Coin World News Report:
Since the birth of virtual currency, how to calculate its price has been a highly controversial issue. Especially in the process of judicial proceedings, some practices in calculating the price of virtual currency involved in the case clearly violate relevant regulatory provisions. Today, Lawyer Liu will discuss the issue of calculating the price of virtual currency involved in the case based on his own experience and the mainstream views in the theoretical and practical circles.
I. What are the ways to determine the price of assets involved in the case?
In traditional criminal cases, there are several ways to determine the price of assets involved in the case:
The first is to issue a price determination report by a price determination center;
The second is through judicial accounting appraisal opinions or audit reports;
The third is to determine through intermediaries such as trading platforms;
The fourth is to determine based on the amount of the victim’s loss or the suspect/defendant’s profit.
It should be noted that in the judicial practice in recent years and in the theoretical field, it has basically reached a consensus that mainstream virtual currencies have value in the sense of criminal law. Although China’s laws currently only stipulate in Article 127 of the Civil Code that “if the law has provisions for the protection of data and network virtual property, it shall be implemented in accordance with its provisions,” this is a general provision. However, in the “Notice on the Prevention of Bitcoin Risks” (Yinfa [2013] No. 289) issued by five ministries in 2013, Bitcoin was clearly classified as a “specific virtual commodity”. In the more than ten years since then, various regulatory documents of different sizes have not denied this classification (some scholars believe that the “9.24 Notice” has substantively denied the value attribute of virtual currency, but Lawyer Liu disagrees with this). Therefore, the determination of the price of virtual currency involved in the case has a certain degree of “official basis” (laws and regulatory documents).
The above different ways of determination have their advantages and disadvantages, but overall, judicial accounting appraisal opinions are more widely accepted than other types.
II. The uniqueness of calculating the price of virtual currency involved in the case
Virtual currency actually has property value, theoretically has a foundation to support its value, and has certain legal basis. However, how to calculate the price of virtual currency involved in the case is still one of the most core and difficult problems in current criminal cases involving virtual currency (it is also the easiest breakthrough point for defense lawyers to find).
According to the “Notice on Further Preventing and Dealing with Risks of Virtual Currency Trading Speculation” (referred to as the “Notice”) issued by ten ministries on September 15, 2021, the current regulatory authorities in China have classified the business of providing pricing services for virtual currency trading as “illegal financial activities”. Although the appraisal of the price of virtual currency involved in the case by appraisal agencies is not providing services for virtual currency trading, judicial appraisal is not purely a commercial activity based on the principle of “no prohibition, no appraisal.” It is a judicial activity with strict rules on the scope and content of its appraisal business. Currently, the appraisal of the price of virtual currency involved in the case by judicial appraisal agencies obviously exceeds its clear scope of appraisal.
Similarly, the methods of price determination and audit reports are also not in line with the current provisions of the “Notice”, and these determinations themselves also have varying disputes in criminal judicial practice.
The value of virtual currency itself may fluctuate greatly in the market, and there may be a significant difference between the high and low prices during the investigation, which may even lead to the possibility of innocent cases. For example, in a virtual currency fraud case, if the suspect Zhang San defrauds the victim Li Si of one Bitcoin (BTC), the price of this BTC will determine Zhang San’s future conviction and sentencing. There are three situations to consider:
The first is the price at which the victim Li Si purchased the BTC involved in the case;
The second is the trading price of one BTC in the virtual currency exchange at the time of the crime;
The third is the price at which the suspect Zhang San sold the BTC involved in the case (i.e. the suspect’s profit).
The three different prices determine the different levels of Zhang San’s future conviction and sentencing. There are several prominent issues here: the price at which Li Si purchased BTC may be less than 3,000 yuan (the minimum filing standard); the profit obtained by Zhang San from selling BTC may exceed 500,000 yuan (the starting point for a sentence of more than 10 years); as for the trading price on the exchange, which exchange and which period’s trading price should be used to determine the price of the BTC involved in the case, and so on.
III. Current judicial practice and mainstream views in academia
Regarding the question of whether virtual currency involved in the case has value, the practical and theoretical circles have basically reached a consensus that virtual currency has value and has property attributes in the sense of criminal law, and its value can be presented in the form of price.
In terms of how to determine the price of virtual currency involved in the case, current judicial practice mostly relies on judicial appraisal opinions and audit reports, and some judicial authorities determine based on the trading price of virtual currency exchanges;
In the theoretical field, some scholars advocate determining based on the order of the purchase price, the sales price, and the market price (i.e. the exchange price) of the virtual currency involved in the case, based on the principle of “the victim does not profit” (such as Professor Che Hao of Peking University Law School and Professor Sun Guoxiang of Nanjing University Law School).
IV. Conclusion
The reason why there are so many problems in current criminal cases involving virtual currency is essentially due to the conflict between the attitudes of regulatory authorities and judicial authorities towards virtual currency and the current situation where virtual currency has already begun to infiltrate people’s lives.
The law is not omnipotent. From the moment it was formulated, it has always lagged behind real life. However, the law cannot be arrogant. When relying solely on legal interpretations and policy documents becomes difficult to maintain the balance of legal order, it means that the law urgently needs to be changed. As a criminal lawyer at the forefront of the currency circle, Lawyer Liu increasingly feels that virtual currency should be treated systematically by the judicial system, rather than attempting to regulate this technological change that is about to, or has already had a profound impact on human society, with a piece of paper accumulated by a few departments.