With a 100% profit, people will disregard all laws; with a 300% profit, they will fear no crime, not even the danger of hanging.
Special Declaration: 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 reprints, legal consultations, or professional exchanges, please add: sswls66.
"As soon as there is adequate profit, capital becomes very bold. With a 10% profit, it will be employed anywhere; with 20%, it becomes lively; with 50%, it induces positive risk-taking; with 100%, it makes people disregard all laws; with 300%, it makes people fear no crime, not even the danger of hanging." — From Capital, Volume I
Introduction:
Although the "924 Notice" issued by China in 2021 explicitly classified virtual currency-related businesses as "illegal financial activities," those who have profited from the crypto asset sector often find it difficult to completely leave the industry. Particularly for the "crypto elites" who have amassed substantial wealth in this sector, many prefer to relocate overseas or even change their nationality rather than abandon this field full of opportunities.
Recently, news reports[i] indicated that Zhang Yufa, the principal offender of the MBI Group involving over RMB 100 billion and known as the "Godfather of Asian Pyramid Schemes," was successfully extradited from Thailand back to China. This case marks the first economic crime suspect extradited from Thailand to China since the entry into force of the 1999 China-Thailand Extradition Treaty.
As a criminal lawyer specializing in the Web3 field, I am familiar with the virtual currency pyramid scheme case involving the MBI Group and have previously written analytical articles on the subject (→ "Virtual Currency Pyramid Schemes: Under What Circumstances Is One Innocent?"). Today, I would like to discuss a question frequently asked in my daily practice—If one's business activities violate criminal laws in China, can one evade legal accountability by relocating abroad or changing nationality?
Author | Attorney Shao Shiwei
To comprehensively address this issue, we can break it down into three sub-questions:
- Will foreign nationals committing crimes while abroad be brought back to China for trial?
- Can Chinese nationals who flee abroad after committing crimes evade criminal liability?
- Can Chinese nationals who commit crimes abroad evade criminal liability?
01 Will foreign nationals committing crimes while abroad be brought back to China for trial?
This scenario divides into two categories: ethnic Chinese individuals who held foreign nationality at birth, and those who originally held Chinese nationality and later acquired foreign nationality.
The MBI Group Pyramid Scheme Case
Zhang Yufa, the principal offender of the MBI Group mentioned at the beginning of this article, is rumored to have ancestral roots in Guangdong and is a third-generation ethnic Chinese holding Malaysian nationality (falling into the first category mentioned above). According to reports, the MBI Group was established in Malaysia in 2009. Since 2012, the company set up the "MTC" game-based wealth management platform and the "MTI" online pyramid scheme platform on the internet. Through these two platforms, the "MBI Group" recruited a total of 11.05 million members within China, with downline levels reaching as many as 1,357 tiers. In November 2020, the Chongqing police formally initiated an investigation against Zhang Yufa. In March of the following year, the Interpol National Central Bureau of China issued a "Red Notice" for him. Shortly thereafter, Thai police arrested Zhang Yufa. Subsequently, the Chinese side submitted an extradition request to Thailand. On May 21, 2024, the Thai Court of Appeal made a final ruling to extradite Zhang Yufa to China. On August 14, the Thai government issued an administrative decision supporting the court's ruling.
The Wanfubi Online Pyramid Scheme Case
Since 2014, Liu Ning, an American citizen of Chinese descent, founded America Future City in Los Angeles, USA. The company conducted pyramid scheme fraud activities targeting ethnic Chinese via the internet under the guise of selling virtual digital currencies. In March 2016, Liu Ning launched the "Wanfubi" virtual digital currency pyramid scheme project. By the time public security organs seized the operation on April 27, the project had attracted over 130,000 members and illegally collected nearly RMB 2 billion in pyramid scheme funds in less than two months. On November 7, 2018, the Changde Intermediate People's Court of Hunan Province issued a second-instance judgment[ii], finding Liu Ning guilty of organizing and leading pyramid scheme activities, sentencing him to ten years of fixed-term imprisonment, and imposing a fine of RMB 10 million.
According to Article 9 of the Nationality Law of the People's Republic of China, Chinese citizens who settle abroad and voluntarily join or acquire foreign nationality shall automatically lose their Chinese nationality. This indicates that China does not recognize dual nationality.
However, in criminal cases, the situation differs. Even if you have acquired foreign nationality, as long as you have not formally renounced your Chinese nationality, judicial authorities will still recognize your Chinese nationality. Therefore, the judgment in this case did not mention Liu Ning's American nationality at all, describing him merely as a native of Cangzhou City, Hebei Province.
[Summary]
Given that China's criminal jurisdiction includes the principles of territorial jurisdiction, personal jurisdiction, protective jurisdiction, and universal jurisdiction, physically leaving the country or changing nationality cannot circumvent criminal legal risks under Chinese law.
02 Can Chinese nationals who flee abroad after committing crimes evade criminal liability?
· Jiangsu Zhenjiang Police Solve Virtual Currency Pyramid Scheme Case
According to reports[iii], in March 2021, the Dantu Branch of the Zhenjiang Public Security Bureau discovered that a certain virtual currency platform was suspected of engaging in online pyramid schemes. The virtual tokens issued by this platform were listed on various virtual currency exchanges through various methods, promoting the token's bright prospects to continuously attract members to purchase, while the project operators earned high profits by selling original tokens in the backend. By the time the case was uncovered, the platform had accumulated over 100,000 registered members, with the amount involved exceeding RMB 100 million. The principal offender, Wang, fled abroad and remained at large. In 2022, Interpol officially issued a Red Notice for Wang's arrest. Meanwhile, the Zhenjiang police continued to persuade him to surrender through various channels. Finally, in May 2023, Wang returned to China and surrendered voluntarily under police persuasion. In April 2024, Wang was formally sentenced.
In cases where the country or region to which the perpetrator has fled has not signed anextradition treaty(an act whereby a state, based on a treaty or other grounds, hands over a person within its territory who is accused or convicted of a crime by another state, upon that state's request, for trial or punishment; a form of international criminal judicial assistance between states), persuasion to return is the most commonly used method by Chinese law enforcement officers. Wang in this case returned to China through persuasion.
In the article "Can Chinese Police Arrest Suspects Across Borders for Telecom Fraud Committed Abroad?", Attorney Shao detailed that for fugitives abroad who have violated Chinese laws, investigative authorities mainly employ the following methods:extradition, repatriation, joint law enforcement, and persuasion to return. In addition,prosecution in a different jurisdictionis also an important means of cooperation among international law enforcement agencies.
Prosecution in a different jurisdiction refers to the process where competent Chinese authorities provide evidence of crimes violating the laws of the country where the fugitive is hiding to that country's judicial organs, which then arrest and prosecute the fugitive according to their domestic laws. For example, Yu Zhendong, Xu Chaofan, and Xu Guojun, the former three presidents of the Kaiping Branch of the Bank of China in Guangdong Province, fled to the United States with RMB 483 million after the case broke in 2001. Although there was no extradition treaty between China and the United States, the Guangdong Provincial People's Procuratorate assisted U.S. judicial authorities in arresting Yu Zhendong locally on charges of illegal entry, illegal immigration, and money laundering, and initiating criminal prosecution. Yu Zhendong voluntarily accepted repatriation. Xu Chaofan and Xu Guojun neither pleaded guilty nor accepted repatriation; they were sentenced by U.S. courts to 25 and 22 years of imprisonment, respectively, and remain serving their sentences in local prisons.
[Summary]
Many people fleeing abroad choose countries that have not signed extradition treaties with China as their first option, but this is not a foolproof strategy.Especially in economic crime cases involving the confiscation of huge amounts of property, law enforcement agencies in various countries will actively intervene. For instance, the largest Bitcoin money laundering case in the UK implicated the 2017 Lantian Gerui case in China, involving illegal absorption of public deposits worth RMB 40 billion. The principal offender, Qian Zhimin, was arrested in the UK, but whether investors in the domestic Lantian Gerui case can recover their losses remains uncertain.
03 Can Chinese nationals who commit crimes abroad evade criminal liability?
No. This is easy to understand. Let us discuss two well-known cases.
- The Case of the Pregnant Woman Pushed off a Cliff in Thailand
A couple from Jiangsu Province (the husband from Jiangyin and the wife from Nanjing) were traveling in Thailand when the husband pushed his wife, who was three months pregnant, off a cliff 34 meters high.
- The Jiang Ge Case
In the early hours of November 3, 2016, Jiang Ge, a Chinese graduate student in Japan, was murdered at the entrance of her rented apartment by Chen Shifeng, the boyfriend of Liu Xin.
The commonality between these two cases is that the criminal incidents occurred abroad, and both the suspects and the victims were Chinese nationals; therefore, China naturally has jurisdiction. The difference lies in the fact that China and Japan have not signed an extradition treaty, whereas China and Thailand have. Since the crimes occurred locally, considering the perspective of evidence collection, it is obviously more convenient for local courts to handle the cases. If China insists on initiating investigation and prosecution, it may not be beneficial to the victims. Criminal case handling requires clear facts and sufficient, reliable evidence. With witnesses and evidence located abroad, along with the cumbersome and complex notarization and authentication procedures for extraterritorial evidence collection, the timeline for concluding the cases could be indefinite...
[Summary]
If involved in criminal cases related to crypto assets, even if the individual is overseas, they should closely monitor the relevant regulations of both Chinese law and the laws of the host country regarding their business activities. For example, blockchain gaming (GameFi) carries high criminal risks in China, but operating such projects abroad also requires attention to the relevant laws and regulations of the country where the project is located or the regions where its users are based.
04 Attorney's Reminder:
It is often said that the charm of the crypto circle lies in decentralization and borderlessness. However, for criminal cases, the criminal justice systems of countries around the world exhibit, to varying degrees, characteristics of "long-arm jurisdiction." Therefore, as legal professionals, we have a responsibility to remind every citizen to respect the law and revere rules, whether domestically or internationally.
[i] China Extradites a Major Economic Crime Suspect from Thailand https://mp.weixin.qq.com/s/wJie3O64A3OPuzVmDzCgKQ
[ii] (2017) Xiang 07 Xing Zhong No. 45
[iii] Wang! Zhenjiang Police's First Sentenced "Red Notice" Individual! Amount Involved Exceeds RMB 100 Million!
https://mp.weixin.qq.com/s/5vHP4GEZhwGJ1ylobGSmKQ
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