Crypto world insider coin theft case: Disputes over the nature of encryption assets

Recently, a bizarre theft case occurred in the cryptocurrency realm, sparking widespread discussion about the legal attributes of encrypted assets. This article will provide a detailed account of the ins and outs of this case and explore the judicial practice issues it has revealed.

Case Review

In May 2023, a Shanghai resident named Ou discovered that the encryption coins worth millions stored in a certain cryptocurrency wallet had suddenly disappeared. After investigation, Ou found that someone had transferred all of them away a month ago. Further analysis revealed that there was a "backdoor" program in the wallet that could automatically obtain the private key.

With the assistance of technical personnel, Mr. Ou successfully tracked down information on a suspicious criminal suspect. In August 2023, Mr. Ou submitted a criminal complaint to the public security authorities and successfully filed a case. Subsequently, the criminal suspects Liu, Zhang 1, and Dong 2 were successively captured.

Case Details

According to the court ruling, the defendants Liu, Zhang 1, and Dong 2 are senior developers at a certain encryption currency platform. From March to May 2023, the three conspired to implant a "backdoor" program in the wallet to illegally obtain users' private keys and mnemonic phrase data.

The division of labor is clear among the three: Liu is responsible for writing the request logic code; Zhang1 is in charge of building the server and database; Dong2 is responsible for purchasing the domain name and encrypting user private keys. They illegally obtained a total of 27,622 mnemonic phrases and 10,203 private keys, involving 19,487 wallet addresses.

However, an unexpected turn occurred during the investigation of the case. The prosecutor discovered that someone else had actually transferred the cryptocurrency of Ou. It turned out that Zhang 2, who had worked on the same platform, had implanted a similar backdoor program in another wallet as early as July 2021. In April 2023, Zhang 2 used the illegally obtained data to transfer Ou's cryptocurrency into his own wallet.

Judgment Results and Disputes

Finally, the People's Court of Xuhui District, Shanghai, sentenced Liu, Zhang 1, and Dong 2 to three years of fixed-term imprisonment and fined them thirty thousand yuan for the crime of illegally obtaining data from a computer information system. After Zhang 2 compensated part of the losses and obtained the victim's understanding, he was sentenced to three years of fixed-term imprisonment and fined fifty thousand yuan.

However, this ruling has sparked controversy. Some believe that the punishment for the insider carries the suspicion of being "harsh when picking up, lenient when putting down," with significant disputes over conviction and sentencing. This seems to reflect the divergence in our country's judicial authorities regarding the nature of encryption assets.

Legal Qualification Disputes of Encryption Assets

Through the analysis of relevant case studies in recent years, it is found that the courts in our country have two viewpoints on the characterization of encryption assets:

1. Crypto assets are not property: It is believed that crypto assets are incorporeal and cannot be the subject of crimes related to property infringement.

2. Encryption assets are property: It is believed that although encryption assets are data, they possess the core attributes and value of property and should fall within the protection scope of criminal law.

In recent years, the view that "crypto assets are property" has gradually become mainstream, and most case law has substantively recognized that crypto assets have property attributes.

Controversy of Conviction

In this case, the court convicted four defendants of the crime of illegally obtaining data from a computer information system, which is a controversial characterization. Some argue that the crime of embezzlement more accurately reflects the defendants' subjective intent and objective behavior.

According to the criminal law, the crime of embezzlement refers to the behavior of personnel within a unit who take advantage of their position to illegally occupy the property of the unit. The four defendants were all former employees of the platform, who, during their tenure, exploited their positions to implant "backdoor" programs in order to steal users' encryption assets.

It is worth noting that the sentencing range for the crime of embezzlement is much higher than that for the crime of illegally obtaining data from a computer information system. If the amount involved in this case is taken into account, the sentencing outcome may vary significantly.

Conclusion

This case not only reveals the complexity and risks in the encryption asset field but also exposes the discrepancies in our country's legal characterization of encryption assets. Although the case was ultimately solved and some losses were recovered, the controversies surrounding sentencing highlight the necessity for the law to keep pace with the times. With the development of blockchain technology and the encryption asset market, we hope that future laws can more precisely define the legal attributes of encryption assets, providing clear and unified guidance for judicial practice.