Normative evaluation of the dual attributes of stolen digital collections

Author: Chen Wei, Ye Jing, source: People’s Court Daily

As a blue ocean field of the digital economy, digital collectibles are rich in categories and have considerable potential, attracting many players, but they may also become the target of criminal acts. There have been cases of using the loopholes of digital collection platforms to crack user accounts to steal digital collections in China. At present, due to the ambiguity of the legal characterization of digital collections, there are serious differences between criminal law theory and judicial practice on how to determine the theft of digital collections. This actually involves the question of what protection path to choose for the emerging digital products in the virtual space in the era of Web 3.0.

I. Dispute over the Theft of Digital Collections

Under the existing legal framework, based on different understandings of digital collections, there are three different views on what kind of crime the theft of digital collections constitutes it: the first view is that digital collections are essentially electronic data in computer information systems, and the logic of cybercrime regulation should be adopted. In the digital scene, digital collections inherently rely on data carriers, and tracing back to the source is the externalization of data files. Stealing digital collections by hacking into systems or other technical means constitutes the crime of illegally obtaining computer information system data. The second view is that digital collections are virtual property in the network environment, and the idea of identifying property crimes should be chosen. The act of stealing digital collections breaks the original exclusive domination and establishes a new exclusive control, which meets the constitutive elements of the crime of theft. The determination of the crime of theft does not violate the basic principle of the law of crime, but also conforms to the layout plan for safeguarding the digital economy. The third view is that digital collections have both data and virtual property cores, and should follow the path of imaginary co-operation. When the perpetrator steals digital collections by hacking into the system or other technical means, they simultaneously commit the crime of illegally obtaining data from a computer information system and the crime of theft, and an imaginary joint offense is established. According to the principle of punishment from one felony, it is punished as the crime of theft.

The author believes that the first two perspectives are too single and lack a comprehensive evaluation of digital collections. In contrast, the third view is more appropriate to use “data + property” to determine comprehensively, that is, to solve the qualitative problem of stealing digital collections by imagining competing criminals. Whether it is the regulatory logic of cybercrime, the idea of identifying property crimes, or the imaginary treatment path of competing and co-offenders, it is necessary to conduct an in-depth analysis from the technical characteristics and legal nature of digital collections.

II. Technical Characteristics and Legal Nature of Digital Collections

Technical characteristics: Non-fungible tokens. Digital collectibles originate from the concept of NFT (Non-Fungible Token) in foreign countries, and belong to the application of NFT in China’s digital industry. From a technical point of view, digital collections are non-fungible tokens that map specific assets with the help of blockchain technology, which have the characteristics of uniqueness, non-replication, tamper-proofing, and permanent storage. Each digital collectible is recorded on the blockchain, creating a unique hash value that cannot be changed. Compared with cryptocurrencies, “non-fungible” is reflected in the fact that digital collections cannot be divided and cannot be exchanged. In contrast to physical credentials, “tokens” indicate that digital collections are trusted digital equity credentials in the form of unique metadata codes on the blockchain. The key to the difference between digital collections and ordinary online pictures lies in the process of realizing the value of digital assets on the chain.

Legal nature: Cyber virtual property. Cyber virtual property refers to property that has property value and exists in cyberspace in the form of data. From a legal perspective, digital collections conform to the characteristics of online virtual property. First, digital collections are virtual. In the Internet, digital collections are represented as intangible digital codes, which are free from the constraints of tangible physical forms. Second, digital collections are property-based. Based on the immutable characteristics, digital collections correspond to a unique code and contain detailed transaction information. This makes the scarcity of digital collections prominent, with both use value and exchange value. Third, digital collections are at their disposal. Although China has not yet opened the secondary circulation market, consumers can rely on the trading platform to complete purchase, collection, transfer, destruction and other operations, so as to achieve exclusive possession, use and disposal.

III. Legal Evaluation of the Dual Attributes of Theft of Digital Collections

As mentioned above, digital collections have both the technical characteristics of non-fungible tokens and the legal nature of online virtual property. When evaluating the theft of digital collections, it is urgent to consider the dual attributes as a whole. Accordingly, the perpetrator committed both the crime of illegally obtaining computer information system data and the crime of theft, constituting an imaginary joint offense. From the perspective of statutory punishment, it is punished as a felony according to the crime of theft.

**Conform to the principle of the unity of law and order, and realize the effective connection between civil and criminal law. **In the face of the new thing of digital collections, China’s criminal law has not yet been clearly defined. Under the guidance of the principle of the unity of legal order, the criminal law needs to refer to the provisions of the precedent law and the civil law, and draw on the precedents in the civil field, so as to achieve the coordination and comparison of civil and criminal law, and provide normative guidance for the determination of crimes.

**The interpretation of digital collections in the Criminal Law needs to refer to the provisions of the Civil Code on online virtual property. **According to Article 127 of the Civil Code: “Where the law has provisions on the protection of data and network virtual property, follow those provisions”. It can be seen that from the perspective of civil law, online virtual property is regarded as an object of rights that is different from property rights, creditor’s rights, intellectual property rights, etc., and is protected by civil law. This article is a principled provision on property relations in an online virtual society, and provides legal support for the protection of online virtual assets such as digital collections.

**The identification of digital collections in criminal law needs to draw on the arguments of digital collections in civil precedents. **According to the judgments of the China Judgments Network, civil precedents involving digital collections continue to emerge, and the causes of action focus on disputes over infringement of the right of information network transmission and disputes over information network sales contracts. As far as the reasons for the adjudication are concerned, taking the Hangzhou Internet Court as an example, the civil judge basically adopted the view that digital collections belong to online virtual property. These civil judgments have typical reference value for the precise positioning of the nature of virtual property of digital collections.

**Practice the function of protecting legal interests, covering the dual core of digital collections. **The essence of crime is to infringe on legal interests, and the purpose of criminal law is to protect legal interests. According to the function of protecting legal interests, the characterization of theft of digital collections should include all the cores of digital collections, i.e., data legal interests and property legal interests. The two are not in conflict and should not be abandoned, otherwise the protection of legal interests will be limited.

**The theft of digital collections infringes on the legal interests of the crime of illegally obtaining data from computer information systems. **This crime belongs to the crime of disturbing public order in Chapter VI of the Criminal Law, “Crimes of Obstructing the Order of Social Management”, and the object of the act is the data in the ordinary computer information system. According to the implementation method, the consortium chain is the underlying technical architecture of digital collections. Although there is a strict access mechanism and a specific scope of authority, it still depends on the computer system and network environment. If digital collections are stolen by intrusion into the system or other technical means, it is an illegal acquisition of data, disrupting the order of the public network, and infringing on the legal interests of data.

**The act of stealing digital collections infringes on the legal interests of the crime of theft. **The crime of theft is a key crime in the crime of violating property, and the object of the crime is public or private property. Broadly understood, property in China’s criminal law includes tangible objects, incorporeal objects, and property interests. Digital collections belong to online virtual property, and online virtual property is an incorporeal object in the sense of criminal law, then digital collections should be recognized as property. Since property is the object of property crimes, it is obvious that digital collections can be the object of property crimes. If the digital collection is stolen by hacking into the system or other technical means, the act will also damage the legal interests of the property.

**Conform to the basic principles of criminal law and achieve proportionality of punishment. **The basic implication of the principle of proportionality of crime and punishment is that serious crimes are sentenced heavily, minor crimes are lightly sentenced, the punishment is proportionate to the crime, and the punishment is proportionate. According to this principle, different types of criminal acts need to be strictly distinguished and punished with different punishments, otherwise it will deviate from the balance of crime and punishment. As far as the theft of digital collections is concerned, it is in accordance with the principle of proportionality of crime and punishment to be convicted and sentenced as a felony in accordance with the imagined joint offense.

The imbalance in sentencing for the crime of illegally obtaining computer information system data makes it difficult to reflect the distinction and protection of digital collections from other non-property data. The object of this crime is data stored, processed or transmitted in computer information systems other than the fields of state affairs, national defense construction, and cutting-edge science and technology. There is a huge difference in the social harmfulness of the perpetrator’s use of technical means to steal general data and the theft of valuable digital collections. If the crime of illegally obtaining computer information system data is determined, the economic value of digital collections may be ignored, and the overall sentence is on the light side, forming a loophole in punishment.

**Sentencing for the crime of theft is appropriate, and may reflect the different punishments for different amounts of property. **This crime focuses on the illegal possession of a wide variety of public and private property, and the sentencing scale is based on the standard of amount plus circumstances. Digital collections have the technical characteristics of non-replication, indicating that the holder has exclusive dominance. If a digital collection is stolen by someone else, the owner loses exclusive control. Digital collections have property value and are reflected in different prices on the trading platform. For digital collections of different values, the crime of theft has separate provisions on the sentencing level, which is in line with the principle of proportionality of crime and punishment.

[This paper is the interim result of the National Social Science Foundation project “Research on the Value Establishment and Practical Operation of the Penal Withdrawal Mechanism” (17XFX009)]

(Author’s Affiliation: Southwest University of Political Science and Law)