Industry practitioners in the encryption sector should be vigilant against embezzlement and other illegal activities.

Recently, the issue of corruption within the cryptocurrency industry has become increasingly prominent, raising concerns about potential illegal activities such as embezzlement among industry professionals. This article will delve into this issue, providing legal references for industry practitioners and clarifying compliance boundaries.

Elements of the Crime of Embezzlement

According to the provisions of our criminal law, the composition of the crime of embezzlement includes the following aspects:

1. Entity identity: Staff of a company, enterprise, or other organization
2. Objective behavior: Using one's position to illegally appropriate the property of the unit for personal gain.
3. Amount standard: The amount is relatively large, and the case filing standard is 30,000 yuan.
4. Sentencing Standards:
   • General Circumstances: Imprisonment for a term of less than 3 years
   • Huge amount: 3-10 years imprisonment
   • Amount particularly huge: 10 years or more of fixed-term imprisonment or life imprisonment

The Specificity of the Encryption Industry

Since the introduction of relevant regulatory policies in 2017 and 2021, mainland China has strictly restricted virtual currency-related business activities. However, some overseas encryption currency exchanges still retain technical and customer service teams in the mainland. In this special situation, how to define the subject and victim identity of the crime of embezzlement has become a complex issue.

Do Employees in the Encryption Industry Constitute the Subject of the Crime of Embezzlement?

Although there is legal controversy regarding overseas companies engaging in "illegal financial activities," judicial practice indicates that employees' illegal actions may still be subject to criminal liability. The key lies in how to prove the existence of an employment relationship, which may involve various factors such as labor contracts, salary payments, and so on.

For embezzlement involving virtual currency, mainstream encryption is usually recognized as having property attributes. However, there is still considerable controversy regarding the embezzlement of tokens issued by the company or expected future benefits.

The Application of the Crime of Bribery by Non-State Personnel in the Encryption Industry

In some cases, practitioners in the encryption industry may be involved in both the crime of embezzlement and the crime of bribery of non-state staff. For example, the act of receiving property from others and embezzling company assets by taking advantage of one's position may constitute multiple crimes subject to concurrent punishment.

Industry Trends and Compliance Development

As major cryptocurrency exchanges intensify their efforts to combat internal corruption, and as regions like Singapore and Hong Kong impose increasingly strict regulations on the Web3 industry, the internal compliance construction of the encryption industry is gradually aligning with traditional internet companies, and it may even be stricter in some aspects.

Practitioners should fully recognize the legal risks brought by the industry's specificity, strictly comply with relevant laws and regulations, and jointly promote the healthy development of the industry. At the same time, relevant enterprises should also strengthen internal management and establish a sound compliance system to cope with the increasingly stringent regulatory environment.