Author: Lawyer Liu Zhengyao
Preface
With the popularization of blockchain technology, virtual currency trading has moved from geek circles into the public eye. However, this has brought not only wealth myths but also increasingly severe legal risks. In criminal cases involving cryptocurrencies, the most frequently charged offenses are "aiding information network criminal activities" (referred to as "aiding crime") and "concealing or disguising criminal proceeds" (referred to as "concealment crime").
On the front lines of case handling, the author often hears the most instinctive defenses from the parties involved, and even their family members: "I really didn't know that money was illegal!" "I was just helping a friend transfer some money and earn a little fee; I had no knowledge of anything else," "I was just selling coins normally on the exchange; how would I know if the other party's money was dirty?"
"Unawareness" sounds like a logical explanation. After all, "ignorance is no excuse" is a relatively simple social concept. Specifically in our criminal law, it also reflects the "subjective malice" legal principle. But in judicial practice, is "unawareness" really a "get out of jail free card"?
The answer is much harsher than most people imagine. In the judicial determination of virtual currency cases, "unawareness" is often not judged by what you "said," but by what you specifically "did." The author will analyze the logic of determining "subjective knowledge" in virtual currency cases by combining legal provisions with practical experience.
1 Provisions on "Subjective Knowledge" in Criminal Law
In criminal law theory, the commission of a crime usually requires the unity of subjective awareness and objective behavior. For crimes involving cryptocurrencies, whether it is aiding crime or concealment crime, the core elements require the actor to "know" that upstream funds are criminal proceeds or that others are committing crimes using information networks while still providing assistance.
However, here, the legal meaning of "knowing" is not equivalent to the "certain knowledge" in the party's testimony.
(1) Two Forms of "Knowing"
In simple terms, in the legal evaluation system, "knowing" includes two levels:
First, determined intent. This means clearly knowing that the other party is a fraudster, a gambling website, or proceeds from embezzlement, yet still providing services such as USDT exchange or transfers. This situation has conclusive evidence, leaving no room for defense.
Second, general intent. This is what we often refer to as "should have known." The actor may not have precise knowledge of the specific type of upstream crime (whether it is fraud, gambling, or embezzled funds), but based on their cognitive ability and the abnormality of the transaction behavior, they should recognize that the source of funds is illegal, yet still allow this outcome to occur.
(2) "Presumed Knowledge" in Judicial Interpretation
From the perspective of the judiciary, to break the deadlock of "the suspect cannot be convicted as long as they do not admit," the Supreme People's Court and the Supreme People's Procuratorate (also known as the "Two Highs") have issued a series of judicial interpretations, establishing the principle of "inferring subjective knowledge from objective facts."
For example, in the 2019 release of the "Interpretation on Several Issues Concerning the Application of Law in Criminal Cases Involving Illegal Use of Information Networks and Aiding Information Network Criminal Activities," it is stipulated that when determining whether the actor has "knowledge," the following factors can be comprehensively considered:
The transaction price is significantly abnormal;
Using a specific encrypted communication software to evade supervision;
Frequently using multiple bank accounts or payment accounts for fund transfers;
Refusing to provide real identity verification.
In the field of virtual currency, this means that judicial authorities do not need to obtain your confession of "knowing." As long as your objective behavior pattern aligns with the characteristics of money laundering crimes, even if you shout "I don't know" until your throat is hoarse, the law will still presume that you "knew."
2 In Practice, Can "Unawareness" Really Exempt Liability?
In judicial practice, the game between defense lawyers and the parties often focuses on: how to break the judicial authority's "presumed knowledge" chain. A simple statement of "unawareness" carries no weight; only by providing objective evidence to prove that one "has indeed fulfilled reasonable due diligence" or "has indeed been deceived" can one hope to achieve exemption from liability.
(1) Why is Your "Unawareness" Not Credited?
If your behavior contains the following "red line" characteristics, insisting on "unawareness" is almost 100% likely to be deemed by judicial authorities as a sophistry, leading to conviction and sentencing:
First, the "high-interest temptation" that violates market rules.
For example, the normal profit from USDT arbitrage is very thin. If someone offers you a profit above the market price by a few cents or even dimes, or allows you to earn thousands or tens of thousands in "transaction fees" in a day, as an adult, you should realize that there must be something fishy behind it. The conclusion is that being tempted by high abnormal returns is the most direct basis for determining subjective knowledge.
Second, behavior that appears "sneaky."
For example: using niche communication software, where the parties do not communicate via WeChat or Alipay but specifically download Telegram or other apps with self-destructing message features, and the chat content involves industry jargon like "card testing," "U merchants," "issuing," etc.
Or evading KYC (Know Your Customer) verification. Not verifying the other party's identity during transactions, or knowingly allowing the other party to transfer money using someone else's account (non-matching name transfer).
Finally, "obviously abnormal" transaction habits.
Common high-risk actions include: 1. Quick in-and-out of funds, leaving no balance; 2. Specifically going to the bank to handle multiple cards, or purchasing bank cards or USB keys from others for transactions; 3. After a bank card is frozen, not only continuing transactions but also attempting to unfreeze or change cards to continue operations, etc.
In the above situations, the so-called "unawareness" will be recognized as "committing intentional crimes under the guise of unawareness" by analogy.
(2) What Kind of "Unawareness" Might Truly Exempt Liability?
"Presumed knowledge" is not unassailable. In individual cases, if the party can prove that they have fulfilled the ordinary person's due diligence, then "unawareness" can be a genuine and effective defense. The following situations have considerable room for acquittal or non-prosecution in practice, specifically reflected in the following aspects:
First, strict KYC verification records.
If you are an OTC trader and can provide complete chat records proving that you required the other party to provide identification, bank statements, and conducted video verification, along with a risk assumption commitment, and the materials provided by the other party appear very authentic in form (even if later proven to be photoshopped, as long as it looks real enough to fool an ordinary person), then you, in principle, have no subjective fault.
The core logic here is: "I checked, he deceived me, I am the victim, not an accomplice."
Second, the legitimacy of the trading venue and price.
If the transaction occurs on reputable exchanges like Binance or OKX, rather than private, shady platforms or purely cash transactions. If the transaction price strictly aligns with the market exchange rate of the day, and the party did not seek any additional premium, then for the party, it is also a "favorable" action.
Third, the specific circumstances of being deceived.
For example, the transformation of a "pig-butchering" victim: Some people are first deceived into investing in financial management, and when withdrawing funds, they are exploited by the scammer, who claims "the company's finance is transferring funds," but in reality, is transferring the scam money into their account for them to buy coins. In this case, the party is a victim of fraud, and if there are chat records supporting their brainwashing process, they are highly likely to be exempt from liability.
Also, a relatively reasonable trust relationship: For example, if relatives or real-life friends request help, and the reasons are within common sense (such as limit restrictions, etc.), occasional help without obvious abnormal benefits is difficult to determine as subjective knowledge.
3 In Conclusion
Returning to the question in the title: "Can 'unawareness' really exempt liability in virtual currency cases?"
Lawyer Liu's conclusion is: Verbal "unawareness" is worthless; evidence-supported "no fault" is key.
Criminal law targets "knowing and intentional offenses," but it will not spare "those pretending to be asleep." With the deepening of the "card-cutting action" and the strengthening of anti-money laundering efforts, friends participating in virtual currency trading must understand that the legal standards for determining "subjective knowledge" are no longer limited to testimonies but are a comprehensive objective behavioral profile.
For traders in the cryptocurrency space, Lawyer Liu wants to give one last piece of advice: Do not challenge the judiciary's "iron-fisted ruthlessness" with "ignorance." If you:
Choose to ignore the doubts about the source of the other party's funds for a tiny profit margin, or agree to conduct private transactions in encrypted chat software for convenience, or continue operations after seeing your bank card being stopped…
You may have already placed yourself within the range of criminal law. True exemption does not come from post-factum defenses but from preemptive compliance and restraint.
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