Justice Network publishes an article titled "Establishing Multiple Judicial Disposal Pathways for Criminal Involved Virtual Currencies," exploring three disposal measures: "liquidation, destruction, and restitution."

Deep Tide TechFlow News, on December 14th, Justice Network published an article titled “Establishing Multiple Judicial Disposal Pathways for Criminally Involved Virtual Currencies.” The article proposes to improve the judicial disposal pathways for criminally involved virtual currencies:

First, clarify the legal status and role positioning of third-party institutions. Future legislation could include third-party institutions within the scope of judicial auction auxiliaries, granting them the exclusive qualification for “one-time, targeted, non-public bidding.”

Second, build a dual system of technical standards and procedural norms. Jointly issued by the Supreme People’s Court, the Supreme People’s Procuratorate, and financial regulatory authorities, the standards will use the average price of the 20 days prior to the transaction date or the victim’s acquisition cost as benchmarks for price assessment, standardize on-chain evidence formats, and transfer the proceeds directly to the fiscal account, preventing funds from flowing back into speculative channels.

Third, strengthen the full-process connection between procuratorial supervision and rights protection. Procuratorial organs will participate throughout the disposal process, requiring third-party institutions to regularly submit progress reports and establishing mechanisms for rights notification and objections.

Fourth, explore differentiated disposal modes. Different measures such as liquidation, destruction, and restitution will be applied based on circumstances. For cases involving restitution of victim’s property, priority may be given to targeted bidding for liquidation to ensure full compensation of proceeds. For example, stablecoins not yet exchanged after victim scams, if the victim is willing to return the original currency, can be directly returned under compliant conditions to avoid exchange rate losses. For cases involving confiscation of illegal items, destruction or technical sealing may be used to prevent re-entry into the market. For tokens used exclusively for pyramid schemes or gambling, which have poor liquidity and market depth, forced liquidation may cause devaluation. Destruction can be carried out legally and recorded in the judgment documents. For high-value coins that have been commingled with legitimate investments, liquidation will be prioritized to maximize loss recovery. Additionally, for cases involving small amounts or with high technical tracing difficulty, simplified disposal procedures can be explored, such as a comprehensive recognition model, where in cases where the transfer path cannot be fully clarified, relevant evidence is used to determine the value and ownership of the involved virtual currency.

It is reported that Justice Network is an online comprehensive service platform hosted by the Procuratorate Daily of the Supreme People’s Procuratorate. The authors of this article are a member of the Party Committee and a first-level investigator at the Third Branch of Beijing People’s Procuratorate, a professor and doctoral supervisor at the Law School of Capital University of Economics and Business, and a research assistant at the Center for Clean Governance and Rule of Law Studies at the same university.