The year 2025 seems to be a year of explosive development for virtual currencies and their derivatives. Major economies and regions around the world have successively introduced legislation related to crypto assets, and more and more individuals and institutions are beginning to pay attention to, and even enter, the crypto asset field. However, official agencies in mainland China have not yet made a clear statement, and the current regulations regarding crypto assets still remain at the level of the two previously issued notices: "Notice on Further Preventing and Dealing with Risks of Virtual Currency Trading Speculation" and "Announcement on Preventing Risks of Virtual Currency Trading Speculation." Recent cases indicate that the official crackdown on the use of crypto assets for or participation in crimes seems to be increasing rather than decreasing, showing a tightening trend.
Recently, the Beijing Second Intermediate People's Court published an article discussing a case it recently handled involving the crime of concealing and disguising criminal proceeds. According to the article, in the absence of other written evidence, the court determined that the defendant subjectively "knew it was criminal proceeds" due to the extremely abnormal nature of the defendant's trading behavior. Today, the Sa Jie team will discuss the connection between abnormal behavior in virtual currency trading and the establishment of crimes, as well as the potential legal risks, while providing a risk avoidance guide for friends.
Earlier this year, the People's Court of Wolong District, Nanyang City, Henan Province, ruled on a case involving the use of virtual currency to conceal and disguise criminal proceeds (Case No. (2025) Yu 1303 Criminal First 77). Although the defense argued that the defendant did not subjectively intend to know that the funds involved were illegal proceeds, the court found that the defendant engaged in USDT virtual currency trading activities without using formal platforms and often conducted transactions in concealed locations such as toilet stalls with disguised individuals. Considering the WeChat chat records and group chat records, as well as the circumstances of contact with others, amounts, conversion, and transfer methods, the court determined that the defendant's behavior was obviously abnormal. In the absence of a reasonable explanation from the defendant, the court judged that the defendant had subjective knowledge of the illegal nature of the funds.
Coincidentally, in the recent case heard by the Beijing Second Intermediate People's Court, a series of operations by the defendant Liu revealed every detail to be "abnormal," and these irregularities ultimately became the core basis for the court's determination of his criminality. From the trading model, Liu received orders multiple times and then traveled by car or plane to conduct transactions in other locations, with his movements covering multiple areas and short stays, incurring high costs. In terms of the trading process, Liu's "concealment actions" were highly deliberate; he wore a mask throughout the transaction, and both parties would immediately delete WeChat and chat records after the transaction. By the time the public security authorities captured Liu based on the flow of funds and travel trajectory, there were no traces of any transaction-related evidence on his phone. Ultimately, the Beijing Second Intermediate People's Court, considering the aforementioned details, determined that Liu subjectively "knew that the virtual currency involved in the transaction was criminal proceeds" and sentenced him to three years and six months in prison.
Money laundering and the crime of concealing and disguising criminal proceeds have consistently been two prevalent charges in the field of crypto assets, closely related to the inherent characteristics of crypto assets such as anonymity, decentralization, ease of transaction, and high liquidity. Establishing money laundering and the crime of concealing and disguising criminal proceeds requires that the actor objectively engages in concealing behavior and subjectively knows that the property being handled is illegal criminal proceeds.
From the two cases mentioned above, it is not difficult to see that, in current judicial practice, courts will comprehensively determine whether the actor "knew that the transaction object was criminal proceeds" through clues such as trading models, behavioral details, and the flow of funds, rather than relying solely on a single piece of evidence. For example, in the case ruled by the Beijing Second Intermediate People's Court, there were no relevant WeChat chat records to prove the knowledge of illegality, and the court's article did not disclose the use of relevant fund flows as evidence for the ruling. Instead, the court primarily relied on the defendant's confession, the number of transactions, methods, and profit situations to make a comprehensive determination. In the absence of other written evidence as direct proof, the court could still infer the defendant's subjective intent based on indirect evidence such as the defendant's abnormal trading behavior, combined with the defendant's confession. If trading behavior is abnormal and cannot be reasonably explained, it may be deemed to possess subjective intent. In other words, even if no traces are left, if the overall behavior reveals oddities, there is still a possibility of being convicted.
Liu's case is not an isolated incident; in recent years, the number of criminal cases arising from abnormal virtual currency trading has continued to grow, with diverse charges and behavioral patterns. In addition to the crime of concealing and disguising criminal proceeds, similar presumptive logic also applies to money laundering and other similar crimes. If one participates in the crime process, they may also be recognized as an accomplice in illegal fundraising or fundraising fraud. On one hand, there is no clear official statement, and there is a trend of stricter judicial crackdowns; on the other hand, there are increasingly sophisticated, standardized, and advanced technical investigation methods. For example, the emergence and application of "financial analysis as evidence" indicate that crimes involving virtual currencies are no longer in a black box but are gradually becoming visible, and the corresponding standards for conviction are becoming clearer.
Ordinary individuals engaging in virtual asset trading should remain vigilant at all times to avoid inadvertently crossing criminal red lines. Many people may have the mindset that "as long as I don't clearly know the funds are illegal, it doesn't count as a crime." However, from the current judicial practice, courts will infer whether the actor "should have known" that the transaction object was criminal proceeds through the "abnormal details" of the transaction. For instance, in Liu's case, details such as "high-cost cross-regional transactions," "deliberately concealing identity," and "actively destroying evidence" were all recognized by the court as key evidence of "subjective knowledge." The underlying logic is that these behaviors violate normal trading habits, and the only reasonable explanation is "to evade supervision and conceal illegality." This means that even without direct evidence, such as WeChat chat records, to prove "clear knowledge," abnormal trading details may still expose the actor to criminal liability.
Although the "Notice on Further Preventing and Dealing with Risks of Virtual Currency Trading Speculation" clearly defines "conducting legal currency and virtual currency exchange business" as illegal financial activity and mandates that it be "strictly prohibited and resolutely banned by law," many currency traders still engage in such business. Many traders do not and cannot conduct strict verification of the source of funds. According to current judicial practice, this contains inherent risks—if the source of the other party's funds is indeed problematic, and there are also some abnormal behaviors in the transaction, it may constitute a crime. The Sa Jie team here suggests that if one inadvertently comes into contact with suspected abnormal transactions, they should immediately terminate the operation, avoiding significant losses due to small mistakes, while preserving key evidence such as chat records, transfer receipts, and the other party's identity information. It is also important to abandon the mindset of "it's okay to do it just once"—the determination of criminal offenses may only require evidence of one abnormal transaction. By raising awareness of risks and evidence preservation, individuals can form a protective "vest."
The case of Liu heard by the Beijing Second Intermediate People's Court may seem like an individual case, but it actually reflects that China's attitude towards combating illegal activities in the virtual currency field may be gradually becoming stricter. Virtual currency trading is not a "lawless land," and abnormal trading is certainly not a "loophole for evasion." Those seemingly "smart" evasion tactics may backfire during judicial investigations and become key evidence for conviction and sentencing. The Sa Jie team reminds all friends that the official stance on crypto assets remains unclear, and one should not harbor any illusions. It is essential to remain sensitive to related crimes, and if abnormalities are detected, transactions should be promptly terminated while ensuring evidence is preserved to demonstrate that necessary due diligence has been exercised to protect oneself.
Related: Opinion: The Future of Cryptocurrency Lies in Realizing the Practicality of Global Payment Expansion
Original: “@Coin Circle People: ‘Abnormal Trading Behavior’ Could Likely Be Deemed a Crime!”
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