Punished for circumventing the firewall to trade in cryptocurrencies - You may have misread this case

Introduction:

This ordinary administrative penalty case has caused two major misunderstandings. The first misunderstanding is that many people mistakenly believe that it is the "first case" in which the domestic public security organs formally defined that citizens' trading of virtual currency is illegal; the second misunderstanding is that the definition of illegal income in this case exceeds the scope stipulated in the "Administrative Penalty Law", and the 90,000 yuan income from cryptocurrency speculation should not be confiscated.

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According to media reports, a public security agency in a certain place in China punished a team that used circumvention software to speculate in cryptocurrencies for arbitrage. Specifically, Zhang San's team was engaged in virtual currency arbitrage business and used circumvention software on a daily basis. Therefore, they were punished by the local public security agency for violating my country's "Interim Regulations on the Administration of International Networking of Computer Information Networks". The punishment included confiscation of related Internet access tools, a fine of 15,000 yuan, and confiscation of illegal income (profits from cryptocurrency speculation) of 90,000 yuan.

The focus of the issue is whether the 90,000 yuan profit is illegal income from circumventing the firewall to access the Internet?

Note that the focus of the issue is what kind of illegal income the 90,000 yuan is, not whether cryptocurrency speculation is illegal. However, Attorney Zeng noted that many people believe that this is the first case in which domestic public security organs have determined that cryptocurrency speculation is illegal, and use this as a "sensational" policy indicator, which is a big fallacy.

Of course, this case involves analysis at multiple legal levels.

1. Analysis of the nature of the cryptocurrency trading and arbitrage business

The virtual currency arbitrage business that Zhang San's team is engaged in is essentially an activity that uses the price differences between different trading platforms to make profits. The nature of this behavior, according to current policies, is to prohibit related exchanges from operating in China, but it does not prohibit individual citizens from holding and trading. Therefore, Zhang San's team was punished, it is impossible because of the virtual currency trading arbitrage (arbitrage), so the basis for punishment does not exist. The reason why Zhang San was punished was that he used illegal wall-climbing software to access the international Internet.

2. Behavior Analysis of Using Circumvention Software

Violation of laws and regulations: In my country, without the approval of the telecommunications authority, it is not allowed to establish or rent dedicated lines (including virtual private networks VPN) and other channels to conduct cross-border business activities. According to Article 6 of the "Interim Regulations on the Management of International Networking of Computer Information Networks", "Computer information networks that directly connect to the international network must use the international entry and exit channels provided by the national public telecommunications network. No unit or individual may establish or use other channels for international networking." And Article 14 "Anyone who violates the provisions of Articles 6, 8 and 10 of these Regulations shall be ordered by the public security organs to stop connecting to the network, given a warning, and may be fined up to 15,000 yuan; if there is any illegal income, the illegal income shall be confiscated."

3. Is this administrative penalty case undisputed?

In this case, there is no dispute that Zhang San was punished for administrative violations in accessing the international Internet. However, the focus of the issue is whether the 90,000 yuan confiscated from him was illegal income from "climbing over the wall to access the Internet"?

In terms of nature, this income actually has no direct connection with circumventing the firewall to access the Internet.

Unlike criminal penalties, this type of public security violation is directly determined and punished by the public security organs, while the penalty decision for criminal cases is based on the judgment of the People's Court. Therefore, the concept of illegal gains in this case must strictly refer to the provisions of the Administrative Penalty Law, Article 28 of which stipulates that "illegal gains refer to the money obtained from the implementation of illegal acts."

Zhang San's team illegally connected to the international Internet, which was an illegal act. Their illegal gains were directly caused by this illegal act. For example, Zhang San would receive a relevant time reward for using an illegal VPN. This reward is illegal gains obtained by implementing illegal acts. The two are directly related. In this case, Zhang San's team's 90,000 yuan in cryptocurrency speculation profits were the profits from their arbitrage of virtual currency transactions, not the profits from their unauthorized use of illegal channels for international networking (climbing over the firewall). There is no direct connection between the behavior of climbing over the firewall and their cryptocurrency speculation profits, unless Zhang San's team received a 90,000 yuan reward for climbing over the firewall itself. At this time, the two are directly related.

If income that is not directly related is counted as illegal income, it means that all income earned through circumvention software falls into the category of income that can be directly confiscated by the public security organs. For example, if Li Si uses circumvention software to sell legal real estate under his name overseas, the income from overseas stock speculation, investment, etc. can all be confiscated. This obviously exceeds the scope of legal principles and common sense.

4. One case, two misunderstandings

This ordinary administrative penalty case has caused two major misunderstandings. The first misunderstanding is that many people mistakenly believe that it is the "first case" in which the domestic public security organs formally defined that citizens' trading of virtual currency is illegal. This is obviously due to excessive excitement and confusion. The second misunderstanding is that the definition of illegal income in this case exceeds the scope stipulated in the "Administrative Penalty Law", and 90,000 yuan should not be confiscated.