The Supreme People's Procuratorate released a case of illegal trading of foreign exchange using Vitual Money, and Zhao Dong's team was the first case

**Wu said that the Supreme People’s Procuratorate and the State Administration of Foreign Exchange jointly issued 8 typical cases of punishing foreign exchange-related violations and crimes. The person in charge of the Fourth Procuratorate of the Supreme People’s Procuratorate said that the cases released this time are mainly aimed at cross-border illegal foreign exchange trading cases. In response to the typical cases of using Vitual Money as a medium to carry out illegal foreign exchange trading, the person in charge of the Fourth Procuratorate of the Supreme People’s Procuratorate pointed out that in China, Vitual Money does not have the same legal status as legal tender, and related business activities are illegal financial activities. **

The person in charge pointed out that more and more illegal foreign exchange trading crimes are being carried out through Vitual Money transaction exchange. In the course of handling the case, it was found that using Vitual Money as the Medium of Exchange to indirectly convert the monetary value of foreign exchange and RMB is an important link in the chain of illegal foreign exchange trading and should be punished according to law. To guide the collection of evidence, review and judgment of criminal facts related to Vitual Money transactions, it is necessary to be familiar with the technical characteristics related to Vitual Money transactions, so as to facilitate the quality and efficiency of case handling.

The Supreme People’s Procuratorate selected two cases. The first is that the Xihu District Branch of the Hangzhou Municipal Public Security Bureau in Zhejiang Province transferred the facts of You, Zhao and others illegally engaged in the payment and settlement of funds for prosecution on suspicion of illegal business operations. The procuratorate sorted out 309 transaction records related to foreign currency exchange in the chat records of Zhao’s gang, totaling more than 43.85 million yuan. Zhao’s gang has formed a long-term and continuous fixed pattern: collect foreign currency dirhams abroad, transfer RMB to the domestic beneficiary account designated by the other party, and then use the dirham to buy USD, and then sell USD to obtain RMB. The above-mentioned behavior is ostensibly the act of buying and selling Vitual Money, but in essence, using USD as a medium to realize the currency value conversion between foreign currency and RMB, it is an illegal trading of foreign exchange and constitutes the crime of illegal operation.

On March 24, 2022, the Xihu District People’s Court of Hangzhou City, Zhejiang Province made a judgment and sentenced Xiao to 11 years in prison and a fine of RMB 20 million for the crime of illegal business operation, You X was sentenced to 11 years in prison and fined RMB 10 million, Zhao was sentenced to seven years in prison and fined RMB 2.3 million, Zhao was sentenced to four years in prison and fined RMB 450,000, Zhou Moukai was sentenced to two years and six months in prison and fined RMB 250,000, and Shi and seven others were sentenced to fixed-term imprisonment ranging from four years to one year and two months, with fines ranging from RMB 2 million to 25,000. After the verdict was announced, Xiao, You, Zhao, and Zhao appealed. On September 5 of the same year, the Intermediate People’s Court of Hangzhou Municipality, Zhejiang Province, ruled to reject the appeal and uphold the original judgment.

When reviewing the extracted mobile phone chat records, the Xihu District Procuratorate found that Zhao’s gang also had evidence of using Vitual Money to provide foreign exchange services, and was suspected of illegal foreign exchange trading. In order to find out this part of the facts, the procuratorial organs sorted out 309 transaction records related to foreign currency exchange in the chat records of Zhao’s gang, and found that each record contained a confirmation of successful transactions, including domestic collection accounts, transaction times, total transaction amounts, purchase Exchange Rates and other information, totaling more than 43.85 million yuan. In order to further verify the authenticity of the above-mentioned transaction records, the procuratorate focused on supplementing the following evidence by returning them to the public security organs for supplementary investigation and self-investigation: (1) The transaction details of domestic bank accounts involved in the 15 transaction records were obtained, and the bank transaction details could be mutually corroborated with the transaction data in the chat records in terms of amount and time. (2) Make interrogation records of the payees in 15 transactions, and confirm that the 15 collection records are all foreign trade-related fees paid by foreigners. (3) During the interrogation of Zhao and his gang members, the suspects admitted that Zhao and others received dirhams in cash, paid RMB to the domestic account provided by the other party, and used dirhams to buy USD, and at the same time let the domestic gang illegally sell USD to exchange for RMB. (4) Carry out targeted inquests on seized computers, mobile phones and other electronic data carriers, determine the Vitual MoneyWalletAddress controlled by the criminal gang, and then compare the transaction records of the Vitual MoneyWallet with the bank account flows, and find out the capital flow link of Zhao’s criminal gang’s “foreign currency-Vitual Money-RMB”. On February 11, 2022, the Xihu District Procuratorate filed a public prosecution with the court for Xiao, You, Zhao and others constituting the crime of illegal business operation, and added the criminal facts of Zhao, Zhao and Zhou Moukai illegally trading foreign exchange.

The Supreme People’s Procuratorate pointed out that the act of using Vitual money as a medium to realize the exchange of RMB and foreign exchange constitutes the crime of illegal business operation. The perpetrator used Vitual Money as a medium to earn profits from the difference in Exchange Rate by providing cross-border exchange and payment services, which is to use the special attributes of Vitual Money to circumvent the state’s foreign exchange supervision and realize the conversion of the value of foreign exchange and RMB through the exchange of “foreign exchange-Vitual Money-renminbi”, which is a disguised purchase and sale of foreign exchange, and shall be pursued for criminal responsibility for the crime of illegal business operation in accordance with law.

In the second case, from January 2018 to September 2021, Chen Mouguo (handled in a separate case), Guo Mouzhao and others set up websites such as “TW711 Platform” and “Yusu Platform” to provide customers with foreign currency and RMB exchange services through Vitual MoneyUSD. After placing an order in the business sections of the above-mentioned website, such as stored value and payment, the Exchange Currency customer will pay the foreign currency to the overseas account designated on the website. After purchasing USD overseas in the above-mentioned foreign currency, Fan Mouwei sells it to obtain RMB through illegal channels, and then pays the corresponding amount of RMB to the domestic third-party payment platform account designated by the customer at the agreed Exchange Rate, earning the Exchange Rate difference and service fee. The above-mentioned website illegally exchanged more than 220 million yuan. Among them, Fan Mouwei received more than 6 million USD coins from Chen Mouguo and exchanged more than 40 million yuan by operating the Vitual Money trading platform account and RMB bank account provided by Zhan Mouxiang, Liang Mouzhuan and others.

The Supreme People’s Procuratorate pointed out that those who know that others illegally buy and sell foreign exchange and provide assistance by exchanging Vitual Money as a medium are accomplices to the crime of illegal business operation. In China, Vitual Money does not have the same legal status as legal tender, but using Vitual Money as a medium to help others indirectly realize the illegal exchange between domestic currency and foreign currency is an important link in the criminal chain of illegal foreign exchange trading and should be punished according to law. Where the person providing Vitual Money conspires with the person who illegally buys and sells foreign exchange in advance, or knows that others illegally buy and sell foreign exchange, but still provides substantial assistance to them in converting their own currency into foreign currency by trading Vitual Money or other means, it constitutes a joint crime of illegal business operation. Vitual Money Trading Services are provided to persons who illegally buy and sell foreign exchange, but only have a general understanding of the criminal acts they help, and do not specifically realize that aiding the crime of illegal foreign exchange trading can help pursue criminal responsibility for the crime of information network criminal activities.