Are there inconsistent sentencing for similar cases involving virtual currency crimes? This summary of a seminar held by the Shanghai No. 2 Intermediate People's Court provides the answer.

Editor in Charge: Zhai Jun, Shanghai No. 2 Intermediate People's Court

Text compiled by Li Feng and Xu Hancheng

Layout Editor | Zhou Yanyu

On November 25, 2025, the fourth "Zhizheng: Theory and Practice Go Hand in Hand" Criminal Trial Seminar (click to view), jointly hosted by the China Criminal Law Research Association, the Shanghai High People's Court, the Shanghai No. 2 Intermediate People's Court, and the Law School of Renmin University of China, was held at the Shanghai No. 2 Intermediate People's Court. This seminar focused on the theme of "Unified Application of Law in Cases Involving Virtual Currency Crimes" and adopted a "2+2" discussion format combining theory and practice. The seminar content is summarized below:

Topic 1: Determination of "Subjective Knowledge" in Money Laundering Crimes Involving Virtual Currency

Case 1:

Cai, who possessed a large quantity of U-coins, learned online that someone was buying up U-coins at 10% above the market price. He then contacted the buyer and sold all his U-coins, making a profit of 1 million yuan. It was later discovered that the buyer's funds for purchasing the U-coins came from a fundraising fraud. Cai confessed that he knew the online high-priced U-coin buying was unusual.

Case 2:

Yang purchased U-coins at the normal price on a certain platform, then searched for people who wanted to exchange U-coins through the Telegram instant messaging software, and sold them at a price 5 cents higher than the market price per U-coin. Within six months, Yang conducted over 10,000 U-coin transactions with multiple individuals, profiting 1.2 million yuan. It was later discovered that 4.8 million yuan of the funds Yang obtained from selling U-coins originated from loan fraud.

In practice, there is controversy regarding how to determine "subjective knowledge" in money laundering crimes involving virtual currencies. For example, regarding Case 1 and Case 2...

The first view holds that, based on the cognitive principle that subjective experience is reflected in objective reality, the determination of subjective knowledge in money laundering should be based on a combination of the perpetrator's objective behavior and common sense. In Case 1, Cai clearly recognized the abnormality of the transaction, and the premium of U-coins significantly exceeded normal business logic. In Case 2, Yang continuously obtained stable profits using a high-frequency, small-amount, and anonymous transaction model, exhibiting typical characteristics of "money laundering through 'running points'." Combined with the quantity and frequency of U-coin transactions by Cai and Yang, it can be presumed that the two had subjective knowledge that the funds from U-coin transactions might originate from upstream crimes such as financial fraud and their profits.
The second viewpoint argues that subjective knowledge in money laundering involving virtual currencies should be comprehensively assessed. In Case 1, Cai's perception of the abnormality of the transaction does not equate to knowledge that the funds originated from the proceeds and profits of seven specific upstream crimes. In Case 2, Yang's high-frequency, small-amount transactions of U-coins, earning a small price difference, did not significantly exceed a reasonable range and did not reach the level that could be presumed as knowledge. Therefore, in the absence of evidence such as prior collusion, explicit warnings, specific instructions, or abnormal communication, and considering factors such as the transaction background, professional experience, relationship with upstream criminals, and whether reasonable due diligence was fulfilled, it is advisable to cautiously determine whether the perpetrator possessed subjective knowledge to prevent objective attribution of guilt.

The focus of the aforementioned controversy is:

First, is "subjective knowledge" still a part of the subjective intent in money laundering?
Second, how to determine the standards and methods for establishing "subjective knowledge" in money laundering crimes involving virtual currencies. After discussion, the following tentative opinions were formed:

The Amendment (XI) to the Criminal Law, which came into effect on March 1, 2021, made significant revisions to the provisions on money laundering, deleting terms such as "knowingly" from the original provisions. This is generally considered a textual adjustment made to adapt to the need for criminalizing money laundering, without changing the criminal structure of money laundering as an intentional crime, nor lowering the standard of proof for the subjective element in the elements of money laundering. According to the general provisions of the Criminal Law regarding intentional crimes and the requirement of responsibility, subjective knowledge remains an essential element of money laundering, requiring the perpetrator to subjectively know or should know that the object of their concealment or disguise is the proceeds and profits of the seven types of predicate offenses stipulated in the law. If the perpetrator genuinely does not know the source and nature of the object of their actions, then they do not constitute money laundering. Because money laundering and the crime of concealing or disguising the proceeds and profits of crime are related as special and general provisions, money laundering should take precedence when the two crimes overlap. Furthermore, if it cannot be presumed that the perpetrator should have known that the object of their concealment or disguise was the proceeds and profits of the seven types of predicate offenses, then the crime of money laundering is not constituted. However, if it can be presumed, based on abnormal behavior and other factors, that the perpetrator should have known that the object of their concealment or disguise was the proceeds and profits of crime, then the crime of concealing or disguising the proceeds and profits of crime may be constituted.

Regarding the standards and methods for determining "subjective knowledge" in money laundering crimes involving virtual currencies, the following four aspects need to be considered:

First, the subjective knowledge element of "self-laundering money" does not require special proof. If a perpetrator commits one of the seven predicate offenses stipulated in the Criminal Law and then further conceals or disguises the proceeds of crime and their profits, they are naturally aware of the source and nature of the money being laundered. However, for money laundering for others, it is necessary to determine, according to the rules of evidence, whether the perpetrator subjectively knew or should have known that the object they were concealing or disguising was the proceeds of the seven predicate offenses and their profits.
Second, the subjective knowledge in "money laundering" crimes includes two types: "knowing or should have known." It does not include "possibly knowing," and subjective knowledge cannot be determined solely by perceiving abnormal behavior. In practice, determining whether a perpetrator possesses subjective knowledge typically employs methods of corroboration of evidence and presumption of facts. The "Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Money Laundering" (hereinafter referred to as the "Interpretation on Handling Criminal Cases of Money Laundering"), which came into effect on August 20, 2024, generally follows the "rebuttable presumption of facts" model. Determining whether a perpetrator knew the source and nature of the money laundering target is primarily proven through direct evidence such as their confession, testimony from accomplices or witnesses, and communication records. Determining whether a perpetrator "should have known" relies on the "rebuttable presumption of facts" method, which involves comprehensively reviewing and judging based on the information the perpetrator accessed and received, the handling of others' criminal proceeds and profits, the type, amount, transfer, and conversion methods of the criminal proceeds and profits, abnormalities in transaction behavior and fund accounts, combined with their professional experience, relationship with upstream criminals, and other evidence in the entire case.
Third, factual presumption is not a legal fiction, but a judicial proof method that conforms to objective laws. The basic facts on which the presumption is based are usually the "antecedent" and "consequence" facts of the case, which must be verified. The basic facts cannot rely on presumption to avoid "double presumption." Based on the basic facts and evidence, common sense, common feelings, and common reasoning are used to form the presumed facts. To ensure the reliability of the factual presumption method, that is, to prevent special or exceptional circumstances from occurring, it is necessary to accurately understand and grasp the "exclusion of rebuttal evidence" rule in the "Interpretation on Handling Criminal Cases of Money Laundering." This means emphasizing giving the perpetrator the opportunity to defend, refute, or provide rebuttal evidence. If there is indeed evidence proving that the perpetrator was unaware of the source and nature of the object of the act, the presumption is not established, and the perpetrator is not legally convicted of money laundering. It should be noted that, regardless of the standard and method of determination used, in terms of the degree of knowledge, it is only necessary to prove that the perpetrator knew or should have known that the object of their money laundering originated from one of the seven types of predicate offenses. In other words, "knowing or should have known" is a general understanding of the predicate offense, and does not require the accuracy of the specific crime, let alone the level of knowledge required to "conspire" with the predicate criminals.
Fourth, in determining subjective knowledge in money laundering crimes involving virtual currencies, it is necessary to fully consider the characteristics of virtual currencies. Virtual currencies do not have the same legal status as legal tender, do not have legal tender status, and should not and cannot be used as currency in the market. Stablecoins and other virtual currencies currently cannot effectively meet the requirements for customer identification and anti-money laundering. Activities such as exchanging legal tender for virtual currencies and exchanging virtual currencies among themselves are all illegal financial activities. Therefore, in money laundering crimes involving virtual currencies, a comprehensive consideration should be given to the perpetrator's choice to transfer or convert funds through virtual currencies, as well as any abnormalities in transaction behavior, fund accounts, amounts, and frequency, especially their professional experience, the information they have access to and received, their relationship with upstream criminals, or their communication records, to correctly determine whether they possessed subjective knowledge.

Based on the above, in Case 1 and Case 2, the element of abnormal transaction behavior alone can only presume that the perpetrator was aware that the source of the funds was questionable. Further presuming that the perpetrator was aware that the funds came from one of the seven predicate offenses of money laundering requires more evidence. Therefore, the second view is more comprehensive and reasonable in judicial practice.

Topic 2: Types of Money Laundering Crimes Involving Virtual Currency and the Determination of Completed Crimes

Case 3:

Wang used his embezzled 9 million yuan to purchase U coins from cryptocurrency dealers offline in multiple transactions. He then fled overseas and, with the help of Li, who ran a virtual currency business in the United States, converted all of his U coins into US dollars. Li charged a 1.5% service fee.

Case 4:

Zhang illegally profited 50 million yuan in China through illegal fundraising and other means. To transfer his assets overseas, he conspired with Li, an overseas resident, to have Li provide money laundering services using cryptocurrency, charging a 15% commission. Zhang used dozens of bank cards to purchase an equivalent amount of U-coins, then transferred all the U-coins in his wallet to account A, registered on an overseas cryptocurrency exchange provided by Li. This transaction was recorded on the blockchain. Li then used multiple "coin mixing" and intermediary transactions to transfer the "cleaned" U-coins to account B, registered on another cryptocurrency exchange in another country. He then sold these U-coins through OTC (over-the-counter) trading, converting them into US dollars, which were then deposited into Zhang's overseas US dollar account.

In practice, there are disagreements regarding what type of money laundering is involved in transferring assets overseas via virtual currencies, and how to determine the completion of a money laundering crime. For example, regarding Cases 3 and 4.

The first viewpoint argues that when Wang transferred U-coins to a wallet under his control, and when Zhang transferred U-coins to wallet A provided by Li, both constituted "cross-border asset transfers," and were thus completed. The on-chain transfer of virtual currencies is instantaneous, technical, and borderless. Once the perpetrators converted the illicit funds into U-coins, they achieved effective control and offshore disposal of the proceeds of crime. Money laundering activities acquire cross-border characteristics from the moment the U-coins are technically transferred.
The second view holds that the crime is considered complete only when Wang and Zhang convert U-coins into legal tender. Only by successfully converting the virtual currency into a widely circulated legal tender, such as the US dollar, are the proceeds of crime truly "laundered." The previous U-coin exchange and transfer are merely intermediate steps; only when the value of the illicit funds is realized can the "laundering" be considered complete. The third view argues that the concept of physical national borders should be transcended, and the completion of "cross-border asset transfer" should be defined as the funds leaving the original jurisdiction and being under the actual control of the perpetrators. When Wang and Zhang transfer the U-coins into anonymous wallets under their control that are not subject to Chinese jurisdiction, the main harmful consequence of money laundering has occurred, and at this point, the crime is considered complete.

The focus of the aforementioned controversy is:

First, how to grasp the nature of money laundering and the standard for its completion;
Second, what type of behavior is money laundering through virtual currencies, and how is a completed crime determined? After discussion, the following tentative opinions were reached:

Regarding the nature of money laundering and the criteria for its completion, the following three aspects need to be grasped:

First, it is crucial to accurately grasp the essential nature of money laundering: "concealing or disguising the source and nature of proceeds and profits from crime." In practice, there is a misconception that money laundering is limited to "laundering black money" or "operating through financial institutions," as well as a tendency to "emphasize the method while neglecting the object." In fact, any act of concealing or disguising proceeds and profits from crime by transferring their location or changing their form constitutes money laundering. The Criminal Law explicitly evaluates money laundering separately. If, after committing the predicate offense, the perpetrator engages in money laundering activities such as transferring or changing the source or nature of proceeds and profits from crime (e.g., purchasing a house or car), thus concealing the source and nature of the proceeds and profits, and possesses the intent and act of money laundering, and this is not a natural extension of the predicate offense, it should be considered money laundering. From the perspective of proportionality between crime and punishment, it should no longer be considered solely the predicate offense.
Second, the act of concealing or disguising the proceeds and profits of crime, as required by the elements constituting the crime of money laundering, constitutes a completed crime. Whether the proceeds and profits of crime have undergone several rounds of laundering and are no longer verifiable in terms of their source and nature is relative and does not affect the determination of a completed crime.
Third, we must crack down on money laundering crimes strictly in accordance with the law and resolutely safeguard national financial security. Faced with the new situation, new changes, new methods, and new characteristics of money laundering crimes, we need to grasp the essential characteristics and subjective and objective elements of money laundering behavior amidst the complex, ever-changing, and multi-layered money laundering methods, and effectively improve the quality and efficiency of combating money laundering crimes.

Regarding the classification and completion standards of money laundering involving virtual currencies, on the one hand, the crime of money laundering adopts a "list + catch-all" legislative approach to categorize money laundering activities. Generally speaking, money laundering includes two main types of behavior: the transfer and conversion of proceeds of crime and their profits, as well as several specific methods. In practice, since most perpetrators transfer assets abroad through virtual currencies, some argue that this falls under the category of "cross-border asset transfer" money laundering. However, this understanding raises questions about how to define the "border" and how to determine the completion standard. Article 5, Paragraph (6) of the "Interpretation on Handling Criminal Cases of Money Laundering" explicitly defines the transfer and conversion of proceeds of crime and their profits through "virtual asset" transactions as one of the methods of money laundering, providing an answer to the aforementioned controversy and facilitating the determination of the completion standard for money laundering crimes involving virtual currencies.

On the other hand, according to the "Interpretation on Handling Criminal Cases of Money Laundering," transferring or converting proceeds of crime and their profits through "virtual asset" transactions constitutes a completed money laundering crime. Although virtual currencies do not possess legal tender status or legal tender status, they possess certain property attributes based on their actual exchange value, disposable nature, and related practices, and can be categorized as "virtual assets" as defined in the aforementioned interpretation. Moreover, as long as a virtual asset transaction occurs, the result is the transfer or conversion of proceeds of crime and their profits. Therefore, when a perpetrator converts illicit funds and goods into virtual currency, traditional assets become on-chain virtual assets, completing a transfer of location and a transformation of form, thus completing the money laundering crime.

Based on the above, all three viewpoints in Cases 3 and 4 have certain shortcomings. Wang and Zhang's actions constitute money laundering by transferring and converting proceeds of crime and their profits through "virtual asset" transactions. When they converted the illicit funds into virtual currency, the conversion of proceeds of crime and their profits was considered complete, and the money laundering crime was thus finished. If we consider other asset transfers and conversions, such as pooling or dispersing funds between different accounts to exchange for virtual currency, the point at which the crime was completed would be even earlier.

Topic 3: Identification of Crimes Involving Illegal Operations Related to Virtual Currency

Case 5:

Li discovered that trading virtual currencies was profitable, so he opened domestic and foreign accounts to engage in the "arbitrage" business of buying low and selling high in virtual currencies. He would buy U coins at a low price in RMB and then sell them at a high price in USD, or buy U coins at a low price in USD and then sell them at a high price in RMB. Over the years, he made a profit of RMB10 million.

Case 6:

Hu operated a virtual currency trading business in the United States. Some Chinese customers needed to exchange their U coins for US dollars, while some American customers needed to exchange their U coins for RMB. Therefore, Hu helped Chinese customers exchange their U coins for US dollars and transfer them to the overseas accounts designated by the customers. He also helped American customers exchange their U coins for RMB and transfer them to the domestic accounts designated by the customers. He collected more than RMB3 million in handling fees from this.

In practice, there is controversy regarding whether the cross-border two-way exchange of virtual currencies constitutes "disguised foreign exchange trading." For example, there are cases 5 and 6.

The first view holds that the actions of Li and Hu constitute disguised foreign exchange trading, thus constituting the crime of illegal business operations. In essence, this behavior, conducted in a cross-border context, used virtual currency as a medium to complete the exchange between RMB and USD, meeting the characteristics of disguised foreign exchange trading and severely disrupting the national foreign exchange management order.
The second view holds that Li and Hu do not constitute the crime of illegal business operations. The currency conversion via U-coin links is not directly equivalent to buying and selling foreign exchange, and Li did not have the subjective intent to help others exchange foreign exchange; he merely objectively facilitated the conversion and transfer between different currencies. Hu's business operations occurred in the United States and are permitted under local law. Since their transactions involved virtual currency rather than foreign exchange, it is inappropriate to classify them as committing the crime of illegal business operations. However, if there is evidence proving that their actions meet the elements of money laundering, they could be punished for money laundering.

The core of the aforementioned controversy lies in whether the act of exchanging RMB for foreign currency using virtual currency constitutes a disguised form of foreign exchange trading that violates national regulations, and whether, in serious cases, it can be punished as a crime of illegal business operations. After discussion, the following tentative opinions have been formed:

The crime of illegal business operations is an administrative offense. Whether the act of exchanging RMB for foreign currency using virtual currency as a medium constitutes illegal business operations disguised as foreign exchange trading requires attention to the following aspects when making a specific determination:

First, the business activities involved in the crime of illegal business operations are characterized by their regularity and profit-making nature, thus distinguishing them from non-business activities. Regularity means the activity must be continuous and repetitive, rather than occasional or one-off; profit-making emphasizes that the primary purpose is to obtain economic benefits. Regarding virtual currency trading, it is necessary to distinguish whether the perpetrator is engaged in business activities such as OTC trading, virtual currency exchange, market making, providing information intermediary and pricing services for virtual currency trading, token issuance and financing, or virtual currency derivatives trading, or whether they are engaging in non-business activities such as personal holding or speculation of virtual currency.
Second, considering the essential characteristics of the crime of illegal business operations, the substantive judgment should be made as to whether the conduct involved violates national regulations and seriously disrupts the financial market order, thus distinguishing between criminal and non-criminal conduct. For example, if an individual uses virtual currency as a medium to circumvent national foreign exchange regulations and provides others with exchange services between RMB and foreign currencies, and exhibits characteristics of business operations such as earning handling fees or exchange rate differences, this constitutes disguised foreign exchange trading outside of nationally designated trading venues, disrupting the financial market order, and if the circumstances are serious, it constitutes the crime of illegal business operations.
Third, by comprehensively considering factors such as the perpetrator's subjective cognition, objective behavior, and profit-making methods, it is crucial to accurately determine whether a crime has been committed jointly. In money laundering crimes involving complex models such as cross-border fund transfers, multi-layered nested transactions, and chain-like operations, the organization and gang nature are evident. For example, if someone knowingly helps others illegally buy or sell foreign exchange, or conspires with others in advance to facilitate the conversion of RMB and foreign currency through virtual currency transactions, and the circumstances are serious, they shall be treated as an accomplice to the crime of illegal business operations.

Based on the above, in Case 5, if Li's behavior does not exhibit characteristics of business operations and merely constitutes personal holding and speculation in cryptocurrency, it is generally not considered a crime of illegal business operations. However, if he knowingly assists others in illegally buying or selling or indirectly buying and selling foreign exchange by exchanging virtual currency, and the circumstances are serious, he should be considered an accomplice to the crime of illegal business operations.

In Case 6, Hu's behavior exhibited characteristics of regular business operations and profit-making. Moreover, knowing that others intended to exchange RMB for USD outside of state-regulated trading venues, he still provided "local currency-virtual currency-foreign currency" exchange and payment services, which constituted disguised foreign exchange trading. He illegally profited more than 3 million yuan from this, and should be considered guilty of the crime of illegal business operations.

Summary and Review

Huang Xiangqing, Deputy Director of the Social and Legal Affairs Committee of the Shanghai Municipal Committee of the Chinese People's Political Consultative Conference and former Vice President of the Shanghai High People's Court:

Firstly, regarding the determination of "subjective knowledge" in money laundering crimes involving virtual currencies, subjective knowledge is an essential element of intentional crime. There are two methods for determining subjective facts: the method of corroboration by evidence and the method of presumption of facts. When using the method of presumption of facts, it is important to give the suspect or defendant the opportunity to defend and refute their claims.
Secondly, regarding the determination of completed "cross-border asset transfers" involving virtual currencies, the standard for determining the completed form should be based on the common state at the time of the specific crime as the marker of completion. Therefore, money laundering crimes should generally be considered conduct crimes.
Thirdly, regarding the identification of crimes involving illegal business operations related to virtual currencies, firstly, the essential characteristics of the crime of illegal business operations should be emphasized, namely, the legal interests infringed upon by the crime; secondly, the completeness of the behavior should be emphasized in the specific evaluation, and conclusions should not be drawn from isolated fragments; finally, the appearance of the behavior should focus on the conformity of the constituent elements, as illegal business operations are usually characterized by stages, repetition, and illegal profit-making.

Yang Dong, Vice President of the China Securities Law Research Association and Dean of the Law School of Renmin University of China:

Firstly, regarding subjective determination, given the lack of legislation on virtual currencies and insufficient financial supervision in my country, we should take into account my country's national conditions and the spirit of relevant policies, exercise caution in using presumptions, and strictly control the scope of the determination of knowledge.
Secondly, regarding the determination of completed money laundering, the property attributes of virtual currencies should be recognized and their financial attributes denied from the perspective of a unified legal order. The completion of the crime should be marked by the substantive transformation of the form of assets obtained through crime, that is, the transfer and conversion of off-chain assets or funds to on-chain assets, and money laundering should be severely punished.
Thirdly, regarding the issue of illegal virtual currency operations, the determination of the crime of illegal operation should be based on the legislative elements, taking into account the special characteristics of virtual currency transactions such as decentralization, borderlessness, and large value fluctuations. At the same time, it should implement the policy spirit of the central bank to ban virtual currency trading platforms, accurately distinguish between the operation of trading platforms and individual trading activities that meet the needs of the public, and differentiate between illegal trading activities within the country and legal virtual currency operations abroad. This will ensure that the crime is accurately cracked down on and the risks of overseas virtual currencies are prevented from spreading to the country, while also taking into account the actual needs of the public and avoiding inappropriate expansion of the crackdown that could affect the construction of foreign-related rule of law, so that the people can truly feel the fairness and justice of the judiciary.