The first digital currency case trial attracted attention from the investment circle

Bitcoin attracts attention from speculators

Bitcoin

Bitcoin is actually a set of computer codes derived through computer algorithms. Since this set of codes is unique, it can be used as a currency just like the unique code on paper money. It also has many advantages that current legal tender does not have, such as no inflation.

Yangcheng Evening News reporter Li Gang

In order to regulate the online payment business of non-bank payment institutions, the People's Bank of China recently issued the "Administrative Measures for Online Payment Business of Non-Bank Payment Institutions (Draft for Comments)" and solicited public opinions, which attracted widespread public attention.

It remains to be seen what impact the new online payment regulations will have on people's lives. However, the reporter noticed that digital currencies, which also originated from the Internet, have entered the lives of many people and become a concept of "investment". At present, a transaction that ordinary people cannot understand is in full swing on the Internet: dozens of "digital currencies" are also being traded online on multiple online trading platforms, and their prices are like the stock market, with ups and downs.

According to the reporter, since the birth of Bitcoin, countless digital currencies have emerged, and many of them are popular in China. However, there are many legal issues behind it, and some pyramid schemes have taken a fancy to this unknown new thing. Some scholars believe that legislation should be strengthened to guide the standardized development of digital currencies.

A Origin

The first case of “digital currency”

Zhejiang trial:

Bitcoin trading platform runaway case

On July 7, the Hong Kong GBL Bitcoin trading platform runaway case, known as the "first case of digital currency in China", was heard in the Dongyang City People's Court of Zhejiang Province. Three suspects were charged with suspected fraud. Since this case was the first to include Bitcoin in the amount involved according to its market value at the time of the incident, whether it can become a precedent that recognizes the personal property attributes of Bitcoin has attracted great attention in the digital currency investment circle. The case is currently under trial.

According to the reporter's understanding, in 2013, this platform absconded with about 30 million yuan in investment funds and countless bitcoins, involving thousands of victims across the country, and also aroused the government's attention to the risks of digital currency.

Prosecution and defense focus:

Is Bitcoin property?

In the year of the incident, three suspects were arrested by Dongyang police. At that time, countless victims across the country joined together to carry out rights protection activities, but due to many reasons, so far, only more than a dozen victims have successfully filed cases nationwide. Therefore, in the trial on the 7th, the amount involved in the prosecution was only more than 1.3 million yuan and 1,300 bitcoins.

According to the reporter’s understanding, this case was the first case of a trading platform absconding with funds after Bitcoin entered China, and the amount of money involved and the number of people involved were large, so it had a great impact. Although there were some similar cases after this case, the scale and impact of the later cases were not as large as the GBL case.

After the incident, the People's Bank of China, the Ministry of Industry and Information Technology, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission jointly issued the "Notice on Preventing Bitcoin Risks". This is the first and only official document issued by the Chinese government regarding "digital currency" so far.

The reporter saw in the "Notice on Preventing Bitcoin Risks" that the notice has defined Bitcoin and determined that Bitcoin is a "specific virtual commodity that does not have the same legal status as currency and cannot and should not be circulated and used as currency in the market."

Although it has been defined as a "specific virtual commodity" in the "Notice", the focus of the debate between the prosecution and the defense in the trial that day was still on whether Bitcoin has value and whether it can be regarded as a personal property.

According to people who attended the trial and spoke to our reporter, in the indictment, the prosecutor calculated the amount of 1,300 bitcoins based on the market transaction price of more than 600 yuan per bitcoin at the time and included it in the amount of fraud.

The defense believes that digital currency has not yet been recognized in China and is just a computer data code, so it has no value at all.

Whether Bitcoin has value and whether it will be calculated into the amount of fraud will be directly related to the final judgment and sentencing.

Insider opinion:

Hope that digital currency will be legally recognized

Why did only a dozen people file a case? One of the victims, Gan En, told reporters that after the incident, investors from all over the country went to the police stations in their respective locations to report the case, but the situations they encountered were similar - the police in some places had no idea what Bitcoin was.

"Because of this, many people have encountered trouble in filing a case. I also encountered such a situation at that time. Finally, after many twists and turns, I was able to file a case with the police." Jiang En also told reporters that after the case was filed locally, it had to be transferred to Dongyang. It was precisely because of this series of problems in this link that there were only more than a dozen victims in this case.

According to Gann, in 2013, he invested about 500,000 yuan in the GBL trading platform, but he never got it back because the platform ran away. But after contacting the Dongyang Court, he learned that according to the database match of the trading platform, his investment amount was only about 100,000 yuan.

For the digital currency community, they are more concerned about whether Bitcoin can be recognized through judicial precedents.

Han Feng, a scholar at Tsinghua University and a lifetime member of the Bitcoin Foundation, believes that if the value of Bitcoin can be determined in this case, it will show that digital assets have been recognized by the state as a personal property right.

Although he suffered losses from investing in the GBL platform, Gann is still optimistic about the development of digital currency. He has now become the chairman of the Dogecoin (another digital currency) Association.

In an interview with this newspaper, he believes that the significance of this case lies in the fact that the result of the trial will ultimately give a definition of digital currency at the judicial level. If it can be legally determined that this is a personal asset, then it will be of great significance to the development and promotion of digital currency in China.

B. Current situation

“Digital currency” lacks supervision

Dozens of “altcoins” are being traded

The reporter found that due to the ambiguity of its legal status, the promotion of digital currency itself in the country has not been smooth.

After the Bitcoin craze swept the world and entered China, dozens of digital currencies of all sizes appeared one after another, and these digital currencies were given a Chinese-style name: "altcoins."

On a well-known digital currency trading website, the reporter saw that just like stock market transactions, the price fluctuations of these digital currencies were also updated in real time. Investors only needed to complete a simple registration to obtain a login account for the trading website and could trade digital currencies.

The names of these digital currencies are also very distinctive, such as "Shark Coin", "Dogecoin", "Fortune Coin", etc.

Therefore, many people in the computer field, based on the Bitcoin algorithm, made slight modifications and formed their own new "digital currency", which is the source of so many "copycat coins".

However, according to the reporter's understanding, these digital currencies have no practical use in reality except for transactions among a small number of people.

"Digital currency" pyramid schemes deserve vigilance

Gann also told reporters that although the GBL case has drawn the government’s attention to the risks of digital currencies, so far, the government still lacks guidance in this area.

"The threshold for digital currency is actually very high. For ordinary people, it is difficult to understand why a string of computer code can be used as currency. In addition, the law does not define it. Therefore, some people will take advantage of this cognitive ambiguity to carry out pyramid selling activities."

"Batid Root" told our reporter that copycat coins have no security at all. There are many currencies on the market now, and they are promoted under the concept of dividends. In fact, it is a kind of pyramid scheme and has no practical significance.

"The so-called digital currency is actually an algorithm. A large number of domestic teams lack a form and carrier, so in order to promote it, many digital currencies have become pyramid schemes. My view is relatively absolute. All digital currencies except Bitcoin can be classified as altcoins. The core issue of digital currency - why would people trust a currency - involves the concept of computing power. If the computing power is particularly large, the data can be reversible, which means that it can be artificially tampered with and controlled, so the risk of altcoins becomes very high."

During the interview, the reporter learned that Darkcoin (later renamed Dash), known as the world's fourth largest digital currency, was previously exposed in China as a suspected pyramid scheme, and a Chinese businessman who claimed to have the most Darkcoin "mining machines" was involved in the case. Public security departments in many places have also successively seized pyramid schemes in the name of investing in Darkcoin.

To this end, the founder of Darkcoin, American Dafydel, also issued a statement specifically targeting China, saying that there is currently no Chinese official website for Darkcoin in China, and called on Chinese Darkcoin enthusiasts to be wary of pyramid schemes and fraudulent activities.

C Expert

Digital currencies face risks

Fan Yunhui, associate professor of the Law School of Shanxi University of Finance and Economics, wrote an article pointing out that digital currency faces huge legal risks. She believes that the legal status of digital currency is still vague. Although the notice of the five ministries and commissions defines Bitcoin as a specific virtual commodity, it still does not clearly define what a specific virtual commodity is. In addition, the number of domestic trading platforms with varying quality is increasing rapidly, but these platforms lack corresponding standards and supervision. Moreover, many platforms not only launch various digital currency trading businesses, but also gradually introduce leveraged trading and short selling methods in the form of financing and currency lending, which increases the trading risks of digital currency.

She believes that today's digital currency trading platforms already have the rudiments of "shadow banking", but in the absence of supervision, these digital currencies are likely to become ordinary investment and speculation products, or even become a "Ponzi scheme."

She hopes that regulatory authorities can seriously understand the true connotation of digital currency and try to avoid hindering the normal development of digital currency with a condescending attitude and non-public intervention measures. The central bank should step up research and bring digital currency under legal supervision.