Criminal risks of trading virtual currency after bank card is frozen

Merchants engaged in virtual currency OTC transactions have all had the experience of having their bank cards frozen . This is different from the freezing caused by triggering the bank's risk control system. After being frozen by the public security organs, those who continue to trade virtual currencies will face increased criminal risks. After the bank card is frozen, most OTC merchants have some misunderstandings about the criminal risks they encounter. They simply stay at the case handling agency after the bank card is frozen to handle the unfreezing. The worst result is nothing more than a refund of some money. However, after the bank card is frozen, those who continue to trade virtual currencies are actually on the verge of criminal offenses. If a bank card is frozen and continues to trade and receives stolen money again, what criminal risks will it face once it is determined by the investigation agency as subjective knowledge? This article will provide an in-depth analysis for everyone.

1. Bank freeze is different from criminal freeze

First of all, the authorities that can freeze bank cards are divided into banks and public security organs. From the perspective of bank freezing, the main reason is that the bank risk control system is triggered during the transaction, which leads to the freezing of bank cards. The main reasons for freezing bank cards are: multiple incorrect query passwords are entered continuously; no transaction records for 6 consecutive months or more; large sums of money are transferred out quickly after entering the account, suspected of money laundering ; multiple early morning consumption, suspected of gambling; multiple integer amount online scanning code payments, suspected of online gambling betting; frequent defaults on various platforms, such as money in WeChat is transferred to Alipay immediately after being transferred to the bank card, or money in Alipay is transferred to WeChat immediately after being transferred to the bank card; virtual currency transactions; related parties of risky transactions, etc. It can be seen that OTC transactions are not the only situation where bank cards are frozen due to receiving stolen money. For freezing due to other reasons, there should be some distinction. For example, if a large amount of funds is transferred out quickly and the bank card is frozen, the party has not received the stolen money, which means that the party may not know that the virtual currency transaction will receive the stolen money.

Unlike bank freezes, criminal freezes are a compulsory measure taken by investigative agencies in handling criminal cases. According to Article 237 of the Regulations on the Procedures for Handling Criminal Cases by Public Security Organs (hereinafter referred to as the "Ministry of Public Security Regulations"), public security organs may, based on the needs of investigating crimes, inquire into and freeze the criminal suspect's deposits, remittances, securities trading settlement funds, futures margin and other funds, bonds, stocks, fund shares and other securities, as well as equity, policy rights and other investment rights and interests and other properties in accordance with the regulations, and may require relevant units and individuals to cooperate.

The risks faced by bank freezing are also far lower than the legal risks faced by criminal freezing. Most of the bank cards frozen by the investigative agencies are frozen because they received stolen money. If you continue to trade virtual currency to receive the stolen money, the investigating agency will query the criminal freezing records and find that the bank card has a record of being frozen. The investigative agency may determine that you continued to trade virtual currency after your bank card was frozen, and it is presumed that you subjectively "knew".

However, why did the investigative agency determine that you were "knowingly" and committed the crime knowingly when your bank card was frozen again?

When virtual currency is frozen for the first time in OTC transactions, the investigating authorities often stop at freezing the card and do not take further measures such as filing a criminal case. This is because, in the absence of a precedent of freezing bank cards and no other abnormal behavior during the transaction , it is difficult for the investigating authorities to determine whether the OTC traders are subjectively aware that the bank cards may receive stolen money in virtual currency transactions. However, if the bank cards have been frozen for receiving stolen money, the situation of OTC traders has changed greatly, because this means that the perpetrators have subjectively realized that they may receive stolen money, but continue to trade, and will be presumed by the investigating authorities to be subjectively "knowingly" based on relevant behaviors, thus constituting a criminal offense. In judicial practice, when the perpetrators have such awareness, the judicial authorities will presume the conclusion that the perpetrators are subjectively aware based on the relevant judicial interpretations of "crimes of aiding and abetting" and "crimes of concealing".

Whether it is the crime of aiding and abetting or the crime of concealing, both require that the perpetrator has subjective knowledge. If the perpetrator cannot be aware that his or her behavior will result in a specific harmful consequence, there will be no criminal intent. Therefore, for knowledge, the judicial determination is whether the knowledge exists when the perpetrator has such knowledge, rather than presuming the existence of knowledge when the perpetrator does not have such knowledge. If it is uncertain whether the perpetrator has knowledge, it is difficult to judge the subjective elements of the crime. According to the spirit of presumption of innocence, if there is doubt about the elements of the crime, if the fact is important for determining the defendant's innocence, a judgment in favor of the defendant should usually be made.

II. Constitutes the crime of assisting information network criminal activities

The crime of “assisting others” is stipulated in Article 287, Paragraph 2 of the Criminal Law, which states that knowing that the other party has committed a crime by using the information network, and providing payment settlement..., which clearly stipulates that knowing that the other party has committed a crime by using the information network is a general knowledge, which only requires the recognition that the other party has committed a crime by using the information network, and does not require the clear recognition of what crime the other party has committed. The basis for presuming that OTC traders are subjectively aware is based on Article 11 of the Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Laws in Handling Criminal Cases Such as Illegal Use of Information Networks and Assisting Information Network Crimes. If a person provides technical support or assistance to others in committing a crime, and has one of the following circumstances, it can be determined that the person knows that others have committed a crime by using the information network, except where there is evidence to the contrary; (i) After being informed by the regulatory authorities, the person still carries out the relevant behavior. Therefore, if the person continues to trade and receives the stolen money, resulting in the bank card being frozen again, it will be presumed that the person continues to trade after being informed by the regulator, which is subjectively aware, and the crime of assisting others will be applied for evaluation.

However, it should be noted that the regulatory authorities in the above judicial interpretation generally refer to the Internet Information Office, Telecommunications Office, Public Security Bureau, etc., so it can include public security organs, but does it include banks? Although it is not explicitly stated, it is in line with the interpretation rules of the Criminal Law to include banking departments, because banks have the authority to review whether there are any abnormalities in the flow and the power to freeze, so banking organs can be interpreted as regulatory authorities. However, the above also lists the reasons for bank freezes. The reason for freezing is not only the receipt of stolen money, but sometimes it triggers other reasons to freeze. This also leads to the possibility that OTC traders may not have factual knowledge, and they are not aware that virtual currency transactions will receive stolen money, and they are not aware that the transaction flow is stolen money. Therefore, if the bank card is not frozen due to the receipt of stolen money, the above judicial interpretation cannot be applied, and it is presumed that the parties are subjectively aware.

Related cases: People's Court of Jiangmou Yao Autonomous County, Hunan Province, Criminal Judgment, (2021) Xiang 1129 Xingchu 312

Basic facts of the case: From January 28 to March 2021, the defendant Zhou Yu used his three bank cards to speculate in virtual currency on the Internet to help telecommunications fraud suspects transfer illegal gains. After his Bank of China card (card number 62×××03) was frozen for speculating in virtual currency, knowing that his behavior was illegal, he continued to use his own China Postal Savings Bank card (card number 62×××19) and Hunan Jiangmou Rural Commercial Bank (card number 62×××00) to operate virtual currency. The total payment settlement amount of the three bank cards was 8,691,178.87 yuan: the payment settlement amount of the Bank of China card with card number 62×××03 was 2,588,748.9 yuan; the payment settlement amount of the China Postal Savings Bank card with card number 62×××19 was 2,168,159.35 yuan; the payment settlement amount of the Hunan Jiangmou Rural Commercial Bank card with card number 62×××00 was 3,934,270.62 yuan. The defendant Zhou Yu made an illegal profit of 6,000 yuan. It has been verified that on February 8, 2021, the Kaizhou District Public Security Bureau of Chongqing City filed a case for investigation into the case of Xu being defrauded. The victim Xu was defrauded of 99,999 yuan, of which 20,000 yuan was transferred to Zhou Yu's Bank of China card.

The court held that: the defendant Zhou Yu, knowing that others used information networks to commit crimes in order to obtain illegal benefits, still used his bank card to provide payment settlement assistance for others' crimes, which was a serious case and constituted the crime of assisting information network criminal activities. The facts alleged by the public prosecution agency were clear and the evidence was sufficient, and the charges were established.

III. Constitutes the crime of concealing and hiding the proceeds of crime

The crime of concealment is stipulated in Article 312 of the Criminal Law, which clearly stipulates that knowing that it is the proceeds of crime and transferring it. It requires that there must be a clear subjective understanding of the funds that are objectively transferred, that is, there must be a clear understanding of the object of the behavior. This clear understanding is based on the possibility of knowing the facts. If there is no possibility of knowing at the factual level, there is no clear understanding. For trading virtual currency, it means that there must be awareness of the fact that virtual currency may receive stolen money. At present, the main basis for presuming subjective knowledge in the "crime of concealment" is Article 1 of the "Interpretation of the Supreme People's Court on Several Issues Concerning the Specific Application of Laws in the Trial of Criminal Cases Such as Money Laundering". The "knowing" stipulated in Articles 191 and 312 of the Criminal Law should be determined in combination with the defendant's cognitive ability, the circumstances of contact with the proceeds of crime and their proceeds of others, the types and amounts of the proceeds of crime and their proceeds, the conversion and transfer methods of the proceeds of crime and their proceeds, and the defendant's confession and other subjective and objective factors.

If any of the following circumstances exists, the defendant may be found to have known that the proceeds of crime and their profits are obtained, unless there is evidence to prove that he did not know: (1) knowing that others were engaged in criminal activities and assisting in the conversion or transfer of property; (2) without a legitimate reason, assisting in the conversion or transfer of property through illegal means; (3) without a legitimate reason, purchasing property at a price significantly lower than the market price; (4) without a legitimate reason, assisting in the conversion or transfer of property and charging a "handling fee" significantly higher than the market price; (5) without a legitimate reason, assisting others to store huge amounts of cash in multiple bank accounts or frequently transfer them between different bank accounts; (6) assisting close relatives or other close persons in the conversion or transfer of property that is obviously inconsistent with their occupation or property status; (7) other circumstances in which the perpetrator may be found to have known.

Although the judicial interpretation of the "crime of concealment" does not stipulate that those who continue to trade after receiving the stolen money and the bank card is frozen should be presumed to know, and there is no presumed knowledge clause such as the judicial interpretation of the "crime of aiding and abetting" regarding the continued trading after being informed by the regulatory authorities, can other circumstances in Article 7 that can be determined as the presumed knowledge of continuing to trade after the bank card is frozen? It should be noted that the presumption principle of Article 7 should be equivalent to the presumption of knowledge in Articles 1 to 6 above. After the bank card is frozen, although the subjective awareness of the possibility of receiving the stolen money by continuing to trade, if the stolen money is received after continuing to trade in virtual currency, the investigative agency will presume that the subjective "knowing" is applied to the "crime of concealment" for evaluation.

Related case: Criminal Judgment of the People’s Court of Shishi City, Fujian Province, (2021) Min 0581 Xing Chu 645

Basic facts of the case: It was found through trial that from April to May 2020, the defendant Yang Lei operated virtual currency trading through a virtual currency trading platform, purchased USDT coins from Huobi.com, and then sold them through other platforms at a higher price, and traded with relatively fixed objects. Knowing that the virtual currency trading process would actually help others transfer criminal proceeds, and even though the account had been frozen, he continued to use multiple Alipay accounts under his name or under his control to trade virtual currency, receiving and transferring the proceeds of others' crimes in the form of "buying and selling coins" in a short period of time, totaling RMB 7,132,292, and earning a difference of RMB 15,000. Among them, the victim Chen was defrauded of RMB 3,500 by others in Shishi City, Fujian Province, and the victim Gao was defrauded of RMB 35,995 by others in Xiong County, Hebei Province.

The court held that the defendant Yang Lei helped others transfer the proceeds of crime knowing that they were proceeds of crime, and the amount of money transferred reached RMB 7,132,292, which was a serious circumstance. Her behavior constituted the crime of concealing and hiding the proceeds of crime. The charges brought by the public prosecutor were established. Regarding the second defense counsel's defense opinion that the defendant Yang Lei was not aware that the money from the purchase and sale of USDT was illegal money and the amount of crime in this case. After investigation, the defendant Yang Lei's confession after being arrested and the chat records extracted from her mobile phone by the public security organs can mutually confirm that the defendant Yang Lei knew that the money she received when buying and selling USDT coins involved illegal money. Combined with her leaving the "Huobi.com" trading platform, using other platforms to trade with relatively fixed objects, and holding multiple Alipay accounts to transfer money to evade risk control when Alipay was frozen and could not transfer money, it can be confirmed that she had a possible understanding that the money she received was the proceeds of crime, and according to law, she should be determined to have known that it was the proceeds of crime at the time.

4. Final Thoughts

Although bank card freezing happens from time to time in the cryptocurrency circle, we have to pay attention to the criminal risks brought about by bank freezing. Bank card freezing is one of the presumptive evidences to determine whether the subjective knowledge is known. Once it is determined that the subjective knowledge is known, it will become the target of "cover-up crime" and "assistance crime". Here, we remind people in the cryptocurrency circle who are engaged in virtual currency transactions not to be lucky and think that my card has been frozen many times and I haven't been caught, so it's okay! Of course, it is not only the bank card freezing that will bring criminal risks. Abnormal transaction prices, offline USDT transactions, and the use of encryption software will also bring certain criminal risks.