How to reduce the illegal income in the currency circle criminal case 3.0? How are reasonable expenses deducted?

Question

I don’t know if Web 3.0 will come, but criminal case 3.0 in the currency circle is definitely coming.

I started to specialize in the criminal defense of the currency circle in 2019. The general intuitive feeling is that before the plustoken case, it can be called **Currency circle criminal case 1.0. **At that time, the public prosecutors and law investigators were repelled by the currency-related cases, so The defense work is also relatively easy, and there are many cases where arrests and prosecutions are not approved. The Plustoken case is a turning point. After a while, it can be called **Currency Criminal Case 2.0. ** has two notable features. One is that very few regions are more "enthusiastic" about currency-related cases; I have a certain understanding, and I often talk on the phone with the case-handling staff during the defense. Judging from the results of the cases I have undertaken, the innocence defense can still achieve good results in general, especially in the stage of transfer for review and prosecution, and evidence has been obtained in many cases Insufficient do not prosecute. One year after the "924" notice was promulgated and fermented, starting from the second half of 2022, criminal cases in the currency circle have ushered in the 3.0 era. In addition to the introduction of the new judicial interpretation of illegal fund-raising, the application of laws has been continuously broken through, and the connection between execution and case handling has opened up, leaving little room for innocence defense. Of course, this is also related to the cases I represent. Exchanges, hackers stealing coins, and job-related crimes in the currency circle are the main ones, and some traditional cases of helping letters, concealing, and disbelief have long since ceased to be represented.

I always believe that the role of a lawyer is to assist the client to find the best solution, and the client's freedom cannot be sacrificed for the defense of innocence. In the era of currency criminal case 3.0, no matter how many criticisms lawyers have, they want to make complaints about it (I plan to write a special article later, so that this article with a bit of technical content can survive), **We should still fight for the rights and interests of the parties within the legal framework , **If there is no room for a crime, then you should actively seek the interests of property criminals, so I summarized this article, which is the opinion of many cases and multiple cases that I have represented and adopted by the procuratorate and the court. Case handling helps.

1. Legal basis (insiders can skip this part directly)

In my country's criminal law and criminal procedure law, there is no clear provision on whether the reasonable cost of crime should be deducted, but through relevant legal documents, we believe that some crimes should be accurately calculated in the application process of illegal income, adopting the "profit theory", for reasonable The cost, the deduction of the deduction, the deduction of the deduction.

The crime of illegal business operation. According to the "Research Opinions of the Research Office of the Supreme People's Court on the Determination of "Illegal Gains" in the Crime of Illegal Business Operations", relevant departments have sought opinions from the Research Office of the Supreme People's Court on the determination of "illegal gains" in the crime of illegal business operations. The Research Office of the Supreme People's Court believes after research: "The "illegal gains" in the crime of illegal business operations should refer to the amount of profits, that is, the total income obtained by the perpetrator from illegally producing and selling goods or providing services (that is, the amount of illegal business operations) , the remaining amount after deducting the reasonable expenses directly used in business activities."
The crime of illegally absorbing public deposits. According to the new judicial interpretation of illegal fund-raising, the amount of fund-raising fraud... advertising fees, intermediary fees, handling fees, kickbacks paid by the perpetrators for the implementation of fund-raising fraud activities, or expenses such as bribery and gifts, shall not be deducted. We believe that this judicial interpretation focuses on prohibiting the deduction of reasonable expenditures for the crime of fund-raising fraud. From another perspective, it should be considered that reasonable expenditures for the crime of illegally absorbing public deposits should be deducted. It is difficult to consider expenses such as gifts as reasonable expenses.
Other judicial interpretations supporting the "profit theory" of illegal gains: First, the Supreme People's Court issued the "Reply on How to Determine the Amount of Illegal Gains" in the Trial of Criminal Cases of Manufacturing and Selling Counterfeit and Inferior Products issued by the Supreme People's Court to the Higher People's Court of Hubei Province in 1995 "clearly: "The "amount of illegal income" stipulated in the Standing Committee of the National People's Congress "Decision on Punishing the Crime of Producing and Selling Fake and Inferior Commodities" refers to the amount of profit from the production and sale of fake and shoddy products." Second, Article 17 of the Interpretation of Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Publications issued by the Supreme People's Court in 1998 clearly states: "The 'amount of illegal gains' mentioned in this Interpretation refers to the amount of profit". Third, Article 10 of the Interpretation on Several Issues Concerning the Specific Application of Laws in Criminal Cases of Insider Trading and Leakage of Insider Information issued by the Supreme People's Court and the Supreme People's Procuratorate in 2012 clearly states: "...Illegal gains refer to those obtained through insider trading. gain or avoid loss.” (Excerpt from the Internet)
MLM cases are common crimes in the currency circle, but judging from the author’s experience in representing such cases, the defendant is always held accountable for the amount involved, so it does not involve the issues mentioned in this article.

2. Illegal income reduction

**1. Repurchase. **Based on complying with the regulations of the white paper, or in order to stabilize the currency price, the project party usually promises to repurchase at a percentage of profit. This act was necessary, so the defender believed that although this part of the profit was obtained for a short time, it was immediately spent and should be deducted from the illegal income. (Of course, this part of the content still needs to be discussed in detail in order to be adopted by the judiciary in the actual defense, the same below)

**2. Destroy. **Essentially similar to repurchase, everyone understands it, so I won’t discuss it too much. Common deflation methods are aimed at maintaining currency prices, and some of them have been hard-coded in the contract. Interests shall be deducted from the illegal income.

**3. Rebate. **Commission rebate has the nature of advertising to a certain extent, and should be deducted from reasonable expenses. However, from the perspective of general operation in the circle, the rebate is also stated through procedures and mechanisms. The exchange cannot obtain this benefit and should be included in the illegal income be deducted.

**4. Pledge. **In the new judicial interpretation of illegal fundraising, the act of "virtual currency transactions" has been added, but not all virtual currency transactions constitute non-absorption. From the perspective of the four characteristics of "non-absorption", it is determined that the currency circle is non-absorption, "Incentive" is the most important thing. Some projects promise income only by pledge. Therefore, the calculation of illegal income should be based on the pledged amount, and other items should be deducted.

3. Deduction of reasonable costs

**1. Human cost. **In any project, labor costs account for a large part of the cost expenditure, so it is of great significance to strive for the deduction of this part. There are many existing cases that prove that in non-absorption and business crimes, the deduction of labor costs All received support, indicating that in related criminal activities, labor costs are indeed reasonable and necessary expenditures, specifically including wages, social security, provident funds, year-end bonuses, etc. In practice, it is often difficult to get support for project dividends.

**2. House rental cost. **Like labor costs, housing rental costs are reasonable and necessary expenditures for the project. Once paid, they will be lost forever. Therefore, when calculating illegal income, housing rental costs should also be deducted.

**3. Service fee. **Service fees include a wide range of content, mainly including servers, tools, SMS, and other types. Commonly used servers include Alibaba Cloud, AWS, Cloudflarle, etc., which are the core equipment that supports the operation of the exchange , so the cost of renting the server should be deducted. In addition, the interaction between the exchange and users, SMS service is also essential. In addition, the necessary tools include Zendesk, Travis, Google, Ipinfo, Coveralls, Github, Crowdin, etc.

**4. Purchase mining machines and pledge coins. **Some projects, such as computing power mining, pledge mining, etc., need to purchase a large number of mining equipment, and some require the mode of mining machine + pledged coins to produce coins. In this case, in order to operate normally, the project party must The purchase of equipment and pledged coins is a necessary expenditure, so this part of the expenditure should be deducted.

**5. Marketing advertising and public relations expenses. **If a project wants to gain popularity and popularity, it needs to invest a lot of advertising expenditure, including project public relations expenses, etc., to attract users to participate, so this expenditure should be recognized as reasonable and necessary expenditure.

**6. Intermediary service fee. **Mainly refers to related work completed by third-party companies, such as security audit, kyc certification, outsourcing services, etc.

**7. Office costs. **In order to maintain the normal operation of the project, a large amount of office costs are required, such as hardware equipment such as computers, house decoration design, electricity expenses, etc. In practice, some judicial organs did not adopt this opinion on the grounds that hardware equipment, house decoration, etc. were spent but not lost. Involving mining projects, the proportion of electricity expenses is relatively large, and the possibility of adoption by judicial organs is relatively high.

**8. Based on the necessary external investment of the project. **Foreign investment can also be understood as expenditure on advertising and publicity, but in practice the judiciary often does not adopt it.

4. Other issues that should be noticed

Whether it is the deduction of illegal income or the deduction of reasonable costs, it needs to be supported by objective evidence. For the understanding of evidence and the standard of evidence, it is recommended to communicate with the judiciary.
When calculating illegal income and reasonable costs, since legal currency and virtual currency are involved, legal currency also involves RMB and foreign currency, and the exchange rate has fluctuated greatly in just over half a year, a lawyer should propose a plan that is more beneficial to the client and persuade the judicial authorities to support it , For example, the exchange rate of RMB to US dollar varies from the lowest price displayed on different official websites, so it is necessary to submit the official website price that is most beneficial to the parties to the judiciary.
When disposing of virtual digital currency, focus on whether the otc price is a positive premium or a negative premium to the RMB exchange rate, and choose a favorable disposal method. When foreign exchange is settled overseas and returned to China, you can strive for a higher price according to the foreign exchange rate, but basically it will be calculated according to the foreign exchange purchase price.
The law is lagging and limited, and it is applied by specific case-handling personnel. Especially in pleading guilty and pleading guilty to fight for property rights and interests, lawyers have to run errands, communicate frequently, and come up with reasonable and evidence-based solutions in order to strive for the maximum benefit for the parties. rights and interests.

I always want to talk about something, later.