How is the price of cryptocurrency determined in criminal cases?
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How is the price of cryptocurrency determined in criminal cases?
In the future, virtual currencies may very well achieve a balance among technical rationality, legal fairness, and economic value in terms of pricing mechanisms, finding a better equilibrium between combating crime and protecting citizens' property, as well as between legal policies and technological innovation.
Navigating Web3 tides with focused insightsBy Xu Qian
Introduction: The Rise of Virtual Currency Crimes and Legal Challenges
In recent years, with the widespread adoption of blockchain technology, cryptocurrencies such as Bitcoin, Ethereum, and Tether have increasingly appeared in criminal cases involving fundraising fraud, theft, and embezzlement. According to data from China's裁判文书网 (Judgment Documents Network), criminal cases involving virtual currencies have risen year by year since 2018. However, China’s current legal framework lacks a unified definition of virtual currency, leaving judicial authorities facing two core challenges: whether virtual currency qualifies as "property" protected under criminal law, and how its value should be determined. These issues directly affect distinctions between guilt and innocence, different types of offenses, calculation of criminal amounts, and sentencing consistency.
In late February 2025, Professor Zhu Jianhua from Southwest University of Political Science and Law proposed in his article “Exploring the Establishment of a Tiered System for Determining Criminal Amounts” that for bribery cases where public officials illegally receive virtual currency, the amount should be determined using a tiered approach—based first on purchase price, then disposal price, followed by market price—to ensure accurate quantification of criminal proceeds and uphold judicial fairness.
How can we establish a pricing mechanism that balances legal logic with technological characteristics amid policy restrictions and technical barriers?
Legal Nature of Virtual Currency: Judicial Shift from “Data” to “Property Interest”
(I) Theoretical Debates and Policy Background
According to the 2013 “Notice on Preventing Bitcoin Risks” and the 2017 “Announcement on Preventing Risks Associated with Token Issuance Financing,” virtual currencies are defined as “virtual commodities” without legal tender status, and related trading activities fall within the scope of illegal financial activities. The 2021 “Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation” further clarified that “business activities related to virtual currency constitute illegal financial activities,” leading to the comprehensive shutdown of domestic exchange platforms.
However, Article 127 of the Civil Code mentions the protection of “data and virtual network property,” leaving room for recognizing the property attributes of virtual currencies. This has led to two main perspectives:
1. Data Theory: Argues that virtual currency is essentially electromagnetic records classified as computer system data, which should be regulated through crimes like illegal acquisition of computer information system data.
2. Property Theory: Holds that virtual currency possesses value, controllability, and transferability, thus falling under the protection of property-related offenses.
(II) Judicial Standards in Practice
Judicial precedents show that although virtual currency is not legal tender, it is widely regarded as a “virtual commodity” possessing property attributes—due to its value, controllability, and liquidity—and is therefore protected under criminal law, albeit with caution regarding valuation.
1. Value: Economic value established through fiat currency exchange or actual transactions;
2. Controllability: Exclusive possession achieved via private keys;
3. Liquidity: Ability to be exchanged for fiat currency or other goods on specific platforms or overseas markets.
Judicial Rules for Valuing Virtual Currency: Diverse Methods and Controversial Issues
(I) Mainstream Pricing Approaches and Their Applications
Statistical analysis of over 50 criminal judgments involving virtual currency shows that judicial authorities primarily adopt the following valuation methods:
(II) Key Disputes and Judicial Dilemmas
1. Conflict Between Policy Restrictions and Data Legitimacy
Per the “Announcement on Preventing Risks of Token Issuance Financing,” domestic judicial bodies cannot directly use price data from overseas platforms. Yet in practice, most virtual currency transactions occur on foreign exchanges (e.g., Binance, Huobi). For example, in the first instance of Zhao’s fraud case, losses were calculated based on Huobi prices, but the appellate court ruled this “de facto recognizes the legitimacy of overseas platforms,” ultimately adjusting the amount to reflect the victim’s actual purchase cost.
2. Price Volatility and Timing Selection
The unique features of virtual currency—high volatility, 24/7 trading, and absence of centralized pricing—complicate timing decisions, affecting evidence collection and value determination. In theft cases, if the price surges or plummets after the crime, how should value be assessed? Should it be based on the time of incident, case filing, or judgment? This affects compensation and sentencing fairness.
3. Limitations in Technical Forensics
Blockchain anonymity complicates tracking; data is distributed across nodes, often requiring cross-border investigation. Encryption poses decryption challenges, while lost or destroyed private keys may result in irretrievable evidence. Anonymous wallets and mixing services (e.g., Tornado Cash) further hinder on-chain traceability.
Paths Toward Improving Virtual Currency Valuation Rules
(I) Clarifying Legislation and Judicial Interpretation
1. Establish the principle: “Actual payment cost or resale amount takes priority; market price serves as supplementary”
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Use actual payment cost or resale proceeds as primary basis for determining criminal amounts;
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If no resale record exists, refer to prices from major overseas platforms at the time of the offense (with blockchain timestamp verification), such as screenshots from blockchain explorers or wallet transaction logs taken immediately after the incident;
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Differentiate pricing rules between stablecoins (e.g., USDT) and worthless “air coins.”
2. Build a “Dynamic Price Database”
To balance volatility and reflect fair market value, consider average prices over a reasonable period (e.g., 30-day average).
3. Apply the “In Doubt, Favor the Defendant” Principle
When platform data authenticity or legality is questionable, or if prices sharply decline post-incident, opt for a valuation point favorable to the defendant.
(II) Integrating Technical Tools into Judicial Processes
1. Standardize Blockchain Forensics
Promote judicial blockchain evidence platforms and require law enforcement to use compliant tools (e.g., Chainalysis) to secure key evidence such as wallet addresses and transaction hash values.
2. Introduce Third-Party Appraisal Mechanisms
Commission qualified blockchain audit institutions to issue valuation and assessment reports. For instance, an expert body could calculate a weighted average of historical prices across multiple platforms to enhance evidentiary credibility.
(III) Refining Sentencing Criteria
1. Differentiated Treatment by Coin Type
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For fiat-pegged stablecoins (e.g., USDT), apply a direct 1:1 conversion;
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For highly volatile altcoins, reference the 30-day average price prior to the incident;
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For air coins with no real value, treat only as a sentencing factor.
2. Explore a Dual-Track System: “Compensation for Loss” and “Confiscation of Gains”
In embezzlement or fraud cases, require defendants to compensate victims based on loss even if virtual currency hasn’t been cashed out; for realized profits, confiscate according to actual resale amounts.
Conclusion: Striving for Balance Between Technological Rationality and Legal Fairness
Currently, China’s criminal regulation of virtual currency remains in transition—from isolated case-by-case rulings toward unified standards. While strictly maintaining the policy line that virtual currency is not legal tender, courts increasingly recognize its property nature and economic value. Going forward, there is strong potential for achieving a balanced approach to “pricing rules” that harmonizes technological rationality, legal equity, and economic reality—striking a better balance between combating crime and protecting citizens’ assets, and between regulatory policy and technological innovation.
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