Special Disclaimer: This article is an original work by Attorney Shao Shiwei. It reflects only the author’s personal views and does not constitute legal advice or a legal opinion on any specific matter. For article reprints, legal consultations, or professional exchanges, please add: sswls66.
Abstract:
If your family member or friend has been detained in connection with a virtual assets case, the most pressing question is often, “What monetary amount will ultimately be determined for sentencing?” In fact, how the price of the virtual assets is calculated directly determines whether conduct constitutes a crime and, if so, the length of the sentence. For the same token, whether the value is assessed at the time of theft, at the time of the loss, or based on the price at a particular point in time on an exchange can lead to vastly different outcomes. This article avoids abstruse statutory language and, drawing on real cases, clarifies the “timing rules” that courts apply in judicial practice to determine the value of virtual assets. It helps you understand where the focal points of dispute lie in such cases and from which angles counsel can advocate for the most favorable outcome.
Keywords: Determination of the amount involved, timing nodes for virtual asset valuation, defense in virtual assets cases, sentencing standards
Main Text:
In criminal cases involving virtual assets, differing timing nodes for calculating the asset price can lead to entirely opposite conclusions as to whether the conduct constitutes a crime.
In the article “How to Determine the Involved Token Price in Virtual Assets Theft Cases?,” Attorney Shao discussed a real case: Zhang San stole a certain altcoin held by Li Si. Zhang San did not cash out the tokens but instead incurred total losses in subsequent transactions. The conduct was ultimately characterized as the crime of illegally obtaining data from computer information systems, with the amount involved determined at RMB 12,000, resulting in an eight-month fixed-term imprisonment.
However, the method used to calculate this amount was highly controversial.
In that case, the public security organs ultimately adopted the following approach: they referenced the price of the token at 00:00 on the relevant day on a certain exchange to calculate the amount involved. Unfortunately, that price happened to be the highest point for that token both on that day and during that month.
However, if calculated based on the prices at other times on the same day, the amount involved in the case does not exceed RMB 10,000, meaning it has not reached the threshold for conviction and sentencing in this case; therefore, Zhang San does not constitute a criminal offense.
In judicial practice, discussions surrounding the determination of the amount involved in cases concerning virtual assets often focus on different calculation methods, such as the proceeds from disposing of stolen goods, market transaction prices, or the victim’s investment costs. However, in Attorney Shao’s view, these discussions often remain at the level of general principles and lack practical operability.
Once a specific case is underway, the factor that often determines the outcome is the time point at which the coin price should be calculated.
Based on this, this article attempts to examine the issue from a temporal perspective, combining typical cases from judicial practice to outline common time points for determining coin prices in criminal cases involving virtual assets, and to analyze potential defense opportunities from the perspective of defense counsel.
I. Author: Attorney Shiwei Shao
In this articlePart I, we discussed the practical dilemmas faced in determining the amount involved in criminal cases concerning virtual assets. As analyzed earlier, when neither the victim’s losses can be clearly identified nor actual disposal of stolen goods has occurred, the case often requires consideration of a third approach for determination—namely, the time when the criminal act was committed. Next, we will proceed from this temporal dimension to further discuss the challenges in determining the amount involved in cases concerning virtual assets.
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Third Time Point: Calculating the Coin Price Based on the Time When the Act Was Committed
In practice, if neither the victim’s actual losses can be clearly determined nor the actor has disposed of the virtual assets for cash, the determination of the amount involved often needs to revert to the time point when the criminal act itself was committed.
In other words, at this stage, the reference is no longer based on the loss side or the gain side, but rather on the market price of the virtual assets at the time the act was committed as the basis for calculation.
For example, in cases involving embezzlement by employees, bribery by non-state functionaries, and corruption and bribery-related offenses, if the subject matter involves virtual assets and neither the victim’s losses nor the proceeds from disposing of stolen goods are applicable, judicial practice typically uses the time point at which the actor actually acquired or completed the transfer of the virtual assets as the benchmark for calculation. That is to say:
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Transferring virtual assets out of the company wallet
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Transferring them to a wallet address controlled by the perpetrator
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Or transferring them to an exchange account controlled by the perpetrator
When virtual assets enter an address or account that the perpetrator can effectively control, the act is generally deemed completed. At that point, the prevailing market price of the corresponding virtual assets may be used as the basis for calculating the amount involved in the case.
The rationale for this approach is primarily that criminal law assessment is generally based on the time when the act was committed, rather than on subsequent price fluctuations. If calculation were based on subsequent market prices, the perpetrator could face significantly heavier criminal liability due to a rise in the price of the virtual assets.
However, after determining the timing of the act, it remains necessary to address whether the referenced token price truly reflects market value.
In judicial practice, cases can be broadly categorized into two scenarios depending on whether the tokens involved have a stable trading market.
(I) Tokens with Relatively Stable Market Prices
The first category comprises tokens that have formed relatively stable prices in trading markets.
These typically include:
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Tokens listed and traded on mainstream centralized exchanges (CEXs)
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Those with relatively sufficient trading depth
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Market prices carry a certain degree of reference value.
In such circumstances, judicial practice typically refers to the market prices on trading platforms to calculate the amount in dispute.
Nevertheless, further disputes may still arise. For example:
First, the specific point in time at which the act of misappropriation is completed.
In on-chain transactions, misappropriation often manifests as the transfer of virtual assets from wallet addresses controlled by an entity to wallets or exchange accounts controlled by the perpetrator. Whether the completion time of the on-chain transfer should be regarded as the time of completion of the act, or whether the time at which the perpetrator ultimately obtains actual control should serve as the basis for determination, may be subject to different interpretations in different cases.
Second, the issue of selecting the price source.
As virtual assets do not have a unified official pricing mechanism, prices often vary across different trading platforms. Therefore, in specific cases, whether to refer to the price on a particular exchange or to adopt an average price aggregated from multiple trading platforms may itself become a focal point of dispute in determining the amount in dispute.
Third, the issue of price volatility.
Virtual asset prices are highly volatile. This is particularly true for tokens with smaller market capitalizations, which often suffer from poor market liquidity and limited trading volume. In such circumstances, even a small number of transactions can cause significant price fluctuations, and prices may even be artificially manipulated with minimal funds, making it difficult to reflect the fair market value accurately.
In certain cases handled by Attorney Shao, similar situations have arisen: the prices of certain tokens plummeted rapidly after the incident, nearly losing all liquidity. If calculations were based simply on the price at a single point in time, the result could deviate significantly from their true market value.
Therefore, Attorney Shao believes that where there is significant price volatility or a discernible price range, a more reasonable approach in specific cases is to determine the amount based on a relatively lower price within a reasonable price range.
The rationale is that, in virtual asset cases, differences in the method of price valuation alone may directly affect whether the case meets the threshold for "huge amount," thereby influencing the sentencing tier. For example, in the case initially mentioned in this article, if calculated based on prices at different points in time, the amount in dispute might even fall below the threshold for criminal prosecution. In other words, the method of calculating coin prices itself may become a key factor in determining whether the perpetrator's conduct constitutes a crime.
(2) Tokens Lacking Stable Market Prices
Another scenario arises when the tokens involved in the case lack stable market prices.
For example:
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Trading exists solely on decentralized exchanges (DEXs);
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The tokens have been delisted from centralized exchanges (CEXs); or
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Overall market liquidity is extremely low.
In such circumstances, determining the price of the tokens involved in the case often becomes more difficult.
Compared with centralized exchanges, DEX trading exhibits distinct characteristics: limited order book depth, poor liquidity, and a price formation mechanism that is highly dependent on on-chain trading activity. For tokens with smaller market capitalizations, even a small number of trades can cause significant price volatility, and prices may even be artificially manipulated with minimal capital.
Furthermore, because DEXs lack a unified price dissemination authority and do not have an authoritative pricing mechanism akin to those in traditional financial markets, it is difficult to establish a unified price that reflects fair market value.
In such circumstances, mechanically selecting the DEX price at a specific point in time as the basis for calculating the amount involved in the case may often lead to significant distortion.
In Attorney Shao’s view, when evaluating such cases, handling authorities should fully consider the background of China’s current regulatory policies and the particularities of the virtual currency market. If the tokens involved in the case lack a stable trading market, exhibit high price instability, or even fail to form a market price with reference value, it becomes difficult to accurately determine their true value.
In such circumstances, the determination of the amount involved in the case should be made with greater caution. Where there is significant uncertainty, the principle of making determinations favorable to the defendant should, in principle, be applied.
Similar approaches are also observed in judicial practice. For example, in Case No. (2020) Yue 0304 Xing Chu 2, the defendant, Mr. Li, an employee of the company, stole not only the company’s Ether but also four million Haode Coins issued by the company itself. However, as the Haode Coins had not been publicly listed for trading at the time of the incident, the court held that their value was difficult to calculate.
Ultimately, the court did not make a specific monetary determination regarding the value of these tokens in its judgment, but instead gave discretionary consideration to the relevant circumstances during sentencing.
The handling of this case demonstrates that where the tokens involved lack a clear market price, courts do not simply presume they have a determinate value, but rather adopt a more prudent approach to valuation. This approach offers useful guidance for similar cases where the true value of tokens is difficult to ascertain.
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Conclusion: Three Key Issues in Determining the Monetary Value of Virtual Currencies
Compared with traditional cases, the determination of the amount involved in criminal cases concerning virtual currencies is often more complex and contentious.
Drawing on Attorney Shao’s case-handling experience, what truly affects the outcome is not simply “which calculation method is adopted,” but rather three key issues that must be considered when determining how to calculate token prices:
First, at which point in time should the token price be calculated;
Second, from which trading market should the price data be sourced;
Third, whether the price can genuinely reflect market value.
Attorney Shao believes that, against the backdrop of China’s yet-to-be-established comprehensive legal framework for virtual currencies, a prudent approach should be maintained in determining the amount involved. In particular, where the source of pricing is unclear, market liquidity is insufficient, or price volatility is abnormal, one should avoid mechanically applying the price at a single point in time, and instead make reasonable judgments based on the specific circumstances of the case.
For defense counsel, the method of determining token prices precisely constitutes an important area for building a defense.
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