Using cryptocurrency to accept bribes: a new tool for official misconduct?

By: Xiao Sa's Team

The lawyers of Sa’s team have observed, while handling cryptocurrency-related cases, a fact that cannot be ignored: law enforcement officers unfamiliar with the crypto industry often view it as a dangerous menace. However, once they’ve handled such cases, many begin studying relevant knowledge, actively seek out new crypto cases, and some even proactively search for them...

So, can cryptocurrency be used for bribery? If public officials exploit the hard-to-regulate, easily transferable, and high-value characteristics of digital assets to accept bribes, can this still constitute traditional official crimes such as bribery under Chinese law—especially given China’s clear stance that cryptocurrencies are not legal tender?

TechFlow will now explain how digital currencies may be used in official misconduct.

An Official Who Took 6,000 Bitcoins Was Lucky He Committed His Crime Early

As mentioned above, because the technical features of cryptocurrency make it difficult to trace and regulate, it is naturally an extremely convenient tool for money laundering and asset transfer—and thus theoretically suitable for use in bribery, embezzlement, and other official crimes.

However, in judicial practice, cases involving cryptocurrency-based bribery or official misconduct remain rarely exposed. TechFlow believes this may partly be due to the relatively high technical barrier associated with using cryptocurrency, making it inconvenient for most government officials; on the other hand, Bitcoin and Ethereum are subject to significant price volatility—gifting coins that later sharply depreciate would be quite embarrassing.

Yet, in the history of China’s development of digital assets, there was one very notable “pioneer”: Xiao Yi, former vice chairman of Jiangxi Provincial Committee of the Chinese People's Political Consultative Conference (CPPCC) and Party Secretary of Fuzhou City. It has been widely rumored that he accepted bribes amounting to as much as 6,000 bitcoins.

Between 2017 and 2021, Xiao Yi leveraged his position as Party Secretary of Fuzhou to connect with Lin, the actual controller of Genesis Technology Co., Ltd. and a prominent figure in the crypto world, engaging in large-scale monetization of power. Specifically, Xiao Yi used his authority to designate Genesis Technology as a key enterprise in Fuzhou, publicly promoting plans to "build Asia’s largest single data center," while in reality tacitly allowing the company to secretly construct a massive mining farm in Fuzhou for Bitcoin mining. Furthermore, Xiao Yi provided substantial financial subsidies, funding support, and critically, guaranteed electricity supply to Genesis Technology.

In return, Lin reciprocated by “gifting” Xiao Yi a large quantity of mined bitcoins—rumored to exceed 6,000 BTC. During the first-instance trial, it was determined that Xiao Yi had accepted bribes totaling 125 million RMB. On August 22, 2023, the Hangzhou Intermediate People’s Court in Zhejiang Province publicly announced its verdict in the case of Xiao Yi, former member of the Jiangxi CPPCC Party Leadership Group and vice chairman, convicting him of bribery and abuse of power, sentencing him to life imprisonment. Unfortunately, however, no detailed information about the nature of the bribes has been made public—only described vaguely as “illegally received property valued at over 125 million RMB.”

Why does TechFlow say he was lucky the case was judged early? According to Article 388 of China’s Criminal Law on the crime of bribery, if the amount involved exceeds 3 million RMB and causes particularly severe damage to national or public interests, the death penalty may apply. Assuming Xiao Yi indeed received 6,000 bitcoins, based on today’s market prices, the value of his bribes would surpass 200 million RMB—and could potentially exceed 1 billion RMB should prices continue rising.

In judicial practice, 1 billion RMB is widely regarded as the “life-or-death line” in corruption cases involving public officials. Consider two recent examples:

It is evident that if digital assets continue appreciating in value, and Xiao Yi continued accepting large amounts of cryptocurrency after their appreciation, the total bribe amount could become astronomically high—possibly crossing this critical threshold.

What If Public Officials Only Accept Cryptocurrency as Gifts—Does That Constitute Bribery Under Chinese Law?

Although rumors suggest that a significant portion of Xiao Yi’s illicit gains consisted of digital assets, we cannot confirm this from any official source. Therefore, we must seriously consider this question: if a public official only accepts cryptocurrency as gifts, does this constitute the crime of bribery under Chinese law?

This first requires addressing a fundamental issue: Do cryptocurrencies possess property attributes under criminal law?

Based on current judicial practice, TechFlow believes that cryptocurrencies do possess property attributes under criminal law and can therefore be objects of property-related crimes.

In Issue No. 138 [Case No. 1569] of the Supreme People’s Court’s Criminal Trial Reference, concerning Zhang’s robbery case, the SPC stated that property includes both tangible goods and proprietary benefits. Whether cryptocurrency qualifies as property under criminal law hinges on whether it exhibits the essential characteristics of property in criminal jurisprudence—namely, manageability, transferability, and value.

(1) Cryptocurrency holders possess, control, and manage their assets via passwords and private keys, demonstrating manageability;

(2) Cryptocurrencies circulate between different parties through trading platforms, enabling buying, selling, and currency exchange, demonstrating transferability;

(3) Acquiring cryptocurrency requires expenditure of labor or cost, endowing it with value—including both exchange value and utility value.

Therefore, virtual currencies exhibit the general characteristics of property under criminal law, possess property attributes, and qualify as “property” in the legal sense.

Then, do cryptocurrencies meet the definition of “property” under laws governing official misconduct? TechFlow believes that in practice, they are highly likely to be interpreted as a form of “proprietary benefit.”

In practice, China interprets “property” in official crime cases very broadly—in simple terms, anything of value can constitute “property” in such crimes. According to Article 12 of the Supreme People’s Court and Supreme People’s Procuratorate’s Interpretation on Several Issues Concerning the Application of Law in Handling Cases of Embezzlement and Bribery, “property” in bribery offenses includes currency, goods, and proprietary benefits. Proprietary benefits include material benefits convertible into monetary value—such as home renovations or debt forgiveness—as well as other benefits requiring monetary payment, such as membership services or travel arrangements.

Thus, although no publicly available precedents currently exist showing convictions for bribery using cryptocurrency (though unconfirmed internal cases among law enforcement are rumored), our view remains: digital assets cannot serve as a shield against accountability. Offering or accepting bribes via digital assets constitutes bribery and related crimes.

Final Thoughts

With the growing popularity and expanding applications of cryptocurrency, its role in official misconduct is becoming increasingly prominent. The anonymity and global liquidity of cryptocurrency make it an attractive tool for some criminals seeking to conduct bribery and money laundering. Although Chinese law clearly states that cryptocurrencies are not legal tender, their recognized property attributes and intrinsic value mean they are treated as objects of property crimes in judicial practice—and thus can form the basis of official crime charges.

In conclusion, TechFlow reminds everyone: digital assets are not a safe haven for official misconduct. Paper cannot wrap fire forever. No matter how covert the method, traces always remain. Today’s third-party blockchain analytics firms can already perform fairly precise tracking based on on-chain data. Never blindly trust the supposed “anonymity” of blockchain technology.