Research Summary
The report details China’s crackdown on illegal foreign exchange activities involving virtual currencies. It highlights two cases involving the illegal buying and selling of foreign exchange using virtual currency in Zhejiang and Shanghai. The report also discusses the legal implications of such activities and the importance of understanding the technical aspects of virtual currency transactions for effective case handling.
Key Takeaways
Illegal Foreign Exchange Activities Involving Virtual Currencies
- Increasing Use of Virtual Currencies: The report highlights the growing use of virtual currencies in illegal foreign exchange crimes. It emphasizes that virtual currencies do not have the same legal status as fiat currency in China.
- Case Examples: Two cases were selected to illustrate the illegal buying and selling of foreign exchange using virtual currency. These cases serve as examples for legal practitioners and highlight the need for understanding the technical aspects of such transactions.
- Illegal Payment Platform: The “Upward Every Day” illegal payment platform was used to facilitate payment and settlement services for illicit activities, recruiting over 100,000 individuals to provide more than 370,000 fund accounts.
- Illegal Foreign Exchange Transactions: Zhao Dong, known as the “Chinese OTC King,” and his associates were involved in illegal foreign exchange transactions, exchanging RMB for virtual currency and vice versa for profit.
- Legal Consequences: On March 24, 2022, the People’s Court of Xihu District in Hangzhou sentenced several individuals involved in these illegal operations, with sentences ranging from two and a half years to eleven years in prison and fines totaling RMB 33 million.
Actionable Insights
- Understanding the Legal Implications: It is crucial for individuals and businesses involved in virtual currency transactions to understand the legal implications of their activities, especially in jurisdictions like China where virtual currencies do not have the same legal status as fiat currency.
- Importance of Technical Knowledge: The report emphasizes the importance of understanding the technical aspects of virtual currency transactions for effective case handling. This knowledge can be crucial in identifying and preventing illegal activities.
- Monitoring Virtual Currency Transactions: The report underscores the need for stringent monitoring of virtual currency transactions to prevent the circumvention of foreign exchange laws and regulations.
- Collaboration Between Authorities: The report highlights the need for enhanced collaboration between foreign exchange management departments, procuratorial organs, and public security organs to address new types of foreign exchange crimes involving virtual currency.
- Professional Assistance in Complex Cases: The procuratorial organs are advised to seek professional assistance from foreign exchange management departments when dealing with complex foreign exchange-related criminal cases.
