Author: Xiao Sa, lawyer

Recently, a news about an employee of a certain network security company stealing virtual currency and obtaining more than 2.5 million yuan has attracted attention in the cryptocurrency circle. The criminal behavior of internal technical staff is lamentable as the crisis is actually close at hand. However, from a legal perspective, this case involves a key issue of criminal cases related to virtual currency: whether virtual currency has the attribute of property.

Basic Case

According to the prosecution, from February 9 to 20, 2023, employees Hong, Yang, and Zhang of a certain network security company gained access to a target virtual currency website by analyzing and exploiting the Yapi remote code execution vulnerability. They controlled the internal network servers through lateral penetration and Trojan implantation, found the victim Su's 1 virtual wallet address and private key, and constructed false instructions to transfer virtual currency from the victim's virtual wallet address. Subsequently, the three individuals exchanged it for other virtual currency and sold it, obtaining illegal gains of more than 2.5 million yuan. Meanwhile, another employee, Zheng, at Hong's instruction, forged Dash coin signatures and broadcast transactions to transfer 3015.9 Dash coins from the victim.

The public prosecution agency determined that their actions constituted the crime of theft, as stipulated in Article 264 and Article 25, paragraph 1 of the Criminal Law of the People's Republic of China.

The court held that the defendants, with the purpose of illegal possession, used technical means to intrude into others' computer information systems, secretly stole others' virtual currency, and the amount involved was particularly large or had other particularly serious circumstances. Therefore, their actions constituted the crime of theft as charged by the public prosecution agency. Taking into account the circumstances and factors such as confession, surrender, meritorious service, confession, accomplice, and restitution, the court accepted the defense's application for probation and sentenced Hong to three years' imprisonment with a four-year probation period and a fine of 50,000 yuan; Zheng was sentenced to three years' imprisonment with a three-year probation period and a fine of 50,000 yuan.

Does Stealing Virtual Currency Constitute Theft?

The main significance of discussing this issue lies in the fact that the statutory penalty for theft is higher than that for the crime of illegally obtaining computer information system data. If the amount involved in the theft is particularly large or there are other particularly serious circumstances, the penalty can be ten years or more of fixed-term imprisonment or life imprisonment, and a fine or confiscation of property may be imposed. On the other hand, if the crime of illegally obtaining computer information system data involves particularly serious circumstances, the penalty is only three to seven years of fixed-term imprisonment, and a fine may be imposed. The difficulty in convicting theft of virtual currency and common defense points all revolve around the issue of the property attribute of virtual currency. According to Article 264 of the Criminal Law, the crime of theft requires the fulfillment of elements such as the subject of the act, the purpose of illegal possession, the act of secret theft, the object of the crime, and the circumstances of the crime. The object of the crime of theft can only be the "public or private property" protected by the Criminal Law. Therefore, if it can be proven that virtual currency is not property, there is hope of not convicting theft and instead convicting the crime of illegally obtaining computer information system data, thereby reducing the penalty. In this case, the defense lawyer adopted this strategy.

The question of whether virtual currency can be regarded as "property" has always been controversial in judicial practice.

1. Supporting Reasons

a. Scarcity of Virtual Currency

The scarcity of virtual currency is objective. Cryptocurrencies often declare an upper limit on the issuance quantity, and any changes to virtual currency are recorded in the blockchain through special and unchangeable hashes. This uniqueness makes each virtual currency unique rather than fungible. If stolen, virtual currency cannot be recovered through low-cost, centralized means, resulting in direct losses. Therefore, when virtual currency is the object of the crime of theft, the harm to the victim is similar to that of the theft of general property.

b. Virtual Currency Has Property Value

Virtual currency is a special virtual property with value and exchange value. The difference between virtual property in the network and tangible property in real life lies only in the difference in time, space, and form of existence. They can be converted into real property, and there is no difference in terms of property and interest.

2. Opposing Reasons

a. Virtual Currency Has Data as Its Physical Attribute

Virtual currency is essentially a set of computer codes that exist in binary form, and this objective attribute cannot be ignored. On the contrary, using technical means to intrude into a computer information system, exceeding the authorized scope to steal data from the computer information system, and stealing keys to transfer virtual currency are typical unauthorized intrusions into computer information systems, which can be evaluated as intrusions into computer information systems.

b. China's Policy Documents Have a Strict Attitude Toward Holding and Trading Virtual Currency

The 924 Notice clearly stipulates that activities related to virtual currency are illegal financial activities. Any legal person, unincorporated organization, or natural person investing in virtual currency and related derivatives, if contrary to public order and good customs, the relevant civil legal acts are invalid, and any losses incurred as a result are borne by the parties themselves. At the same time, for criminal cases involving virtual currency, relevant policy documents also often pay close attention, not considering virtual currency as property protected by criminal law, which is more in line with policy needs.

Value Orientation of the Judgment in This Case

The defense lawyer in this case argued that "virtual currency is not 'property' in the sense of criminal law," so this case does not constitute the crime of theft but only the crime of illegally obtaining computer information system data. The court did not respond directly to this, but in the judgment, it stated that "the defendant, with the purpose of illegal possession, used technical means to intrude into others' computer information systems, secretly stole others' virtual currency." Illegal intrusion into others' computers is the means of theft, and virtual currency is the object of the crime of theft. From this perspective, this case actually acknowledges the property attribute of virtual currency.

Since the issuance of the 924 Notice, it has been made clear that virtual currency is illegal. Civil cases involving virtual currency also need to undergo effective review first, and in criminal cases where virtual currency is the object of the crime, there is also doubt about the necessity of protecting virtual currency. This case acknowledges the property value of virtual currency, starting from the protection of the interests of virtual currency holders in the crime of theft, and gives a negative evaluation of the use of computer information technology to commit theft, capturing the essence of theft as a crime that infringes on the property rights of others.

The Sa Team believes that the trial of cases involving virtual currency needs to be gradually standardized. Although the illegal status of virtual currency leads to differences in judicial practice and has policy implications, the overall trend is still to explore and clarify the nature of civil disputes and criminal crimes arising from virtual currency, protect the legitimate rights and interests of the parties involved, and promote consistent judgments for similar cases. Although there is still room for debate on the classification of theft of virtual currency cases, this case has properly handled the protection of the rights of the victims and the cautious attitude of criminal policy toward virtual currency. In the future, the trial thinking of related cases should be further standardized.

In Conclusion

In addition, this case also serves as a reminder to professionals in the field of network security that they should abide by professional ethics and legal bottom lines and should not engage in illegal activities. "Fighting fire with fire" will also be subject to legal sanctions. Relevant professionals should assist law enforcement agencies in combating cybercrime and safeguarding network security. Professionals in fields such as Web3 and network security possess professional skills and knowledge and should use these skills in a legitimate manner to ensure network security and the privacy, data security, and property rights of users. Engaging in illegal activities using network security skills not only violates the law but also deviates from professional ethics and will be severely punished by the law.

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