Attorney Shao Shiwei | Case Commentary | Programmer Illegally Obtains Virtual Currency by Taking Advantage of Position, Gains RMB 30,000, Sentenced to Three and a Half Years

In the eyes of many, programmers (coders, engineers) hold lucrative and enviable high-paying positions. However, in the view of criminal defense lawyers, this is also a profession that easily touches upon legal riskshigh-risk profession。

Attorney Shao has previously represented numerous programmers involved in suspected criminal cases:

Company operations suspected of constituting the crime of copyright infringement, with programmers implicated as employees;

Software companies providing illegal website construction services for clients, with the company’s legal representative suspected of the crime of aiding information network criminal activities;

Overseas virtual currency exchanges suspected of constituting the crime of opening casinos, with domestic employee programmers arrested;

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The People's Court of Changping District, Beijing, recently released a case—An employee took advantage of their position to obtain virtual currency for profit, constituting the crime of illegally obtaining data from computer information systems, and was sentenced to three and a half years in prison. This article analyzes the relevant legal issues using this case as an example.

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Zhang, formerly a blockchain engineer at a certain internet company, was responsible for the development of the company's blockchain projects. In July 2020, while participating in a company project, he learned that the project account held a large amount of Ethereum. Zhang then took advantage of his work position, using "code study" as a pretext, to request from colleagues program code and private keys that exceeded the scope of his work authority.

According to Zhang, he had joined a certain "technical exchange group," shared the code and private keys with the group, and invited a member named Jack to crack the code and attack the company account, thereby obtaining 106.15 Ethereum. Subsequently, Zhang conducted "money laundering" operations on the obtained Ethereum, converting it into other forms of currency, transferring it through multiple accounts, and finally transferring it back to his own account.

After discovering that the virtual currency in the account had been stolen, the company promptly reported the case to the police. Zhang argued: He had only shared code addresses and project information in the "technical exchange group"; the Ethereum was transferred away by others who scanned the private keys; and 18 of the Ethereum were given to him by Jack as compensation for his labor in sharing code and other information.

The Changping Court in Beijing held that Zhang violated regulations by requesting program code and private keys from others, illegally obtaining Ethereum information from the company's computer system, and profiting from trading part of the Ethereum. Furthermore, without authorization, he illegally obtained information on virtual currencies stored in the computer system in the form of computer data. His actions constituted the crime of illegally obtaining data from computer information systems.

Upon calculation, Zhang's total illegal gains amounted to RMB 38,329.76. The court sentenced Zhang to three years and six months in prison for the crime of illegally obtaining data from computer information systems.

1. Are virtual currency transactions not protected by law?

After being arrested, Zhang argued, "The project developed by the company itself involves risky transactions, and the risks should be borne by the parties involved”。

"Virtual currency transactions are not protected by law, and risks are borne by the parties involved." This is a viewpoint we often see from courts in civil disputes involving virtual currencies. Because the transactions are not protected, contracts and entrustments signed by both parties are deemed invalid, and the court will accordingly rule that both the plaintiff and defendant bear corresponding responsibilities.

Therefore, Zhang's statement is not entirely wrong. Butwhy was it not adopted by the court?

This reflects the "differential treatment" of virtual currencies in criminal versus civil cases within current judicial practice involving crypto-related matters.

In civil cases, such as lending, entrusted investment, and mining, current court judgments exhibit a somewhat "passive" style, assigning equal blame to both parties and requiring them to bear their own risks. The purpose is to make people realize that virtual currency transactions are not encouraged in China.

However, if virtual currencies are stolen and meet the criminal filing standards for relevant offenses, based on the consultations received and cases handled by Attorney Shao, as judicial authorities' understanding of virtual currencies deepens, the number of cases filed by public security bureaus across various regions continues to increase. This also demonstrates that in criminal cases, the property attributes of virtual currencies are recognized and protected by judicial authorities.

2. Why was the crime defined as illegally obtaining data from computer information systems?

Continuing from the above, since the property attributes of virtual currencies are recognized by judicial authorities, why was this case defined as the crime of illegally obtaining data from computer information systems? This is somewhat contradictory and subtle.

The logic behind defining it as a computer crime lies in the fact that although Bitcoin, Ethereum, Tether, and other virtual currencies can objectively be exchanged for money, possess property attributes, and are recognized by judicial authorities, the court, when rendering judgment,strives to avoid discussions regarding the value of virtual currencies, and instead adopts a different perspective:

It views virtual currencies from the angle of having data attributes (generated based on computing power), considering them as objects protected under computer-related crimes. However, according to the following judicial interpretations by the Supreme People's Court and the Supreme People's Procuratorate, obtaining data from computer information systemsdatashould refer to "identity authentication information," such as account numbers, passwords, digital certificates, etc. The data attributes possessed by virtual currencies clearly do not fall within the aforementioned scope.

The contradiction is that although the court deliberately avoids arguments regarding the value of virtual currencies in its reasoning and judgment, itinevitably assigns a value to the virtual currencieswhen sentencing the defendant (in this case, Zhang profited from 18 Ethereum, and based on the coin price in July 2020 when the incident occurred, Zhang's illegal gains were determined to be over RMB 38,000), and uses this valued amount as the standard for sentencing.

Returning to the question raised at the beginning of the article, why are programmers considered a "high-risk profession"?

Currently, cybercrime is rampant. Every platform involved in cases, such as gambling websites, gambling-related games, fraud platforms, and pornographic software, relies on a team of website developers and operations personnel behind the scenes providing technical support. This requires programmers to have a certain ability to identify the nature of the platforms they serve.

When providing services for lawful and compliant operations, the legal risks faced by programmers often stem from internal theft (as in this case), such as stealing company property by exploiting vulnerabilities in the company's systems or leveraging their own position or work conveniences. Therefore, programmers must uphold professional ethics, enhance their legal awareness and sense of moral responsibility, and avoid engaging in any form of illegal activities.