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

Introduction

Since the introduction of relevant regulatory policies in 2021, China's attitude towards Virtual Money has become clearer: it does not prohibit citizens from investing, but does not provide legal protection, and individuals bear the risks themselves. Virtual Money is not regarded as legal tender and should not circulate in the market. This has complicated the handling of disputes related to Virtual Money in judicial practice. The difficulty of civil case filing has increased, while the standard of proof for criminal case filing is quite high.

However, the recognition of the property attributes of mainstream Virtual Money by judicial authorities is on the rise. Sometimes, there are even extreme cases where pure investment disputes are treated as criminal cases. Therefore, it becomes particularly important to clearly distinguish between "civil disputes" and "criminal offenses." This article will analyze this issue in depth through a specific case.

I. Case Overview

A public judgment from the Intermediate People's Court of Foshan City, Guangdong Province ((2024) Yue 06 Criminal Final 300) reveals a typical case. Between May and June 2022, the defendant Ye certain falsely created investment projects, promised high returns, and induced multiple victims to invest, totaling 2.5 million yuan (including 500,000 equivalent in USDT).

After Ye obtained the funds, he used most of it for personal consumption and repaying debts. When he was unable to pay the interest and return the principal, the victims reported to the police. After hearing the case, the court determined that Ye committed fraud and sentenced him to 11 years in prison in the first trial, with the second trial upholding the original verdict.

The defendant and their defense lawyer argue that this is a private lending relationship and question the lack of sufficient evidence to prove that virtual money worth 500,000 yuan was received. However, these views were not accepted by the court.

2. From "Civil Dispute" to "Criminal Fraud": What Are the Criteria for Determination?

The key to distinguishing "civil disputes" from "criminal fraud" lies in whether the perpetrator has the subjective intent of illegal possession, as well as whether they have objectively engaged in deceptive behavior.

In this case, the court's main basis for determining that Ye某某 constituted the crime of fraud includes:

1. The defendant admits to using part of the investment funds to repay debts.
2. Some funds are used for personal lending and investing in Virtual Money.
3. Purchase a Mercedes-Benz sedan the day after receiving an investment of 1 million yuan.
4. There are existing foreign debts when receiving the investment funds, and there is no property.
5. The monthly income is insufficient to pay the car loan, resulting in a deficit.
6. Create false Virtual Money transfer records to deceive the victim, and did not actively repay before the incident.

These factors combined are sufficient to support the court's ruling. Unless the defendant can provide evidence of genuine investment, it is difficult to refute.

III. Court Determination: Virtual Money Can Be Used as a Target for Fraud

In this case, the court recognized USDT valued at 500,000 yuan as the object of fraud. Although the defense lawyer questioned the inability to prove the receipt of Virtual Money, the court determined the facts for the following reasons:

1. The WeChat chat records show that the defendant confirmed receipt of USDT.
2. The defendant acknowledged in the record that they received Virtual Money.

The court believes that virtual money has the possibility of management, transferability, and value, and can serve as an object of crime for fraud.

IV. Practical Judgment: If an investor is deceived, is it definitely a scam?

Not all investment losses constitute fraud. In judicial practice, the determination of whether a fraud crime has occurred usually considers the following factors:

1. Does the actor have the "purpose of illegal possession"?
2. Are there any acts of fabricating facts or concealing the truth?
3. Did the victim "dispose of property based on a misunderstanding"?
4. Are the flow and use of funds real and legal?

These standards help distinguish between genuine business failures and intentional fraudulent activities.

V. Conclusion

The virtual money investment field presents both opportunities and risks. From a judicial practice perspective, related disputes show a complex trend of "civil and criminal intertwining." For investors, it is important to remain vigilant, make cautious decisions, and avoid being misled by claims of "insider information" or "guaranteed profits."

Once losses are incurred, one should rationally assess the avenues for rights protection and choose civil litigation or criminal case filing based on the specific circumstances. Only by developing within regulations can a balance between technological advancement and legal protection be achieved.