Xiao Za: How is the crime of aiding and abetting determined in cryptocurrency cases?

This article was published on Babbit Information, author: Xiao Sa.

Today is the court date for cryptocurrency veteran Z, and news has emerged that he was recognized as guilty of aiding and abetting a crime in court. As a legal professional, I must first correct the media's statement: today was merely a court hearing, not a judgment rendered in court. Whether Z is guilty of aiding and abetting a crime or illegal business operations will require waiting for the first-instance judgment (there is a 10-day appeal period after the first-instance judgment is delivered, and there are many co-defendants in this case, with a 90%+ probability of appeal, thus there will also be a second-instance trial). Spectators should not think that the shoe has dropped; it is still in the parabolic trajectory and has not yet landed.

Brief Introduction to Aiding and Abetting Crimes

Legal Basis: Article 287-2 of the Criminal Law of China

Criminal Subject: Both individuals and entities can be subjects

Subjective Aspect: Knowing (there was a judicial interpretation in 2019)

Criminal Behavior: Providing internet intervention, server hosting, network storage, communication transmission, and other technical support for others' crimes, or providing advertising, payment settlement, and other assistance, with serious circumstances.

How to Determine "Knowing"?

According to the Supreme People's Court and the Supreme People's Procuratorate's interpretation on the application of laws in criminal cases involving illegal use of information networks and aiding information network crimes, Legal Interpretation [2019] No. 15, the standard for determining "knowing" is: if any of the following behaviors occur, it can be recognized as "knowing," unless there is contrary evidence.

(1) Continuing to engage in relevant behaviors after being informed by regulatory authorities;

(2) Failing to perform statutory management duties after receiving a report;

(3) Transaction prices or methods are obviously abnormal;

(4) Providing programs, tools, or other technical support specifically used for illegal crimes;

(5) Frequently taking measures such as covert internet access, encrypted communication, data destruction, or using false identities to evade supervision or investigation;

(6) Providing technical support or assistance for others to evade supervision or investigation;

(7) Other circumstances sufficient to determine that the actor is aware.

Please note that in criminal cases related to the cryptocurrency sector, the knowing part actually requires the suspect (actor) to bear a certain degree of burden of proof. If there is contrary evidence proving that they indeed did not know that the counterparty or user was suspected of committing a crime while providing assistance, it does not constitute aiding and abetting a crime.

What Constitutes Serious Circumstances?

If the circumstances are not serious, it does not constitute aiding and abetting a crime. So, what are serious circumstances? The judicial interpretation also provides a clear answer:

(1) Providing assistance to three or more subjects;

(2) Payment settlement amounts exceeding 200,000 yuan;

(3) Investing more than 50,000 yuan through advertising;

(4) Illegal gains exceeding 10,000 yuan;

(5) Having received administrative penalties within two years for illegal use of information networks, aiding information network crimes, or harming the security of computer information systems, and then assisting in network criminal activities;

(6) The crimes committed by the aided subjects resulted in serious consequences;

(7) Other serious circumstances.

If the aforementioned behaviors are implemented, and due to objective conditions, it is impossible to verify whether the aided subjects have reached the level of crime, but the total relevant amounts reach five times or more of the standards set forth in items 2-4 of the preceding paragraph or cause particularly serious consequences, they should be sentenced according to aiding and abetting crimes.

The Criminalization of Aiding Offenders

China adheres to the principle of subordinate aiding offenders, meaning that aiding offenders are evaluated by criminal law according to the development of the principal offender's crime. However, there are also situations where aiding offenders are criminalized, and aiding and abetting crimes are a typical representative of such charges.

We have previously conducted legal education for cryptocurrency practitioners and written numerous public articles repeatedly emphasizing the elements and penalties of aiding and abetting crimes. Unfortunately, very few people have truly listened. Currently, the incidence of aiding and abetting crimes is on the rise, and the next two years will also be a key focus for law enforcement agencies.

Therefore, we remind companies or individuals participating in cryptocurrency investment and technology supply to carefully examine the business models and profit models of investment targets or users, and to include compliance operation of the other party as a unilateral termination clause in user agreements, cooperation agreements, and investment agreements, to cut ties in a timely manner and cease assistance.