Bribery amount determination and supervision investigation ideas for Virtual Money
In order to deepen the understanding of the characteristics of the bribery Virtual Money behavior, and better serve the construction of a clean society, this article will focus on the issues of determining the amount involved in bribery Virtual Money and the investigation approach.
Author: Liu Yang, Deputy Secretary-General of the National Criminal Committee of Beijing Deheng Law Firm;
Li Bingqian, intern at Beijing Deheng Law Firm
【Introduction】On November 20, 2024, the website of the Central Commission for Discipline Inspection and the National Supervisory Commission announced that Yao Qian, former director of the Technology Supervision Department of the China Securities Regulatory Commission and former director of the Information Center, has been expelled from the Party and dismissed from public office due to serious violations of discipline and law, and has been transferred to the procuratorial organ for examination and prosecution of suspected criminal issues. The announcement mentioned that Yao Qian “used Virtual Money and other means for power-money transactions.” It is reported that this is the first case reported by the Commission for Discipline Inspection and the National Supervisory Commission involving the use of Virtual Money for power-money transactions, which reflects the Party and state organs’ attention to and determination to combat power-money transactions using new methods. The transformation and upgrading of the means of committing official crimes have increased the difficulty of the Commission for Discipline Inspection and the National Supervisory Commission in combating corruption and bribery crimes. In order to deeply understand the characteristics of bribery involving Virtual Money and better serve the construction of a clean society, this article will focus on discussing the issues of determining the amounts involved in bribery with Virtual Money and the ideas for supervision and investigation.
1. The urgency of cracking down on the acceptance of Virtual Money
Although Yao Qian is the typical case of bribery using Virtual Money announced by the Discipline Inspection Commission for the first time, Virtual Money with convenient transactions and strong Consensus value has long been targeted by criminals and has become an important means of power-money transactions. I have previously analyzed the bribery case of Xiao Yi, former Vice Chairman and Party Group member of the Jiangxi Provincial Political Consultative Conference. During his tenure as secretary of the Fuzhou Municipal Party Committee, Xiao Yi was reported to have “abused his power to introduce and support enterprises in engaging in Virtual Money ‘Mining’ activities that do not meet the requirements of the national industrial policy.” At that time, I raised reasonable doubts that the official report did not disclose whether Xiao Yi’s support for ‘Mining’ involved bribery using Virtual Money. However, the mention of “a total of 57.82 million yuan that has not yet been actually obtained” may refer to the amount of Virtual Money that Xiao Yi received as bribes but has not yet been sold. The emergence of these cases demonstrates that Virtual Money, with its characteristics of Decentralization, privacy, Anonymity, and marketability, has become an important part of a new type of corruption.
The website of the Central Commission for Discipline Inspection and the National Supervision Commission once pointed out that new corruption and hidden corruption are the disguised, innovative and upgraded forms of traditional corruption. The new corruption refers to the bribery methods that use high-tech, multi-party transactions, and new business models to build complex interest chains and huge capital networks. It is worth noting that the act of accepting Virtual Money is not an isolated or single harmful act, because Virtual Money-related transactions have illegal attributes in China. This bribery act may form a criminal chain of restraint from the upstream illegal business crime to the downstream money laundering, concealment, concealment of criminal proceeds, and crime proceeds. It also violates China’s financial regulatory order, the order of integrity of public officials, and the investigation order of judicial organs in handling criminal activities. With the further advancement of the blockchain economy, similar Virtual Money bribery cases need to be taken seriously. For example, Xiao Yi, who has supported Mining activities, and Yao Qian, who has in-depth research on Digital Money, have a certain understanding of the operating mechanism and property value of Virtual Money, and are more likely to come into contact with such emerging things. To cope with other possible Virtual Money bribery cases, it is necessary to understand the determination of the amount of bribery Virtual Money and the thinking of supervision and investigation.
2. Recognize the financial nature of Virtual Money in combating the receipt of Virtual Money
According to the Criminal Law of the People’s Republic of China, ‘If a state functionary abuses his power to solicit or illegally accept property from others, or seeks benefits for others, he shall be guilty of the crime of bribery.’ The notice released by the Central Commission for Discipline Inspection and the National Supervisory Commission in the case of Yao Qian sends a signal that virtual money is considered as property in the criminal law sense in bribery cases. Previously, China has successively issued a series of normative documents such as the ‘Notice of the People’s Bank of China and other five departments on preventing risks of BTC’ and the ‘Announcement of the People’s Bank and other seven departments on preventing risks of Tokenissuance financing’, defining domestic virtual money transactions as illegal. Many practitioners have used this as a basis to believe that virtual money does not constitute property in the criminal law sense. In cases of fraud, theft, and robbery of virtual money, the regulations on computer crimes are often applied based on the electromagnetic data attributes of virtual money. In my opinion, the criminal law evaluation of acts of obtaining virtual money can be classified. Although virtual money has certain use value and exchange value, its application scenarios are extremely limited and can only be stored in specific information systems. It has certain differences from traditional manageable and transferable property. For acts of obtaining virtual money by technical means, such as the case of Tian who illegally obtained computer information system data, the defendant secretly saved the victim’s password while applying for a digital wallet for the victim and transferring the virtual money to his own controllable wallet. Based on the modesty principle of criminal law, it should be dealt with as a computer crime. However, for acts of obtaining virtual money without using technical means, such as bribery crimes, considering the need for the state to combat corruption, the driving force for corrupt individuals to take risks is the substantial property value attached to virtual money, rather than its data attributes. It can be concluded that it constitutes the crime of bribery.
III. Discussion on the Determination of the Amount of Bribery in Virtual Money
Against the backdrop of Virtual Money being recognized as a bribe, the calculation of the amount of Virtual Money involved in such crimes has gradually come to light. The amount involved affects the qualitative sentencing of the suspects, while the value of Virtual Money is affected by various factors such as market fluctuations, legal policies, supply and demand. Currently, there are several ways to determine the amount of Virtual Money involved in a crime: first, if the perpetrator and the victim negotiate and agree on a price, that price is used; second, the amount is determined by the victim’s losses, i.e., the actual price the victim paid for the Virtual Money; third, if there is a situation of selling stolen goods, the amount of Virtual Money sold by the perpetrator is used to calculate the amount involved; fourth, a professional appraisal agency is commissioned to determine the price of Virtual Money; fifth, the market trading average price on the day the crime was committed is used to calculate the amount. 01928374656574839201
Specifically, when it comes to the illegal acceptance of Virtual Money by government employees, bribery and corruption crimes often go hand in hand, so the amount of the bribe received by the perpetrator can be calculated based on the specific situation and the type of currency.
First, if the briber obtains Virtual Money through purchase, the amount of Virtual Money purchased by the briber can be used for calculation. For example, the “Reply to the Request for Instructions on the Valuation of Property in Cases of Corruption and Bribery” issued by the Supervisory Department points out that in order to coordinate the handling of disciplinary cases handled by supervisory organs with criminal cases handled by judicial organs, when handling bribery cases, supervisory organs may refer to the provisions of the Supreme People’s Procuratorate and the Supreme People’s Court for the calculation of the amount of property received by the bribe-taker, that is, the amount of the bribe is calculated based on the actual amount paid by the briber for the purchased property. If the briber’s property is not paid for or the amount paid by the briber cannot be calculated (including items purchased overseas), the market retail price of the property received by the bribe-taker at the time and place of receipt shall be used for calculation.
Second, if the briber himself holds Virtual Money, and the bribe taker chooses to cash out all of it after receiving it, the amount of the crime can be calculated based on the selling price of Virtual Money. In practice, it is rare for the bribe taker to directly sell Virtual Money, but it is not nonexistent. The newly revised “Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Money Laundering” in China has added the method of “conducting transactions and exchanging financial assets” through virtual assets to transfer and convert the proceeds of crime and their gains. Therefore, the illegal gains of the bribe taker can be calculated based on the amount of the cash-out. However, whether the bribe taker’s cashing out of Virtual Money after receiving it constitutes a separate offense of Money Laundering needs further discussion. If the bribe taker partially cashes out, the amount can be determined by the proportion of the cashed-out part to the occupied Virtual Digital Money.
Third, if the bribe giver is in possession of virtual money, and the bribe recipient has not realized it after obtaining it, it may be considered to determine the price negotiated by both parties. In practice, there is a situation where the bribe giver gives bribes, and the bribe giver does not actually take possession of the bribes, but entrusts the bribe giver to manage the money on his behalf. For entrusted wealth management bribery, it can be calculated based on the amount of “income” negotiated by both parties. If there is no negotiation between the two parties, it may be considered to be determined at a fair transaction price. If reference is made to marketable securities, the average market price at the time of transfer is calculated. Virtual Money is not a marketable security, but it has some basic characteristics of a marketable security. Article 2 of the Opinions on Several Issues Concerning the Application of Law in the Handling of Criminal Cases of Bribery stipulates that “the amount of bribes accepted shall be calculated according to the value of the shares at the time of the transfer”, and the calculation of the amount of virtual money can also be based on this.
After determining the amount of bribery received by the suspect, the sentencing range of the criminal can be determined in accordance with the “Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in the Trial of Criminal Cases of Corruption and Bribery”. In addition, Virtual Money is a relatively broad concept, which has already differentiated into various currencies with different natures in practice. According to the stability of the currency value, it can be distinguished as relatively stable USD and more volatile BTC, ETH, etc. In individual cases, in addition to considering the bribery situation of the briber, the impact of the currency on the determination of the amount of the crime can also be considered. The former can be calculated based on the purchase and sale amount, while the latter needs to consider the fluctuation of the currency value. If the virtual Digital Money received by the briber appreciates, it shall be recovered as interest. If the Virtual Money received by the briber depreciates, the briber shall be required to make up for it in accordance with the law.
Four, Supervision and Investigation Ideas for Bribery in Virtual Money
The act of bribery using Virtual Money involves a high amount of money, difficulty in investigation, and serious social harm. It requires the national supervisory authority, which is at the forefront of the anti-corruption struggle and responsible for the supervisory function in accordance with the law, to timely discover and handle clues of illegal activities. With the increasing attention of the national regulatory agencies to illegal activities involving Virtual Money, Virtual Money trading platforms, which originally provided services such as Anonymity, privacy, and Decentralization, have gradually shifted to foreign countries, and have standardized user access and transaction processes. The transaction process can be restored through Address analysis and on-chain analysis. At the same time, the advantage of blockchain lies in the fact that all transaction data is recorded on the chain, making it possible to trace the flow of funds to specific Addresses and becoming an important means of investigating and combating illegal activities.
(1) Implement the principle of joint investigation of bribery and bribery
In September 2021, the Central Commission for Discipline Inspection and the National Supervisory Commission, together with the Central Organization Department, the United Front Work Department, the Central Political and Legal Affairs Commission, the Supreme People’s Court, and the Supreme People’s Procuratorate, jointly issued the “Opinions on Further Promoting the Investigation of Bribery and Bribery Cases Together,” clarifying the policy of synchronously investigating and handling bribery and bribery. Bribery is an important incentive for the exchange of power and money, breeding corruption. Therefore, to address the act of bribery using Virtual Money, one can consider starting from the flow of funds and coin purchase behavior of the briber. Generally, in order to carry out bribery, the briber either holds a large amount of Virtual Money themselves or chooses to purchase a large amount of Virtual Money in the short term. Although individual transactions of Virtual Money are not prohibited in China at present, a significant suspicious transfer of funds in the short term may alert financial regulatory authorities and trigger the Anti-Money Laundering mechanism. Therefore, when investigating the act of bribery by bribers, supervisory authorities can choose to start from the flow of funds of the briber, clarify the transaction process of purchasing Virtual Money, and the amount used.
(2) Collecting criminal evidence from the entire chain of Virtual Money
Starting from the whole chain of Virtual Money, it is found that the clues of the crime have two meanings: one is to follow the upstream and downstream criminal chain of the crime of accepting bribes, and look for clues of bribery when investigating and dealing with the upstream and downstream crimes; The second is the followVirtual Money fund transaction chain, which is conducive to the supervision organs to grasp the evidence of the bribery’s crime and clarify the amount of bribes. In response to the first point, virtual money transactions may involve the crime of illegal business operation, money laundering and other crimes, for the bribe-taker, after receiving virtual money in China, it is only a matter of holding data with property value, and the realization of virtual money may involve money laundering, illegal exchange currency and other illegal and criminal acts, in addition to simple personal transactionsIf you want to “launder” the virtual money received, the underground bank is an important channel. In recent years, in order to standardize the financial order and meet the rectification and inspection of the Anti-Money Laundering Financial Action Task Force (FATF), China has continuously strengthened the ideological attention and practical implementation of the Anti-Money Laundering work. The investigation and handling of organized and large-scale underground money banks can effectively feed back China’s anti-corruption and clean government work. In response to the second point, the whole process of Virtual Money transaction may involve the exchange process of “Fiat Currency - Virtual Money - Fiat Currency”. For Fiat Currency transactions, China’s banking institutions have set up an efficient and comprehensive regulatory system, which can respond to clues of violations and crimes in a timely manner. Article 23 of the Supervision Law of the People’s Republic of China stipulates: “When investigating suspected corruption, bribery, dereliction of duty and other serious violations or crimes abusing public office, the supervisory organs may, according to the needs of their work, inquire into and freeze the deposits, remittances, bonds, stocks, fund shares and other assets of the units and individuals involved in the case in accordance with the regulations.” Relevant units and individuals should cooperate." The supervisory authority may require the Virtual Money trading platform to cooperate with the investigation and collect transaction data on the Block chain. In the third ring, i.e., the re-exchange of virtual money to Fiat Currency, in order to conceal assets, bribe-takers may choose to exchange foreign currency, and at this time, it is necessary for the supervision organs to strengthen international cooperation and strengthen cooperation with other countries in the fields of anti-corruption law enforcement, extradition, judicial assistance, transfer of convicts, asset recovery and information exchange in accordance with Article 51 of the Supervision Law of the People’s Republic of China.
(3) Entrust third-party organizations to conduct investigations in accordance with the law
Virtual Money crime has a relatively high technical difficulty. In order to better investigate and punish crimes, supervisory agencies can also conduct technical investigations or entrust third-party agencies to make technical identifications in accordance with the law. Article 28 of the Supervision Law of the People’s Republic of China stipulates that “Supervisory agencies investigating suspected major corruption, bribery and other crimes shall, as necessary, take technical investigation measures, and hand them over to relevant agencies for execution in accordance with regulations after strict approval procedures.” Among them, technical investigation measures may include electronic device inspection, data interception and analysis, financial transaction analysis, etc., which are conducive to supervisory agencies to efficiently and conveniently collect evidence after initially grasping criminal clues, but attention should be paid to balancing the boundary between personal privacy and case handling effects. In addition, with the high-precision and deep development of blockchain technology, a number of network security companies have gradually emerged in China, which can identify suspicious transactions, collect blockchain transaction data, statistics on fund circulation chains, and carry out Virtual Money judicial disposal. Supervisory agencies can cooperate with third-party agencies to delegate the difficult work of evidence collection and identification to professional organizations, but attention should be paid to the legal procedures that bring support to the evidentiary force, so as to prevent the exclusion of collected evidence due to illegal procedures.
Conclusion
Adhering to the clean and honest bottom line and building a strong line of defense against corruption is the duty of every citizen. With the development of the Internet, artificial intelligence, and blockchain technology, the means of bribery are constantly innovating. The new type of corruption represented by the receipt of Virtual Money is a huge tumor in a clean society. In addition to firm determination to fight corruption and build a clean government foundation, it is necessary to address the controversial issues of supervision, investigation, evidence collection, amount determination, and judicial disposal in Virtual Money crimes. It is believed that under the leadership of supervisory authorities, with coordination and cooperation among various agencies, a clean and honest social environment can be established through various means such as tracking on-chain data, investigating criminal funds, and confiscating illegal gains.
This article refers to: “Identifying New Types of Corruption and Hidden Corruption from Four Dimensions”, published on the website of the Central Commission for Discipline Inspection and the National Supervision Commission; Ren Yanjun: “Criminal Qualification Analysis of Illegal Acquisition of Virtual Money Behavior”, published in the 5th issue of Law and Business Research in 2022, pages 160-173.