Judicial Disposal of Virtual Money: Is a price assessment needed?

1. Introduction

With the rapid development of blockchain technology and virtual currencies, the application of virtual currencies is becoming increasingly widespread globally. However, with advantages come disadvantages; the anonymity, liquidity, and decentralized characteristics of virtual currencies make them tools for criminal activities such as money laundering, online gambling, and illegal fundraising. Each year, our country sees an increasing number of criminal cases involving virtual currencies being investigated, prosecuted, and tried, and the issue of disposing of and liquidating virtual currencies (judicial disposal) in these criminal cases is gradually becoming prominent.

In judicial practice, whether a price assessment is needed for the judicial disposal of virtual currencies involved in a case has become a controversial focus for some people. On one hand, price assessment helps clarify the value of the virtual currencies involved in the case, facilitating subsequent disposal; on the other hand, the price assessment of virtual currencies may lead to disputes due to severe market fluctuations and the lack of a unified standard, and it may even touch upon regulatory red lines. The author of this article (web3_lawyer) will discuss the necessity of price assessment in the judicial disposal of virtual currencies, analyzing its current situation and challenges.

2. What is price evaluation?

Price assessment generally refers to the process in criminal cases where judicial authorities commission professional third-party institutions to determine the value, identify the attributes, or conduct technical analysis of the property involved in the case. The purpose is to provide an objective and scientific basis for the investigation, prosecution, and trial of the case, ensuring that the disposal of the involved property is legal and fair. In criminal cases, judicial assessment typically involves estimation of the value of property and technical identification of physical evidence. For example, for traditional properties such as real estate and vehicles involved in the case, judicial assessment can clarify their market value and provide a reference for recovering stolen property and enforcing property penalties.

The core role of judicial assessment lies in ensuring the fairness of judicial procedures and the reliability of evidence. Through evaluations by professional organizations, judicial authorities can obtain authoritative assessment reports, reducing the arbitrariness of subjective judgments. In addition, judicial assessment provides a quantitative basis for the disposal of assets involved in cases, helping to achieve transparency and standardization in asset disposal. However, in the emerging field of judicial disposal of virtual currencies, the applicability of judicial assessment faces new challenges.

3. The Necessity of Judicial Disposal and Price Assessment of Virtual Currencies

(1) The Current Status of Judicial Disposal of Virtual Currency

In our country, the judicial disposal of virtual currencies involved in cases is usually led by public security organs, and the disposal methods include sealing, confiscation, and liquidation. However, due to the particularity of virtual currencies, the disposal process faces multiple challenges. Firstly, virtual currencies are stored on blockchain networks, and sealing and confiscation require technical support; secondly, the prices of virtual currencies are highly volatile, and the timing of disposal directly affects the disposal outcome; finally, the lack of unified disposal standards leads to significant differences in practices across regions.

In judicial practice, most criminal cases involving cryptocurrencies will conduct price assessments of the virtual currency involved to determine its value. For example, judicial authorities may entrust third-party institutions to reference market conditions to appraise the Bitcoin, Ethereum, Tether, and other cryptocurrencies involved in the case. However, this practice is controversial in practice: on one hand, price assessments can provide a basis for determining value for disposal; on the other hand, the assessment process may be questioned due to issues such as market fluctuations and the qualifications of the assessment agency.

(2) Analysis of the Necessity of Price Assessment

Theoretically, the price assessment of virtual currencies has certain significance in judicial disposal. First, the assessment can clarify the value of the virtual currency involved in the case, providing a basis for recovering losses; second, the assessment results can serve as a reference for the execution of property penalties, ensuring that sentencing matches the criminal gains and protecting the legal rights and interests of the parties involved; finally, judicial assessment helps improve the transparency of disposal, avoiding judicial injustice caused by arbitrary handling.

However, under the current regulatory framework in China, the necessity of virtual currency price assessment is debatable. On September 15, 2021, the Notice on Further Preventing and Handling the Risk of Speculation in Virtual Currency Transactions (hereinafter referred to as the “9.24 Notice”) issued by ten departments, including the Ministry of Public Security, the Supreme People’s Procuratorate, the Supreme People’s Court, and the People’s Bank of China, clearly pointed out that virtual currencies do not have the same legal status as fiat currencies, and related trading activities are illegal financial activities, prohibiting any domestic institution from providing pricing services for virtual currency transactions. As a result, the provision of pricing services for virtual currencies may be seen as supporting virtual currency transactions in disguise, and there is a risk of crossing the regulatory red line.

In addition, virtual currency price assessment faces operational difficulties in practice. First of all, the price of the virtual currency market fluctuates drastically, and the evaluation results may be invalid in a short period of time. Secondly, it is difficult to unify the qualifications of the assessment agency and the scientificity of the assessment method, resulting in the lack of credibility of the assessment results. Finally, in the criminal defense of currency-related crimes, even if the price appraisal is accepted and accepted by the prosecution as the material accusing the party of suspected crimes, it is difficult for the appraisal report to be accepted by the defense like the traditional judicial appraisal report, and it will even trigger the defense’s complaints and reports against the appraisal agency.

Through the above analysis, the author believes that the price assessment of virtual currency can be implemented in judicial disposal, but it is not necessary.

IV. Conclusion

Although the judicial disposal of virtual currency is a very niche practical issue, it is currently receiving extensive attention from the theoretical and practical circles. In recent years, academic forums and seminars on the disposal of virtual currencies have been held, and scholars have conducted in-depth discussions on the resolution process, regulatory policies, and technical support. However, the author’s point of view is that as long as the regulatory policies represented by the “9.24 Notice” are not revised or adjusted, it will always be difficult to get rid of the dilemma of “scratching the itch” in the price assessment of the judicial disposal of virtual currencies involved in the case (and even in the entire criminal cases involving currencies). The special nature of virtual currency determines that it cannot be fully applied to the traditional model of disposing of property involved in criminal cases.

In the future, in order to promote the complete standardization of the judicial disposal of virtual currency, efforts need to be made in the following aspects: first, improve relevant laws, regulations, and regulatory policies, and clarify the procedures and standards for the judicial disposal of virtual currency; the second is to strengthen technical support and improve the ability of judicial organs to seize and dispose of virtual currencies; The third is to explore a disposal model that is in line with international standards and learn from the experience of other countries (such as directly nationalizing the virtual currency involved in the case, but the premise of doing so must be to clearly recognize the value attribute of virtual currency and weaken the negative attitude towards the “non-monetization” of virtual currency). Before the regulatory policy is loosened, although the price assessment of virtual currency has theoretical value, it should be implemented cautiously in practice to avoid touching the regulatory red line. Only with the joint promotion of policies, technologies and practices can the judicial disposal of virtual currencies gradually mature.