Upstream Offenses of the Crime of Aiding Information Network Criminal Activities Must Be “Crimes Committed by Means of Information Networks”—Taking Illegal Business Operations Involving Foreign Exchange Trading via Virtual Assets as an Example (Part II)
Abstract:
If your relatives or friends are charged with the crime of aiding information network criminal activities for exchanging foreign currency via virtual assets, providing accounts, or assisting in fund transfers, the key issue is not whether there were WeChat chats, Telegram communications, or online banking transfers in the case, but rather how the upstream foreign exchange transactions were actually completed. This article further analyzes three operational models of foreign exchange trading to point out that the use of WeChat, Telegram, online banking, or virtual assets does not equate to committing crimes by means of information networks. The prosecution must also prove that core processes such as fund matching, receipt and payment, and settlement relied on the internet for completion. This prevents investigative authorities from directly recharacterizing the offense as the crime of aiding information network criminal activities when evidence for illegal business operations is insufficient, thereby allowing defense counsel to seek non-prosecution or acquittal for their clients.
Keywords:
Crime of Aiding Information Network Criminal Activities, Crimes Committed by Means of Information Networks, Foreign Exchange Trading via Virtual Assets, Crime of Illegal Business Operations, Determination of Upstream Offenses
Special Disclaimer:
This article is an original work by Attorney Shao Shiwei. It represents only the personal views of the author and does not constitute legal consultation or legal advice on specific matters. For article reprinting, legal consultation, or professional exchanges, please contact: 13262718713 (same number for WeChat).
Introduction:
The crime of aiding information network criminal activities appears simple on the surface but proves highly complex upon closer examination. Its simplicity lies in the overly concise wording of the statutory provisions; its complexity arises from the diverse scenarios encountered in judicial practice, where the law fails to elaborate on several key concepts, leading to controversies in application.
The above reflects Attorney Shao’s recent experience while handling a case involving suspected illegal business operations through foreign exchange trading using virtual assets.
In this case, after prolonged negotiations and strategic engagement, the prosecution ultimately accepted Attorney Shao’s argument that the evidence was insufficient to establish the crime of illegal business operations. However, after both sides reached consensus on this point, further discussions gave rise to a new divergence—the prosecution maintained that even if the conduct did not constitute illegal business operations, it should still be characterized as the crime of aiding information network criminal activities.
In this regard, the author believes that insufficiency of evidence for illegal business operations does not justify downgrading the charge to the crime of aiding information network criminal activities as an alternative. The crime of aiding information network criminal activities has its own independent and complete constitutive elements.If the upstream offset foreign-exchange transactions do not constitute "crimes committed by others using information networks," the offense of aiding information network criminal activities cannot be established; based on the existing facts and evidence in this case, the client does not commit any crime.
Accordingly, this raises the issue to be discussed in this article:
Although the upstream crimes used WeChat, Telegram, online banking, or virtual assets, do they necessarily constitute "crimes committed using information networks" as prescribed in Article 287-2 of the Criminal Law? What conditions must the upstream offset foreign-exchange transactions meet to qualify as information network crimes for purposes of the offense of aiding information network criminal activities?
l Author of this article: Attorney Shao Shiwei
Part I of this article, entitled "The Upstream Crime of Aiding Information Network Criminal Activities Must Be a 'Crime Committed Using Information Networks'—Taking Illegal Business Operations Involving Virtual Asset-Based Foreign Exchange Transactions as an Example (I)," proceeds from the systematic position and structural composition of Article 287 of the Criminal Law to demonstrate that the upstream crime of aiding information network criminal activities must be a "crime committed using information networks," wherein the information network plays a core role in the actus reus, rather than merely appearing incidentally during the commission of the crime. Based on this criterion, we now return to the core issue in this case: whether the upstream offset foreign-exchange transactions constitute "crimes committed using information networks."
V. For Offset Foreign-Exchange Transactions Involving Virtual Assets, It Is Necessary to Examine the Specific Functions Performed by the Network
Returning to the core issue in this case. Whether the upstream offset foreign-exchange transactions constitute "crimes committed using information networks" cannot be determined in a one-size-fits-all manner; it is necessary to look through the modus operandi to ascertain how the core actus reus of the crime is carried out. The actus reus of the crime of illegal business operations involving illegal foreign exchange trading consists of the receipt, payment, and settlement of funds—namely, the separate receipt and payment of RMB and foreign currencies within and outside mainland China.
Whether this core step is completed offline or through information networks determines the characterization of the upstream crime.
In practice, offset foreign-exchange transactions generally fall into the following three models.
Traditional Offline Settlement Model
The first category is the traditional offline model. The parties complete the fund settlement through cash or face-to-face transfers, with information networks not participating in any part of the process. This model represents the most typical form of offline illegal business operations and does not involve any issue of "committing crimes by means of information networks," leaving no room for discussion.
Model where the network serves merely as a communication channel or general-purpose payment tool
The second category is the model combining online communication with offline settlement. The parties use social media applications (such as WeChat, Telegram, etc.) or encrypted communication tools to publish information, contact clients, and match funding needs, and may even negotiate exchange rates and amounts online. However, the ultimate flow of funds—namely, the delivery of RMB and the corresponding payment in foreign currency—is still completed offline, such as through face-to-face cash settlement or operations at offline bank counters.
Under this model, the information network serves merely as a communication tool during the preparatory stage of the crime. Although the perpetrators use the network to locate clients and agree on terms, the core actus reus of the crime of illegal business operations—i.e., the actual receipt, payment, and settlement of funds—is not dependent on the information network. Applying the criteria established above, since the information network does not play a central role in the actus reus, the conduct should still be categorized under traditional illegal business operations and should not be deemed as "committing crimes by means of information networks."
Model where the information network becomes the operational platform for currency exchange
The third type is a platform-based, systematic online operational model. Not only are customer contact and fund matching completed online, but the collection and payment of funds are also entirely conducted through online banking, third-party payment platforms, virtual asset trading platforms, and other online channels. A typical mode of operation is as follows: customers exchanging foreign currency transfer RMB via online banking to designated domestic bank accounts, while underground banks pay the equivalent amount in foreign currency to the customers’ overseas accounts through online banking or virtual asset platforms, thereby achieving cross-border separation of fund collection and payment. Under this model, the core act constituting the crime of illegal business operations—namely, the payment and settlement process—is entirely reliant on information networks. Every key link, including the pooling of RMB, the payment of foreign currency, and the matching and clearing of funds, operates online. The information network is not merely an ancillary tool for this crime but the foundational platform enabling its commission. Without online banking and online payment systems, this mirror-exchange model would be impossible to operate. In such circumstances, characterizing the conduct as “committing a crime by means of information networks” is justified.
Therefore, the distinction among the three models does not lie simply in whether the transaction occurs "online" or "offline," but rather in whether the information network assumes the operational mechanism for the illegal buying and selling of foreign exchange. The mere use of the network is factually distinct from the crime being dependent on the network for its commission.
Returning to the case at hand, if the prosecution asserts that the crime of aiding information network criminal activities is established,it must adduce evidence proving that the operational model of the upstream mirror-image currency exchange falls within the third category—where the core fund transfer processes are dependent on the information network for completion.
VI. The Use of WeChat or Telegram Does Not Equate to Committing Crimes by Means of Information Networks
Even if it is determined that the fund settlement for the upstream mirror-image currency exchange was completed offline, in practice the prosecution may still argue: the criminals used communication software such as WeChat and Telegram to contact clients, publish currency exchange information, and match funding needs; these acts themselves constitute "using information networks," and therefore the upstream conduct still qualifies as "committing crimes by means of information networks."
This logic is untenable.The reason lies in the conflation of two distinct concepts: 'the use of information networks during the commission of a crime' and 'the commission of a crime by means of an information network.'The former describes which tools were present in the case, whereas the latter assesses whether the information network was integrated into the execution act of the specific offense.
In such cases, communication software serves merely as a tool for communication, not as the vehicle for the execution act of the crime. The execution act of the crime of illegal business operations (illegal foreign exchange trading) consists of the receipt, payment, and settlement of funds, not the act of contacting clients. Using communication software to contact clients, publish foreign exchange information, and match funding needs constitutes preparatory acts—creating conditions for the execution act. However, preparatory acts do not equate to execution acts; the tools used by the offender during the preparatory stage do not alter the nature of the execution act.
If the mere use of communication software were sufficient to establish that a crime was committed 'by means of an information network,' then, following the same logic:
- drug trafficking conducted offline would become an information network crime if the time and place of delivery were agreed upon via WeChat;
- gambling conducted by several individuals playing cards in a teahouse, with stakes settled through WeChat red packets, would become an information network crime;
- Offline theft gangs coordinate their division of labor through WeChat groups, transforming theft into cybercrime.
In today's era, virtually no crime is entirely unrelated to mobile phones and communication software. The extraction of communication records from such software is merely a method of investigative evidence collection and does not mean that the criminal act itself was carried out on an information network platform. Equating 'use of communication software' with 'commission of a crime by means of an information network' would erase the boundaries of predicate offenses for the crime of aiding information network criminal activities (Aiding Crime). Any act of assistance to any crime could then be absorbed under the Aiding Crime, reducing it entirely to a catch-all offense.
Similarly, bank transfers do not automatically lead to the conclusion that the predicate offense is an information network crime. What truly requires examination is whether online banking merely executed a routine payment based on content predetermined manually, or whether it had become an integrated operational platform for account scheduling, fund matching, instruction transmission, and settlement and clearing.
Therefore, what truly determines the legal characterization is neither whether the perpetrator of the predicate offense used communication software, nor whether electronic transfer records exist in the case file,but rather whether the core execution act of the predicate offense relied on an information network for its completion.。
If counterparty foreign exchange swapping is primarily organized and controlled by personnel offline, even if clients were contacted via Telegram, accounts transmitted via WeChat, and payments made via online banking, the execution act does not inherently possess the attributes of an information network crime. Conversely, if the entire foreign exchange chain completes demand publication, order matching, account allocation, fund scheduling, and settlement through an online platform, it remains classified as 'commission of a crime by means of an information network,' even if the transaction terms were initially agreed upon in person.
VII. Insufficient Evidence for the Crime of Illegal Business Operations; The Crime of Aiding Information Network Criminal Activities Cannot Serve as a Catch-All Charge
Returning to the case at hand.
If the prosecution cannot prove that the upstream cross-border currency exchange via offsetting transactions relied on information networks for customer matching, fund allocation, and the delivery and settlement of RMB and foreign currencies, but can only prove that the relevant individuals used communication software, bank transfers, or virtual assets, then the upstream crime does not constitute "committing crimes by utilizing information networks" as stipulated in Article 287-2 of the Criminal Law. As the Crime of Aiding Information Network Criminal Activities lacks its prerequisite constitutive elements, the defendants in this case should not be convicted of this crime.
If the handling authorities cannot prove that the upstream crime relied on information networks during the execution of the criminal act, they should consider the following:Whether the actors constitute accomplices to upstream crimes such as the Crime of Illegal Business Operations, or whether their conduct does not constitute a crime at all.
The charge should not be "downgraded" to the Crime of Aiding Information Network Criminal Activities merely because the evidence for the Crime of Illegal Business Operations is insufficient.The Crime of Aiding Information Network Criminal Activities is neither an alternative charge when evidence is insufficient, nor a catch-all charge for all aiding behaviors that cannot be prosecuted as upstream crimes.
In their interpretation [1] of the Opinions on Several Issues Concerning the Handling of Criminal Cases Such as Aiding Information Network Criminal Activities, the Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Public Security once again emphasized the need to adhere to comprehensive determination, avoid objective imputation of guilt, and prevent the blanket conviction for the Crime of Aiding Information Network Criminal Activities solely based on the actor's conduct meeting the single criterion of "serious circumstances." This principle equally applies to the determination of the nature of upstream crimes—one cannot bypass the constitutive element prerequisite of "committing crimes by utilizing information networks" and directly impose conviction based merely on the objective manifestations of downstream conduct.
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About the Author
Attorney Shao Shiwei has long specialized in criminal defense and compliance matters within the Web3 and crypto assets sectors, accumulating extensive practical experience in economic crimes, cybercrimes, and novel cases involving virtual assets.
He specializes in handling major, difficult, and complex criminal cases involving charges such as operating casinos, fraud, illegal business operations, and occupational embezzlement.
The team provides legal services including full-process criminal defense, establishment of corporate criminal compliance systems, and prevention and control of criminal legal risks for individuals and enterprises.
Since beginning his practice, he has handled more than 300 criminal cases, with over 60 cases achieving substantive defense outcomes such as case dismissal, non-prosecution, application of suspended sentences, or reduction of charges.
This article was first published on the WeChat official account [Attorney Shao Shiwei]. For article reposting, legal consultations, or business exchanges, please contact: 13262718713 (same number for WeChat).
