be constantly “tried by example” in order to continuously improve and gradually comply with the law.