Legal Boundaries in Virtual Money Investment Disputes: Distinguishing Between Civil Disputes and Fraud Crimes

Since the introduction of relevant regulatory policies in 2021, the attitude of mainland China towards Virtual Money can be summarized as follows: citizens are not prohibited from investing, but actions that violate public order and good customs are not protected by law, and investors must bear their own risks. Since Virtual Money is not regarded as legal tender, it cannot circulate in the market. This has led to some dilemmas in judicial practice: it is difficult to file civil cases, and the filing standards for criminal cases are quite high.

However, the judiciary's recognition of the property attributes of mainstream Virtual Money is increasing. Sometimes there are even extreme cases where non-criminal virtual coin investment disputes are treated as criminal cases. Therefore, it becomes particularly important to accurately distinguish between "civil disputes" and "criminal offenses."

1. Case Analysis

Take a public case from the Intermediate Court of Foshan City, Guangdong Province as an example, the case is roughly as follows:

Between May and June 2022, the defendant Ye XX fabricated investment projects, promised high returns, and induced multiple people to invest a total of 2.5 million yuan (including 500,000 equivalent USDT). Ye XX used most of the funds for personal consumption and repaying debts, ultimately unable to repay the principal and interest. The court found Ye XX guilty of fraud and sentenced him to 11 years in prison.

The defendant and their defense attorney raised two main points: first, that the relationship with the victim was a private lending relationship; second, that the evidence was insufficient to prove that 500,000 Virtual Money was received. These points were not accepted by the court.

2. The Difference Between Civil Disputes and Criminal Fraud

The fundamental difference between civil disputes and criminal fraud lies in whether the perpetrator has the intention of illegal possession and whether fraudulent actions have been carried out.

In this case, the court found that Ye某某 constituted the crime of fraud for the following main reasons:

1. Use the investment funds to pay off old debts and for personal consumption
2. Purchase luxury items such as luxury cars
3. In debt at the time of receipt and without fixed assets
4. Personal income is insufficient to cover daily expenses
5. Create false transfer records to deceive the victim
6. Failed to actively raise funds for repayment before the incident.

3. Identification of Virtual Money as the Target of Fraud

The court recognizes that virtual money can be used as the object of fraud crimes. In this case, the 500,000 yuan equivalent of USDT invested by a victim was deemed valid property. The court's basis includes:

1. WeChat chat history shows that the defendant confirmed receipt of USDT.
2. The defendant admitted in the record to receiving Virtual Money.

The court believes that virtual money has the possibility of management, the possibility of transfer, and value, and therefore can become the object of fraud.

4. Distinguishing Between Investment Losses and Fraud

Not all investment losses constitute fraud. In judicial practice, whether fraud is constituted is usually determined by considering the following factors:

1. Does the actor have the intent to illegally possess?
2. Is there any act of fabricating facts or concealing the truth?
3. Did the victim dispose of the property based on a mistaken perception?
4. Is the flow and use of funds real and legal?

V. Conclusion

The virtual money investment field presents a complex trend of "civil and criminal interweaving." Investors should enhance their risk awareness and make prudent decisions. When facing losses, it is necessary to choose appropriate rights protection methods based on the specific situation. Only by proceeding within regulations can a balance between technological development and legal protection be achieved.