Web3 Legal Popularization丨Illegal business crime, why has it become a common crime for U-businessmen in the currency circle?

01. Basic case facts

After searching, the case has not been published online, so the facts of this case can only be understood through the content of the court’s public account.

The People's Court of Dabu County found that the defendants Chen and Li used the form of buying and selling virtual currencies to buy and sell foreign exchange in disguise, which constituted the crime of illegal business operations.

In the article written by the author, "Is OTC Trading of Digital Currency a Crime?" "The article lists in detail the specific situations involving the illegal business crime of "foreign exchange trading". According to regulations, among the four situations of illegal foreign exchange buying and selling (private buying and selling, disguised buying and selling, buying and selling, and illegal introduction and selling), only two acts: buying and selling foreign exchange or disguised buying and selling of foreign exchange are expressly defined as criminal acts. In this case, the behavior of the two defendants was defined as "disguised buying and selling of foreign exchange."

02. Case analysis

Since the court issued a relatively simple description of the case, it did not explain the relationship between Chen, Zou and Huang and the specific transaction details. It only used the word "collaboration" to summarize the entire background of the case, and Zou and Huang Someone has not yet arrived.

The author believes that it is impossible to determine that Chen’s behavior constitutes the crime of illegal business simply because of the mere transaction of U by Chen and Huang. Because according to my country’s relevant policies on virtual currencies, virtual currencies such as Bitcoin and USDT are defined as virtual commodities, and the exchange of virtual currencies and legal currencies between natural persons is not prohibited in the country. If OTC trading is illegal, wouldn’t everyone who has exchanged virtual currency become a criminal?

Therefore, OTC merchants or currency speculators don’t need to be overly alarmed by this case. The key to whether this case constitutes a crime lies precisely in the transaction background and transaction mode between the various subjects that are not mentioned in the article, rather than simply The transaction itself.

03. Graphical interpretation method

In order to facilitate understanding, we use diagrams to illustrate:

B is engaged in the business of a "knock-on" underground bank (that is, funds circulate in one direction at home and abroad without physical flow, and "balance between the two places" is usually achieved in the form of reconciliation). C found B and asked C to help him change the RMB in his hand into US dollars.

So, B took the RMB given by C to OTC merchant A and told A that he wanted to buy U. After A received the RMB from B, he transferred U to the address designated by B.

Then, B converts the U received from A into U.S. dollars. Finally, B transfers the U.S. dollars to C.

In this way, the transaction between B and C ended perfectly.

What is disguised trading of foreign exchange? It refers to the act of repaying RMB with foreign exchange or repaying foreign exchange with RMB, and realizing currency value conversion by swapping foreign exchange and RMB (not a direct purchase and sale between RMB and foreign exchange).

In the process shown above, B completed the transaction process of receiving RMB, converting it to U, and converting U into U.S. dollars. In this process, U acts as an exchange medium.

It is not illegal to buy and sell virtual currencies, but B achieved the purpose of converting RMB into US dollars through virtual currency transactions. This is the reason why he committed the illegal business crime of "buying and selling foreign exchange". Therefore, if Chen in the above court case purchased TEDA coins from others as B, then there is not much controversy about the crime of illegal business.

So what if Chen’s identity is that of A in the transaction above? For example, A, as a U merchant, has made profit by buying and selling USDT virtual currency arbitrage for many years. In order to give B the amount of U required by A, he purchased a large amount from others. B was involved in the crime of illegal business operations and implicated A. At this time, does A constitute an accomplice in the crime of illegal business operations of "foreign exchange trading"?

Here can be divided into three situations:

①A knowingly knows that B operates an underground bank, and exchanges B for U just to obtain profit from the price difference;

②A does not know that B operates an underground bank. It cooperates with B because B's demand is large and A can obtain higher profit margins by relying on the volume;

③Because B's quotation is higher than the market price, in addition to large quantity, A can also earn higher price difference income for each order, so he chooses to cooperate with B;

**In the first case, **A clearly knows that B operates an underground bank and buys and sells foreign exchange, and its act of providing U to B is equivalent to an accomplice, and therefore constitutes an accomplice in the crime of illegal business operations;

The second situation, A chooses to cooperate with B, just because B can give him more business, and does not know B's own business. Here I think of a case encountered before, the party involved was in a virtual The customer of a U merchant who trades on the currency exchange is a Chinese student studying in South Korea. The Korean student bought a large amount of U from him for more than a year. Although he once asked the international student why he needed so much U, The other party didn't explain it to him either. Because the international student was arrested, the U-businessman was also detained for illegal business crimes.

The author believes that if the U business itself is not aware of the specific currency exchange behavior of the partner and its superior company, the U business objectively demonstrates the behavior of indirectly helping the counterparty to exchange currency, and does not have the subjective intention to commit the crime of illegal business. Therefore** It should not constitute the crime of illegal business**. In addition, he has no subjective intention to help others knowing that they may exchange foreign currency illegally, so it should not constitute the crime of helping others. In other words, the U-businessman’s behavior does not constitute a crime;

The third situation, A chooses to cooperate with B because B offers a higher price. In judicial practice, it can be inferred that A knows that others are engaged in illegal and criminal acts. Then based on the chat records, transaction records, witness testimony, etc. of both parties, Determine whether A’s level of knowledge reaches the same criminal intention as the principal offender (crimes of illegal business operations) or general criminal intention (crimes of helping letters, etc.).

Written at the end:

Regarding the case forwarded by the Guangdong High Court where virtual currency trading was convicted of illegal business operations, there is very little information available from public materials, so the relevant opinions in this article do not constitute the author’s judgment on the case itself. This article takes this case as an example to analyze possible situations in practice.

The business of buying and selling virtual currencies for arbitrage is not illegal. The reason why the risk of criminal involvement is high is that U merchants cannot penetrate the transaction itself and see the story behind the transaction chain**.