Different sentences for similar virtual currency crimes? This Shanghai Second Intermediate Court seminar summary provides the answer.

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Chief Editor | Zhai Jun, Shanghai Second Intermediate People’s Court

Text Compilation | Li Feng, Xu Han Cheng

Page Editor | Zhou Yanyu

On November 25, 2025, the fourth “Zhi Zheng · Theory and Practice同行” Criminal Trial Seminar (click to view), organized jointly by the Chinese Criminal Law Research Association, Shanghai High People’s Court, Shanghai Second Intermediate People’s Court, and Renmin University Law School, was held at Shanghai Second Intermediate People’s Court. This seminar focused on the theme “Legal Uniformity in Virtual Currency Crime Cases,” adopting a “Theory and Practice 2+2” discussion format. The content of the seminar is summarized as follows:

Topic 1: Determination of “Subjective Knowledge” in Money Laundering Crimes Involving Virtual Currencies

Case 1:

Cai held a large amount of U coins. He learned online that someone was purchasing U coins at 10% above market price, so he contacted the buyer to sell all his U coins, making a profit of 1 million yuan. Later, it was found that the buyer’s funds for purchasing U coins came from a fundraising fraud. Cai claimed he knew that the high-priced online purchase of U coins was somewhat abnormal.

Case 2:

Yang purchased U coins at a normal price on a platform, then used Telegram instant messaging to find people needing to exchange U coins, and sold U coins at 5 cents above the market price per coin. Over six months, Yang conducted more than ten thousand U coin transactions with multiple people, earning 1.2 million yuan. It was later found that 4.8 million yuan of his proceeds from selling U coins came from others’ loan frauds.

In practice, there is controversy over how to grasp “subjective knowledge” in money laundering crimes involving virtual currencies. Regarding Cases 1 and 2,

The first view holds that, based on the subjective understanding in relation to the objective facts, the determination of subjective knowledge in money laundering should be inferred by combining the defendant’s objective behavior and common sense. In Case 1, Cai clearly recognized the abnormality of the transaction, and the premium on U coins significantly exceeded normal commercial logic; in Case 2, Yang used high-frequency, small-amount, anonymous transactions to steadily earn profits, exhibiting typical “money-muling” laundering features. When combined with the characteristics of the quantity and frequency of U coin transactions by Cai and Yang, it can be inferred that both may have subjective knowledge that the funds involved in U coin transactions originated from upstream crimes such as financial fraud, and that their profits were derived from such criminal sources.

The second view suggests that the subjective knowledge in virtual currency money laundering crimes should be judged comprehensively. In Case 1, Cai’s perception of the abnormality of the transaction does not equate to clear knowledge that the funds come from the seven categories of upstream crimes and their proceeds; in Case 2, Yang’s high-frequency, small-amount transactions do not significantly exceed reasonable bounds, and thus do not reach the level of presumed knowledge. Therefore, in the absence of premeditated conspiracy, explicit warnings, specific instructions, abnormal communications, and other evidence, and considering factors such as transaction background, professional experience, relationships with upstream criminals, and whether reasonable review obligations were fulfilled, the defendant’s subjective knowledge should be cautiously determined to prevent objective guilt.

The core dispute in the above controversy is:

First, whether “subjective knowledge” still constitutes the cognitive content of the subjective intent in money laundering crimes;

Second, how to grasp the standards and methods for determining “subjective knowledge” in virtual currency money laundering crimes. After discussion, the following tendencies have been formed:

The Criminal Law Amendment (Eleven) effective from March 1, 2021, made significant revisions to the criminal law provisions on money laundering, removing terms like “knowing” from the original law. It is generally believed that this was a textual adjustment to meet the needs of criminalizing money laundering behavior, without changing the fact that money laundering is a crime of intent, nor lowering the standard of proof for the subjective element in the crime of money laundering. According to the general provisions of the Criminal Law on intentional crimes and the principle of responsibility, subjective knowledge remains an essential element of money laundering, requiring that the defendant knowingly or should have known that the object of concealment or disguise was the proceeds and benefits of the seven categories of upstream crimes as stipulated by law. If the defendant genuinely does not know the source and nature of the object, then the crime of money laundering is not established. Since money laundering is a special provision related to the crime of concealing or disguising criminal proceeds and their benefits, when both crimes are committed concurrently, priority should be given to applying the money laundering offense. Moreover, if it cannot be presumed that the defendant should have known that the object of concealment or disguise was the proceeds of upstream crimes, then the crime of money laundering is not established. However, based on abnormal behavior or other evidence suggesting that the defendant should have known that the object was criminal proceeds and their benefits, the crime of concealing or disguising criminal proceeds can be established.

Regarding the standards and methods for determining “subjective knowledge” in virtual currency money laundering crimes, the following four aspects should be grasped:

1. The subjective element of “knowing or should have known” in self-laundering does not require special proof. When the defendant commits one of the seven upstream crimes and further commits acts of concealing or disguising the proceeds or benefits, they obviously know the source and nature of the laundering object. For money laundering for others, it is necessary to judge whether the defendant subjectively knew or should have known that the object of concealment or disguise was the proceeds and benefits of upstream crimes based on evidence rules.

2. The subjective knowledge in “other people’s” money laundering includes two types: “knowing” and “should have known.” It does not include “possibly knowing,” nor can subjective knowledge be inferred solely from abnormal behavior. In practice, the determination of whether the defendant has subjective knowledge usually adopts evidence-based verification and factual inference methods. The “Interpretation of Several Issues Concerning the Application of Law in Handling Criminal Cases of Money Laundering” issued by the Supreme People’s Court and the Supreme People’s Procuratorate on August 20, 2024 (hereinafter referred to as the “Interpretation on Handling Money Laundering Cases”) generally adopts a “rebuttable presumption of facts” model. To establish that the defendant knew the source and nature of the laundering object, direct evidence such as confessions, co-defendants or witnesses’ testimonies, and communication records are used; to establish that the defendant “should have known,” the “rebuttable presumption of facts” method is used, which considers the information the defendant encountered, the circumstances of the criminal proceeds and benefits, their types, amounts, transfer and conversion methods, abnormal transaction behaviors, and accounts, combined with their professional experience, relationships with upstream criminals, and other evidence.

3. Factual inference is not a legal fiction but a judicial proof method consistent with objective laws. The basic facts inferred are usually the “cause” and “effect” facts of the case, which must be verified as true; basic facts cannot rely solely on inference to avoid “double inference.” Based on the basic facts and evidence, common sense, customary practices, and rational judgment are used to form the inferred facts. To ensure the reliability of factual inference and prevent special or exceptional circumstances, it is necessary to accurately understand and apply the “exclusion of evidence” rule in the “Interpretation on Handling Money Laundering Cases,” emphasizing giving defendants the opportunity to explain, rebut, or provide counter-evidence. If there is evidence proving that the defendant was unaware of the source and nature of the object, the presumption does not hold, and the crime of money laundering is not established. It should be noted that regardless of the standard and method used, proving that the defendant knew or should have known that the object of concealment or disguise was from upstream crimes only requires evidence of such knowledge; it does not require knowledge of specific crimes or collusion with upstream criminals.

4. When determining subjective knowledge in virtual currency money laundering crimes, full attention must be paid to the characteristics of virtual currencies. Virtual currencies do not have the same legal status as legal tender, lack legal enforceability, and should not and cannot be used as currency in the market. Stablecoins and other virtual currencies currently cannot effectively meet requirements such as customer identification and anti-money laundering. Engaging in activities such as exchanging legal currency and virtual currency or between virtual currencies is considered illegal financial activity. Therefore, in virtual currency-related money laundering cases, comprehensive consideration of the defendant’s choice to transfer or convert funds via virtual currencies, abnormal transaction behaviors, account details, amounts, frequency, professional experience, contact and receiving information, relationships with upstream criminals, or communication records, can lead to a correct determination of whether the defendant had subjective knowledge.

Based on the above, in Cases 1 and 2, merely relying on abnormal transaction behavior to infer that the defendant knew the source of the funds is doubtful; further evidence is needed to establish that the defendant knew the funds originated from the seven categories of upstream crimes. Therefore, the second view is more comprehensive and reasonable in judicial practice.

Topic 2: Determination of the Types and Completion Standards of Virtual Currency Money Laundering Crimes

Case 3:

Wang embezzled 9 million yuan and transferred it in multiple offline transactions to buy U coins from coin traders, then fled abroad. In the US, with the help of Li, who operated virtual currency businesses, Wang exchanged all his U coins into US dollars, with Li charging a 1.5% service fee.

Case 4:

Zhang illegally obtained 50 million yuan through illegal fundraising within China. To transfer assets abroad, he agreed with Li overseas to provide money laundering services via virtual currency, charging a 15% commission. Zhang used dozens of bank cards to buy equivalent U coins with the 50 million yuan, then transferred all U coins in his wallet to an account “A” registered with an overseas virtual currency exchange provided by Li. This transaction left a record on the blockchain. Li further used multiple “mixing” and relay methods to “clean” the U coins and transferred them into an account “B” on a virtual currency exchange in another country, then sold them off-market for USD, depositing the proceeds into Zhang’s overseas USD account.

In practice, there is disagreement over what type of money laundering involves transferring assets abroad via virtual currencies and how to determine the completion of the crime. Regarding Cases 3 and 4,

The first view holds that when Wang transfers U coins to his controlled wallet, and Zhang transfers U coins to Li’s provided wallet “A,” both constitute “cross-border asset transfer” and are considered completed. Virtual currency transfers on the blockchain are instantaneous, technical, borderless, and once the defendant exchanges illicit funds into U coins, they effectively control the criminal proceeds and offshore assets. The money laundering behavior is technically completed at the moment of U coin transfer.

The second view holds that the crime is only completed when Wang and Zhang convert U coins into legal currency. Only when virtual currency is successfully converted into widely accepted legal tender, such as USD, are the proceeds truly “laundered.” The previous exchanges and transfers are intermediate steps; only when the value of the illicit funds is realized does the “cleaning” complete. A third view suggests that the concept should transcend physical borders, considering the transfer of funds outside the original jurisdiction and under the defendant’s actual control as the completion standard for “cross-border asset transfer.” When Wang and Zhang transfer U coins into anonymous wallets outside China’s jurisdiction, the main harmful result of money laundering has already occurred, and at this point, the crime is considered complete.

The core dispute in the above is:

First, how to grasp the essence of money laundering behavior and the completion standard;

Second, what type of behavior money laundering via virtual currency belongs to, and how to determine the completion of the crime. After discussion, the following tendencies are formed:

Regarding the essence of money laundering and the completion standard, three aspects should be considered:

1. Accurately understanding the criminal essence of “concealing or disguising the source and nature of criminal proceeds and benefits.” In practice, there are misconceptions that limit money laundering to “whitewashing black money” or “banking operations,” and a tendency to focus on methods rather than objects. In fact, any act of transferring, converting, or otherwise disguising or concealing the source and nature of criminal proceeds and benefits constitutes money laundering. The Criminal Law explicitly evaluates self-laundering separately. If the defendant, after committing upstream crimes, further conducts transfer or conversion acts such as purchasing property or vehicles to hide the source and nature of the proceeds, with intent and behavior of money laundering, it should be recognized as money laundering, not merely a natural extension of upstream crimes. From the perspective of proportionality of guilt and punishment, it should not be limited to only the upstream crime.

2. The acts of concealing or disguising the source and nature of criminal proceeds and benefits, as stipulated in the crime of money laundering, are acts of the crime’s completion. Whether the proceeds and benefits have undergone multiple rounds of laundering and whether their source and nature can still be verified are relative issues and do not affect the determination of the crime’s completion.

3. Strictly cracking down on money laundering crimes is necessary to safeguard national financial security. In the face of new situations, changes, methods, and features of money laundering, it is essential to grasp the essential characteristics and subjective-objective elements of money laundering behaviors within complex, layered, and nested methods, to effectively improve the quality and efficiency of combating money laundering.

Regarding the classification and completion standards of virtual currency money laundering, on one hand, the crime of money laundering adopts a “list + bottom-line” legislative approach, classifying types of money laundering behaviors. Overall, money laundering includes two main types: transferring and converting criminal proceeds and benefits, along with several specific methods. In practice, since most behaviors involve transferring assets abroad via virtual currencies, some believe it belongs to “cross-border asset transfer” type of money laundering. However, this understanding raises issues about how to define borders and grasp the standard of completion. The “Interpretation on Handling Money Laundering Cases” Article 5, Item (6), explicitly states that transferring or converting criminal proceeds and benefits through “virtual asset” transactions is one of the methods of money laundering, providing an answer to the above disputes and facilitating the determination of the completion standard for virtual currency money laundering.

On the other hand, according to the “Interpretation on Handling Money Laundering Cases,” transferring or converting criminal proceeds and benefits through “virtual asset” transactions constitutes the completion of money laundering. Although virtual currencies lack legal tender status and enforceability, based on their actual exchange value, disposability, and practical use, they possess certain property attributes and can be classified as “virtual assets” as defined in the interpretation. Moreover, once a virtual asset transaction occurs, the transfer or conversion of criminal proceeds and benefits is realized. Therefore, when the defendant exchanges illicit funds into virtual currency, the traditional assets become on-chain virtual assets, completing position transfer and form conversion, and the crime of money laundering is considered completed.

Based on the above, the three viewpoints in Cases 3 and 4 all have shortcomings. When Wang and Zhang exchange illicit funds into virtual currency, the act of converting proceeds and benefits is completed, and the crime of money laundering is considered fulfilled. If the defendant further conducts transfer or conversion behaviors such as gathering or dispersing funds across different accounts, the point of completion may be earlier.

Topic 3: Determination of Illegal Virtual Currency Business Crimes

Case 5:

Li discovered that virtual currency trading was profitable, so he opened domestic and overseas accounts dedicated to “arbitrage” by buying low and selling high, engaging in “virtual asset arbitrage” business, purchasing U coins with RMB at low prices and selling at high prices in USD, or buying U coins in USD at low prices and selling at high prices in RMB, earning a profit of 10 million yuan over several years.

Case 6:

Hu operated virtual currency trading in the US. Some Chinese clients needed to exchange USD, and some US clients needed to exchange RMB. Hu helped Chinese clients convert U coins into USD and transfer to overseas accounts, and helped US clients convert U coins into RMB and transfer to domestic accounts, charging over 3 million yuan in fees.

In practice, there is controversy over whether behaviors involving cross-border two-way exchange of virtual currencies constitute " disguised foreign exchange trading," and whether such acts should be prosecuted as illegal business activities. Regarding Cases 5 and 6,

The first view holds that Li and Hu’s behaviors both constitute disguised foreign exchange trading, and should be prosecuted for illegal business. Essentially, under the cross-border context, using virtual currencies as a medium to complete RMB-USD exchange fits the characteristics of disguised foreign exchange trading, severely disrupting the national foreign exchange management order.

The second view holds that Li and Hu do not constitute illegal business. The currency conversion behaviors linked through U coins are not directly equivalent to foreign exchange trading, and Li has no subjective intent to help others exchange foreign currency, merely objectively causing conversion between different currencies; Hu’s business activities in the US are permitted by local law. Their transactions involve virtual currencies, not foreign exchange, and should not be prosecuted as illegal business. If evidence shows their conduct meets the elements of money laundering, they can be prosecuted for that crime.

The core dispute is: whether behaviors using virtual currencies as a medium to realize RMB and foreign currency exchange violate national regulations on disguised foreign exchange trading, and whether they should be criminally punished as illegal business activities if the circumstances are serious. After discussion, the following tendencies are formed:

Illegal business crime is an administrative offense. Whether behaviors involving virtual currency as a medium to realize RMB and foreign currency exchange constitute disguised foreign exchange trading as illegal business requires attention to the following aspects:

1. The characteristic of business in illegal business crime involves habituality and profit-making, distinguishing it from non-business activities. Habituality refers to the need for continuous and repeated conduct, not occasional or one-time; profit-making emphasizes the primary purpose of obtaining economic benefits. For virtual currency transactions, it is necessary to distinguish whether the behavior involves OTC off-market trading, virtual currency exchange, market-making, providing information or pricing services, token issuance and financing, or derivative trading, or merely holding coins and speculating.

2. Combining the essential features of illegal business crime, the substantive judgment should be whether the behavior violates national regulations and seriously disrupts financial market order. For example, if the defendant uses virtual currency as a medium, bypasses foreign exchange controls, provides RMB-foreign currency exchange services for others, and earns fees or spreads, it constitutes disguised foreign exchange trading outside the regulated trading venues, disrupting financial order, and if circumstances are serious, it should be recognized as illegal business.

3. Based on the defendant’s subjective cognition, objective conduct, and profit methods, accurately determine whether it is a joint crime. In complex money laundering schemes involving cross-border transfers, layered transactions, and chain operations, organized and gang-like behaviors are evident. If it is known that others are illegally buying or selling or disguising foreign exchange, or colluding beforehand, and helping others realize RMB-foreign currency value conversion through virtual currency transactions, and circumstances are serious, it should be prosecuted as an accomplice in illegal business.

Accordingly, in Case 5, if Li’s behavior lacks the characteristics of business and is merely personal holding or speculation, it generally does not constitute illegal business. But if he knowingly assists others in illegal or disguised foreign exchange trading, and circumstances are serious, he should be recognized as an accomplice.

In Case 6, Hu’s conduct exhibits habituality, profit-making, and other business features, and he knowingly provides “domestic currency-virtual currency-foreign currency” exchange and payment services outside the regulated trading venues, constituting disguised foreign exchange trading, illegally profiting over 3 million yuan, and should be recognized as illegal business.

Summary and Comments

Huang Xiangqing, Deputy Director of the Shanghai CPPCC Social and Legal Committee and former Vice President of Shanghai High Court:

1. Regarding the determination of “subjective knowledge” in virtual currency money laundering crimes, subjective knowledge is an essential element of intentional crimes. There are two methods for establishing subjective facts: evidence-based verification and factual inference. When applying factual inference, attention should be paid to providing defendants with opportunities to explain and rebut.

2. Regarding the completion of “cross-border asset transfer” in virtual currency cases, the standard should be based on the common state of the crime at the time of occurrence. Therefore, money laundering crimes are generally considered conduct crimes.

3. Regarding the recognition of illegal virtual currency business crimes, firstly, the essential features of illegal business crime should be emphasized, especially the legal interests it infringes upon; secondly, in specific evaluation, the integrity of the conduct should be considered, avoiding conclusions based on fragments; finally, the appearance of the conduct should match the elements, and illegal business activities usually have stages, repetition, and illegal profit motives.

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

1. On subjective recognition, in the absence of legislation and insufficient financial regulation regarding virtual currencies in China, it is necessary to cautiously use presumptions and strictly control the scope of “knowing” based on national conditions and policy guidance.

2. Regarding the completion of money laundering, it should be recognized from a unified legal order perspective that virtual currencies possess property attributes and deny their financial attributes, with the substantive transformation of proceeds—such as transfer or conversion from off-chain assets to on-chain assets—as the indicator of completion, strictly cracking down on money laundering.

3. On illegal virtual currency business, the recognition should start from legislative elements, considering the decentralization, borderless nature, and high volatility of virtual currency transactions, while implementing the policy of banning virtual currency trading platforms. It is important to distinguish between platform operations and individual transactions that meet public needs, and to separate illegal domestic transactions from legal foreign virtual currency operations, ensuring precise criminal suppression, preventing risks from abroad, and considering public needs to avoid excessive suppression affecting foreign-related legal development, so that the public can truly feel the fairness and justice of the judiciary.