When buying and selling virtual currencies such as USDT (Tether), is there a legal risk in borrowing the bank cards of relatives and friends to collect and make payments on one's behalf? If suspected criminal conduct is involved, might the conduct be characterized as the crime of illegal business operations, the crime of assisting information network criminal activities, the crime of concealing or disguising criminal proceeds, or the crime of impairing credit card management? — The background to this question is as follows:
Recently, in a case involving a U merchant buying and selling USDT (Tether) that Attorney Shao is handling, the client was accused by the judicial authorities of suspected illegal business operations.
After six months of continuous communication with the prosecuting prosecutor and multiple submissions of written legal opinions, the prosecutor basically accepted the defense counsel's view that, based on the existing chain of evidence, the client may not have known that the funds it received were exchanged through USDT mirror trades by an upstream underground money changer, and therefore the conduct did not constitute the crime of illegal business operations.
However, because the amount involved in this case is as high as several billion, and in recent years the client used dozens of bank cards belonging to relatives and friends to collect and make payments on its behalf in virtual currency transactions, from the perspective of the case-handling personnel, this mode of operation indeed does not look like a "normal" business. Therefore, the prosecutor believes that even if the conduct does not constitute the crime of illegal business operations, it is still considering accusing the client of other crimes, such as the crime of impairing credit card management, the crime of assisting information network criminal activities, the crime of concealing or disguising criminal proceeds, and so on.
However, Attorney Shao believes that simply buying and selling virtual currencies such as USDT to earn the price difference, as long as the person has not actually received criminal proceeds and does not know that another person is using virtual currencies to buy and sell foreign exchange and provides assistance in that regard, should in principle not be evaluated as a criminal offense.
It cannot be treated as a criminal offense merely because of the case-handling personnel's "plain" understanding — equating a business that is not "normal" with a criminal offense — as this clearly violates the principle of restraint in criminal law.
Therefore, based on the above perspective in judicial practice, the question to be discussed in this article is:
Where a U merchant or an ordinary individual does not know that the upstream party is engaged in foreign exchange activities, and when buying and selling USDT instructs relatives and friends' bank cards to collect and make payments on their behalf, if the conduct ultimately does not constitute the crime of illegal business operations, might it be evaluated as the crime of assisting information network criminal activities or the crime of concealing or disguising criminal proceeds? Or, as a fallback, might it be determined to be the crime of impairing credit card management?
I Author of this article: Attorney Shao Shiwei
Attorney Shao believes that, on the premise that it can be established that the actor does not have the subjective intent of "knowing that another person is engaged in foreign exchange," even if the actor uses relatives and friends' bank cards to collect and make payments on their behalf, the conduct should not constitute the crime of illegal business operations, the crime of assisting information network criminal activities, or the crime of concealing or disguising criminal proceeds; on this premise, in principle it should likewise not be determined to be the crime of impairing credit card management (although in practice there is indeed a risk that judicial authorities may expand the interpretation and apply this charge).
In other words, the real issue is not whether the actor used another person's bank card, but rather: whether there was subjective knowledge, how the nature of the funds is defined, and whether the understanding of "holding" a bank card has been excessively expanded.
The above issues in dispute are elaborated in detail as follows:
1
The approach of choosing the heavier offense for the crime of impairing credit card management
In judicial practice,if the actor is ultimately found to constitute the crime of impairing credit card management, there are two possibilities:
1. The actor constitutes only the crime of impairing credit card management.
For example: the actor acquires or controls bank cards in large quantities, but it has not yet been verified that these cards have flowed into upstream crimes such as telecommunications fraud; they remain in a state of "stockpiling cards for sale" and have not yet actually entered the stage of fund circulation or use for collection and payment on behalf of others.
2. The actor's conduct simultaneously involves the crime of assisting information network criminal activities and the crime of concealing or disguising criminal proceeds, but is ultimately sentenced under the crime of impairing credit card management by "choosing the heavier offense" (the crime of assisting information network criminal activities carries a maximum of three years, the crime of concealing or disguising criminal proceeds carries a maximum of seven years, while the crime of impairing credit card management carries a maximum of ten years).
For example: the defendant not only acquired bank cards from others in large quantities, but also used these cards to withdraw cash and transfer funds for upstream crimes[i]; the court held that the defendant's conduct satisfied the constitutive elements of both the crime of impairing credit card management and the crime of assisting information network criminal activities, and ultimately chose the heavier offense and sentenced the defendant for the crime of impairing credit card management.
2
Exclusion and determination of the crime of assisting information network criminal activities and the crime of concealing or disguising criminal proceeds
Returning to the specific scenario discussed in this article—a USDT (Tether) merchant or individual, in the course of buying and selling USDT, uses bank cards of relatives and friends to collect and pay RMB on their behalf—in this situation:
1. Is it possible to constitute the crime of assisting information network criminal activities?
The answer is no. The reason is:
In cases where USDT is used for disguised currency exchange as a means of arbitrage, the 'currency exchange' itself is usually characterized as illegal business operations rather than an 'information network crime.'
Therefore, even if the actor is aware that the source of the funds may be abnormal, but does not know that the funds are used for information network crimes such as telecommunications fraud or online gambling, their subjective state still does not meet the elements of the crime of assisting information network criminal activities, namely 'knowingly providing assistance to others who use information networks to commit crimes.'
2. Is it possible that this constitutes the crime of concealing or disguising criminal proceeds?
This conclusion still cannot be established. The reason is:
In currency exchange activities, the funds circulated are the principal used for exchange, and their nature is 'funds of illegal business activities' rather than 'proceeds obtained from crime (after completion).' The actor's mistaken understanding of the nature of the funds prevents the formation of the intent required for the crime of concealing or disguising criminal proceeds.
Therefore, in the scenario discussed in this article—buying and selling USDT and borrowing bank cards from relatives and friends for collection and payment on behalf of others—it is difficult to characterize the conduct as either the crime of assisting information network criminal activities or the crime of concealing or disguising criminal proceeds, and judicially there is thus no basis for 'choosing the heavier crime' and changing the judgment to the crime of impairing credit card management.
3
Crime of impairing credit card management: physical possession or possible expanded interpretation?
After excluding the application of the crime of assisting information network criminal activities and the crime of concealing or disguising criminal proceeds, we can continue to examine this in two layers:
First, if the actor is determined to constitute the crime of illegal business operations, then even if the actor has engaged in conduct constituting the crime of impairing credit card management, that conduct will be absorbed by the crime of illegal business operations, and the actor will not be convicted of both the crime of illegal business operations and the crime of impairing credit card management.
Second, if, as in the scenario discussed in this article, the actor is determined not to constitute the crime of illegal business operations, then, as stated above, one cannot step back and determine that the actor constitutes the crime of assisting information network criminal activities or the crime of concealing or disguising criminal proceeds. Where both of these crimes are excluded, the crime of impairing credit card management is the only possible option.
However, the problem is that the scenario in this article is fundamentally different from the typical scenarios of the crime of impairing credit card management in judicial practice.
Under ordinary circumstances, the crime of impairing credit card management often manifests as:
The perpetrator purchased complete sets of bank card materials belonging to strangers in large quantities (including bank cards, mobile phone SIM cards, online banking USB shields and passwords, copies of identity cards, and the like, i.e., the so-called "four-piece sets") and paid consideration for them; the perpetrator then personally directly controlled and operated these bank cards to conduct transactions.
By contrast, in the USDT trading scenario discussed in this article, the perpetrator used the bank cards of relatives and friends, and there was no situation of buying cards from strangers; more critically, the bank cards were always controlled and operated by the cardholders themselves, and the parties concerned did not possess the cards, passwords, or online banking permissions, while the relatives and friends merely completed collection and payment on their instructions.
Therefore, the possible legal risk in the circumstances of this article lies in how the judicial authorities interpret and determine "holding"bank cards. If it is expansively interpreted to mean that as long as the perpetrator can actually control and dispose of these cards (for example, knowing the passwords or being able to instruct the cardholders to operate them), "holding" is constituted, then the parties concerned do indeed face the risk of this offense.
However, this manner of determination is fundamentally different from the typical circumstances in judicial practice of the crime of obstructing credit card management, where "four-piece sets" are bought from strangers and the perpetrator directly controls the bank cards.
In typical cases of the crime of obstructing credit card management in judicial practice, "holding" is essentially a physical, exclusive, direct control.
The perpetrator, through purchase, rental, or other means, places another person's credit card under his or her own actual custody, directly possessing the physical card, the password, and the online banking tools, and can operate it independently without the cardholder's consent. This control is stable, continuous, and realizable at any time, and its unlawful status is clear and definite.
The circumstances discussed in this article are different: the perpetrator's so-called "control" over the bank cards is in essence an indirect, functional authorization of use based on a specific relationship (relatives and friends) and mutual agreement (instructions for collection and payment). The perpetrator does not possess the physical cards and does not possess the core password information, and each transfer of funds must rely on the cardholder's cooperative operation to be completed. This control is conditional and unstable.
Therefore, Lawyer Shao is of the view that directly equating this instruction-based, indirect fund-channel relationship with the actus reus of "unlawfully holding another person's credit card" in the sense of criminal law is in essence an expansive interpretation of the law.
The circumstances of this article should not be determined to constitute the crime of obstructing credit card management.
4
Closing Remarks
In criminal cases involving virtual currencies and other emerging types of crime, criminal patterns are constantly changing, and judicial practice displays pronounced diversity and uncertainty; as a result, the application of law is often in uncharted territory.
The more one is in this kind of "boundary zone" between guilt and innocence, whether an appropriate legal assessment of the actor's conduct can be made often depends on the details of the evidence and the sufficiency of the legal argument; when a dispute exists, which side the scales of justice will ultimately tip toward precisely reflects the value of criminal defense.
Therefore, when handling criminal cases, defense lawyers must also closely track every factual detail, every chain of evidence, and every point of legal dispute, so as to secure all possible most favorable outcomes for their clients.
[i] Peng XX et al., case of the crime of obstructing credit card management — Sanyuan County People's Court, Shaanxi Province http://xysyfy.sxfywcourt.gov.cn/article/detail/2022/11/id/7008683.shtml
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