Introduction:
Recently, the magazine "Chinese Prosecutor" published an article titled "Analysis of Suspected Cases | Judicial Determination of Money Laundering Involving Virtual Currency," which was a case of U merchants concealing and disguising criminal proceeds handled by the Changning District Procuratorate in Shanghai. The defendant, Xiao, profited 6000 yuan and was sentenced to 3 years and 3 months in prison.
Regarding cases involving the criminality of U merchants trading virtual currency, Lawyer Shao has previously written several articles (click the link at the end of the article to read more) analyzing the legal principles.
Today, we will discuss a more practical issue, which is also a common legal consultation that Lawyer Shao is often asked about in his daily work.
(Image source: X, Telegram)
01 Nowadays, even pregnant women are doing part-time U merchant trading
I don't know if it's because Lawyer Shao has been handling currency-related cases for a long time, but I feel that there are more and more people doing U merchant trading nowadays.
Earlier this year, Lawyer Shao's team handled a case where a U merchant (let's call her Xiaomei) was suspected of aiding and abetting a crime and is currently on bail pending trial. Xiaomei said that she started doing U merchant trading because she got pregnant last year and had nothing to do at home. After learning from online information that she could profit from trading USDT, she started doing part-time U merchant trading to supplement the household income. Although she was trading on a large and legitimate virtual currency exchange, she still received illicit proceeds.
Another sign that indicates the growing U merchant community is that there seem to be more people involved in related industries. In plain language, there are more and more businesses that are profiting from U merchant trading.
If you want to become a U merchant, there are certain entry barriers. Do you know how to use digital wallets? How to arbitrage between different exchanges to maximize profits? How to conduct customer KYC verification? How to avoid receiving illicit proceeds? What to do if your card is frozen and the police get involved? You probably don't know the answers to these questions. I provide U merchant training, and the course is priced at only xxx yuan. Are you interested? It can perfectly solve all the obstacles you encounter in buying and selling U, and the cost-effectiveness is very high. Teaching others to make money is the most profitable business.
Aren't U merchants afraid of being scammed during transactions? What if I give you the currency, and you don't give me the money? Some people have found a business opportunity in this situation and started a U merchant guarantee service (similar to Alipay or Xianyu platform). If both parties in the transaction don't trust each other, they can trust me. Both parties give me the money and the currency, and I deduct a fee from both sides as the cost of my guarantee, and then I transfer the funds to both parties. This perfectly solves your trust crisis. Double profit, risk-free, this business is really great.
I have always lamented that being a U merchant is really difficult. You earn meager profits, but you have to be constantly vigilant against receiving illicit proceeds, and there are so many people trying to exploit you. Dealing with a frozen card might be manageable; our team has successfully handled multiple cases of unfreezing bank cards. But once it becomes a criminal matter and you lose your freedom, then it becomes a big problem.
02 If under investigation by the police, can you claim innocence?
This is a common question from citizens, whether they are the parties involved or their relatives, when consulting a lawyer for the first time after being investigated by the police: "I was just trading U for profit, and I really didn't know I received illicit proceeds. Can I claim innocence?" As a criminal defense lawyer, I can certainly understand this inquiry, but can you really just say, "I didn't have subjective knowledge of others' criminal behavior," and be okay? Of course not.
The core point in determining whether a criminal offense has been committed is the degree of the perpetrator's subjective knowledge.
Taking the case of Xiao, a U merchant, prosecuted for concealing and disguising criminal proceeds by the Changning Procuratorate mentioned at the beginning of this article, let's illustrate how the perpetrator's subjective knowledge of the illegal gains obtained by the counterparty in the transaction is judicially determined.
Lawyer Shao's analysis:
Was Xiao aware of the specific nature and source of the money obtained by the upstream party? I believe he definitely was not aware because he was only concerned with selling U and conducting his own transactions.
So, does the offense of concealing and disguising require the perpetrator to be aware of the specific nature and source of the money obtained by the upstream party? No, it does not. It only requires the perpetrator to know that the upstream party's money is illicit proceeds.
Of course, no party involved would voluntarily admit during questioning, "I knew that the other party's money was illicit proceeds! My transactions were helping the other party transfer illicit proceeds!" At this point, it is necessary to combine various pieces of evidence to infer the perpetrator's subjective knowledge. For example, in this case:
The trading method was covert. Both parties did not use domestic software such as WeChat or QQ, but instead used Telegram, a foreign chat software with strong anti-surveillance capabilities, including self-destructing messages.
The trading mode was unusual. Both parties did not trade on an exchange but conducted transactions offline, and agreed to meet in places such as restrooms or vehicles to deliberately avoid surveillance. Additionally, both parties wore masks and hats to conceal their identities during the transactions.
The transactions involved "testing the card" and unusually high profits. Each time, the upstream party asked Xiao to transfer 100 yuan worth of virtual currency to their wallet address, and the transaction price was much higher than the highest transaction price on the trading platform that day. The upstream party was essentially engaging in loss-making transactions.
Considering the comprehensive behaviors mentioned above, it is difficult to argue that Xiao was unaware of any irregularities in the counterparty's money.
03 If unable to claim innocence, how to seek a lighter sentence?
Aiding and abetting a crime carries a maximum sentence of three years, while concealing and disguising criminal proceeds carries a maximum sentence of seven years. The application of different charges has a significant impact on the parties involved. From a legal perspective, concealing and disguising involves knowing that the upstream party's gains and their proceeds are from criminal activities, while aiding and abetting is limited to knowing that others are using the internet to commit crimes.
However, in judicial practice, the distinction between whether the perpetrator committed aiding and abetting or concealing and disguising is not always clear. As mentioned in a previous article by the author, "Can a charge of concealing and disguising be changed to aiding and abetting? Which charge carries a lighter sentence?" The phenomenon of different sentences for the same case has always existed.
How to seek a lighter sentence? The prerequisite is to have an accurate understanding of the concepts and qualifications of the two charges, as discussed in the author's article "A Comprehensive Analysis: Possible Charges for Providing Account Assistance in Transferring Funds," which provides a detailed analysis.
In specific cases, it is necessary to analyze the specific elements of the two charges and combine them with the facts of the case to make an accurate determination.
Conclusion
As Lawyer Shao often tells his friends who come to him for advice, the transactions in the eyes of U merchants are just the tip of the iceberg.
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