In a recent write-up, a defendant named “Li” was convicted of theft for having stolen cryptocurrency from his previous company following his firing. Li had resigned from the company on May 31 due to underperformance after a probation period. The defendant used his knowledge of the private key and payment password from his previous company’s ‘Haode Star’ project to complete the theft.
The cryptocurrency that Li stole was mainly through the company’s imToken wallet. Li took 3 ETH and 4 million Haode coins on June 20, 2019. About a month later, he also stole 0.4 ETH from the account again. He transferred the cryptocurrency and Haode coins to his account in OKEx and imToken.
The assessed amount of damages was 6000 Chinese yuan, and after the crime, Li was asked to return all the stolen Haode coins and 0.4 ETH to his previous company. Li was sentenced to seven months’ imprisonment and a fine of 2000 Chinese yuan. According to the case documents, the crypto assets represented by ETH had economic value as real “property” since they could be traded publicly with a demonstrable market value.
China’s Long History Regulating Cryptocurrency
In 2017, China banned Initial Coin Offerings (ICO’s). Under the rules, ICOs that raise cryptocurrencies such as Bitcoin and Ethereum through the irregular sale and circulation tokens were strictly prohibited.
The following year, China’s Leading Group of Internet Financial Risks Remediation reportedly requested that local governments remove existing preferential policies for Bitcoin mining companies in terms of electricity prices, taxes, or land use, and guide the orderly exit of such companies from the Bitcoin mining business. The localities were required to submit regular reports on Bitcoin mining operations in their jurisdictions.
In 2018, China’s central bank, the PBOC announced its interest in considering issuing its digital currency and announced that it had completed test runs on the algorithms in 2017.
However, in 2018 when there was another legal arbitration matter between two people in Shenzhen around Bitcoin, the courts decided that Chinese laws and regulations do not prohibit private ownership and legal transfer of bitcoin.
The case stated that Bitcoin is not a legal currency and does not prevent it from being protected by law as property. However, Bitcoin has property attributes, can be controlled and controlled by human resources, has economic value, and can bring economic benefits to the parties.
The judgments foretell a possible shift in the attitude of Chinese regulators who distinguish Ethereum and Bitcoin as property but not legal currency due to lack of government involvement. It remains to be seen whether China’s PBOC will issue its digital currency in 2020 or 2021 in a landmark move. If the PBOC chooses to do so, it remains to be seen whether their acknowledgment of Bitcoin and Ethereum as valid property may change in the process.