Boiling 2020: The sword of China's cryptocurrency regulation hangs high. This year's trial will be a small test, and what will happen next year?

1. FCOIN ran away

In February, when the aftermath of the Spring Festival was still there and the resumption of work after the epidemic was nowhere in sight, Zhang Jian’s article “The Truth about FCoin” announced the official closure of FCoin, which had stirred up the exchange market with its own strength. This was a rare case of a second-tier exchange in China suddenly announcing its closure/runaway.

The 3,000-word article shattered the dreams of countless investors, who were forced out of their homes and embarked on the road of rights protection. (Portal: How to protect rights after the collapse of FCoin) Afterwards, the public security organs filed cases one after another, and the cases progressed slowly.

In the middle of the year, an investor took Zhang Jian and other companies including Beijing Bochen Technology Co., Ltd. to court in an attempt to get their investment back. The case has been transferred from Ningbo Beicang Court to Beijing Chaoyang Court for trial.

2. Legislation of the Central Bank Law

In April, the news of the testing of the central bank's digital currency DC/EP within the Agricultural Bank of China came out, and the circle was once again unprecedentedly excited, mistakenly thinking it was major good news. (Portal: Things you need to know about the DC/EP currency circle)

With the further promotion of the DC/EP pilot, the central bank issued the "People's Bank of China Law of the People's Republic of China (Draft for Comments)" in October and solicited public opinions. (Portal: Things you need to know about the "People's Bank of China Law")

The "Draft for Comments" once again emphasized a point that has been reiterated countless times - my country's legal currency can only be the RMB, and any currency that attempts to shake or replace the RMB will not be tolerated, which will also make domestic currency issuance in the future more cautious.

3. Plustoken major case disclosed

At the end of November, the verdict of the Plustoken pyramid scheme case was released, and the news that the property involved in the case worth $4.2 billion was turned over to the national treasury must still be vividly remembered by people in the industry. (Portal: Why didn’t Plustoken return the sky-high valued property to the “victims”?)

Compared with Plustoken's "grand" success, Telegram is "extremely low-key". This is closely related to the modus operandi. Telegram conducts the crime online and uses third-party software, which is more covert. The core criminals used multiple self-built Telegram groups to defraud victims of their ETH by using arbitrage as bait, and then collected a large amount of ETH and exchanged it for Monero, and then cashed it out. No effective judgment has been made public in this case.

4. Card-cutting action

Freezing credit cards is not new. Once it happens, people are still panicked. Cutting off credit cards is even more of a deterrent. (Portal: In-depth interpretation of "freezing credit cards" and "cutting off credit cards")

In June, the first round of large-scale card freezing occurred in Dongguan and other places.

In September, a new wave of card freezing, said to be the strongest in history, hit.

In October, the Ministry of Public Security announced that it would launch a "card-cutting" operation. For units and individuals and related organizers identified by the public security organs as renting, selling, lending, or purchasing bank accounts or payment accounts, or units and individuals who impersonate others or fictitious agency relationships to open bank accounts or payment accounts, the punishment measures of suspending their bank account non-counter transactions and all payment account transactions for five years and prohibiting them from opening new accounts will be implemented.

In December, the Supreme People's Court, the Supreme People's Procuratorate, the Ministry of Public Security, the Ministry of Industry and Information Technology, and the People's Bank of China jointly issued a document, reaffirming their determination to cut off the card network and emphasizing severe punishment.

The result of all this was not only that a large number of ordinary investors had their cards frozen for unknown reasons, but it also triggered subsequent huge shocks in the exchanges.

5. Exchange investigation controversy

In the fourth quarter, things in the industry were not peaceful.

In October, the founder of OK was taken away by a public security agency to assist in the investigation. (Portal: What is the so-called residential surveillance?)

In November, Huobi executives were taken away to assist in the investigation.

The resulting suspension of currency withdrawals has made everyone feel insecure.

At present, the founder of OKEx seems to have landed smoothly, but Huobi is still under investigation.

Later, the founder of Gongxinbao was convicted of opening a casino, which pushed the criminal risk in the cryptocurrency circle to a new level. (Portal: Opening a casino may become a high-risk criminal risk in the cryptocurrency circle?)

The turbulent year of 2020 is finally coming to an end. What should we pay attention to in the cryptocurrency circle in 2021?

1. The card-cutting campaign will continue to advance

The card-cutting operation will continue to advance. Whether it is the new "Notice on Severely Cracking Down on and Punishing Illegal Activities of Buying and Selling Phone Cards and Bank Cards" issued in December, or the current handling of the judicial organs, the regulatory authorities are determined to crack down on it. In addition, telecommunications network crimes, especially cross-border crimes, are rampant, and the running point movement has gradually shifted from the traditional model to the virtual currency industry. There are even some people who try to make profits in the short and medium term with the mentality of "black eating black". The situation of severe crackdowns will not change in the short term. (Portal: What is the running point movement?)

In this regard, the situation of freezing credit cards is still severe. Once a telecommunications network crime occurs, a large amount of funds will flow rapidly, and freezing credit cards is the most basic measure to recover the stolen money. Especially when the public security organs focus on special campaigns, a large-scale freezing of credit cards is almost inevitable. (Portal: One thing you must pay attention to when unfreezing credit cards during the card-cutting operation)

2. Criminal risks are transferred downstream

The criminal risks in the traditional virtual currency industry are still inseparable from the five major crimes. If you are interested, you can jump to (portal: Five major criminal risks in the cryptocurrency circle)

However, times have changed, and the virtual currency industry is no longer just a place where scammers run rampant. With the increase in attention and understanding, as well as the characteristics of blockchain technology, the industry is gradually being used by criminals as a channel to transfer stolen money.

In the context of the Ministry of Public Security's crackdown on cross-border gambling and telecommunications fraud, there are two crimes that need to be paid more attention to: the crime of assisting information network criminal activities, and the crime of concealing and hiding the proceeds of crime. In addition, given the characteristics of the industry, it is also extremely necessary to avoid being involved in other illegal and criminal activities as an accomplice.

I would like to remind you that during the crackdown period, there will definitely be a generalization of the identification of elements of guilt. In other words, the scope of the crackdown will be expanded, so you must be vigilant.

3. Domestic compliance is a long way to go

This statement can be divided into two levels, one mainly for enterprises, and the other mainly for individuals.

For individuals, it is a long way to go. With the central bank's DC/EP approaching and the increase in crimes involving USDT, it is difficult for virtual currencies to gain regulatory recognition in the short term. Virtual currency transactions between individuals may be neither illegal nor protected for a long time. In this state, everything can only be guided by judicial decisions, but it is an indisputable fact that practices vary from place to place. You need to keep an eye on the latest developments.

For enterprises, it is a "heavy responsibility". For enterprises involved in currency, not only the business itself, but also the behavior of senior executives may be on the edge of the red line. The criminal law generally adopts a double punishment system for corporate crimes, punishing both the enterprise and the main person in charge and senior executives. In the second half of the year, some procuratorates began to explore the combination of corporate criminal compliance and the system of confession and non-prosecution, which may be a good signal. Building a corporate criminal compliance system in a timely manner will definitely have more benefits than disadvantages.