Bitcoin-related judgments increase by nearly 1,000 cases per year, and it is difficult to identify the property attributes

A few days ago, a lawyer disclosed a recent ruling by the Beijing Arbitration Commission. The ruling stated that "virtual currencies, including Bitcoin in this case, are virtual property and are protected by law." But in fact, according to statistics from a reporter from 21st Century Business Herald, cases involving virtual currency disputes are emerging disputes, and there are large differences in the judgment ideas of various courts/arbitration institutions across the country. The phenomenon of "different judgments for the same case" is common in judicial practice, but overall, the current mainstream judgment is to not support the claims of related cases, to determine that the contract is illegal and invalid, and to bear the losses on both sides.

Based on this, our reporter published an article titled "Disputes caused by an arbitration: Is Bitcoin virtual property? Is it protected by Chinese law?", which attracted widespread attention. On April 20, 2022, a reporter from 21st Century Business Herald searched for "Bitcoin" as a keyword on the Judgment Documents Network and found that there were 2,969 related judgments.

Overall, the number of relevant judgments has been increasing year by year. The number of judgments was the lowest in 2014, with only 11 cases; the number of judgments was the highest in 2020, with 993 cases. Taking into account factors such as the long trial period and disclosure delays, the judgments in 2021 may not be fully disclosed, but they have reached 765 cases.

By region, the top three provinces are Guangdong (including Shenzhen), Zhejiang, and Shandong, with 323, 246, and 238 cases, respectively.

From the perspective of trial procedures, there were 1,355 criminal verdicts involved, with theft ranking first in number. Other crimes included fundraising fraud, fraud, illegal absorption of public deposits, extortion, organizing and leading pyramid schemes, etc.

It is worth noting that there are also differences in the identification of theft of Bitcoin in criminal cases. Xiao Sa, partner of Beijing Dacheng Law Firm and director of the China Banking Law Research Association, said in an interview with the media in 2021 that there are currently a large number of cases involving theft of Bitcoin. Judging from the criminal verdicts, there are two main views on the criminal law characterization of theft of Bitcoin: one is to identify Bitcoin as property, which constitutes theft if it meets the elements of the crime of theft in the criminal law; the other is that Bitcoin is a kind of data, and stealing Bitcoin constitutes the crime of illegally obtaining computer information systems.

Data attributes vs property attributes

Among the 2,969 judgments mentioned above, 92 mentioned "virtual property", including 3 criminal cases.

In these three criminal judgments, the classification of virtual currency as virtual property was recognized. However, even so, two of the cases involving the theft of virtual currency were classified as the crime of illegally obtaining computer information system data, rather than as theft as "property" in the sense of criminal law.

In December 2018, the Shanghai Pudong New Area People's Court [(2018) Hu0115 Xingchu No. 845] pointed out in its judgment that virtual currency is a virtual commodity and virtual property. According to current legal provisions, it cannot be identified as "property" in the sense of criminal law. There are obvious differences between virtual currency and tangible property such as money and property, and intangible property such as electricity and gas in the sense of criminal law. Virtual currency is not a physical object, cannot enter the real world, and lacks stability and real utility. Its own characteristics make it difficult to constitute property in the sense of criminal law based on existing laws.

Secondly, virtual currency is essentially a dynamic data combination and can be regarded as computer information system data. Virtual currency is generated through a large amount of calculation based on a specific algorithm and is itself electronic data.

Finally, the Shanghai Pudong New Area People's Court believes that according to existing laws, the act of obtaining virtual property through illegal means such as theft should be identified as the crime of illegally obtaining computer information system data. The Research Office of the Supreme People's Court's "Research Opinions on How to Qualify the Illegal Sale of Others' Game Coins Stealing by Computers for Profit" stipulates that virtual property should be protected as electronic data, and the act of stealing virtual property should be identified as the crime of illegally obtaining computer information system data.

In March 2020, the Jiyuan Intermediate People's Court of Henan Province [(2020) Yu 96 Criminal Final No. 7] held that there were obvious differences between the virtual property involved in the case and tangible property such as money and property, and intangible property such as electricity and gas. The legal attribute of virtual property is computer information system data, and the crime of illegally obtaining computer information systems should be applied in accordance with the law to convict and sentence.

"The fundamental reason for this result is that the legal status of Bitcoin in our country is not clear and the regulatory policy is ambiguous." Zhong Haiwei, a lawyer at Shengdian Law Firm, pointed out in an article published in June 2021 that the approach of characterizing the act of "stealing" Bitcoin as the crime of illegally obtaining computer information system data is more like a stopgap measure to avoid discussing the property attributes of Bitcoin. Directly characterizing the act of "stealing" Bitcoin as theft will inevitably face questions from the perspective of criminal policy and feasibility. Both approaches are difficult to say.

Zhong Haiwei believes that the policy guidelines for cracking down on Bitcoin transactions are very likely to have an impact on the handling of subsequent cases involving Bitcoin and other virtual currencies. Specifically, in criminal cases, it may be manifested in that judicial authorities are more inclined to classify Bitcoin-related cases as computer crimes such as illegal acquisition of computer information system data.