The applicable paths of criminal charges and disputes over amount determination in virtual asset cases.

This case begins with a criminal judgment from a Shanghai court, involving the behavior of employees in the traditional gaming industry who exploit their work privileges to modify backend data and profit by reselling game coins. Although game coins and Crypto Assets are not in the same category, in the current judicial system where there is a lack of clear legislative guidance and established criteria for cases involving Web3, virtual assets, and Crypto Assets crimes, case handlers often use virtual property cases in the gaming industry as a comparative basis to infer the legal attributes of criminal cases in the Web3 field, the property nature of virtual assets, and the qualitative path of behavior.

Therefore, when handling criminal cases involving Crypto Assets, lawyers research the value of criminal cases in the traditional gaming field to better understand the thinking and judgment methods of case handlers when dealing with virtual asset cases. This allows them to know themselves and their adversaries, enabling them to formulate more targeted litigation strategies and enhance the effectiveness of communication.

Case Introduction:

Joyful Entertainment Company focuses on the development, distribution, and operation of video games. The company collaborates with multiple gaming platforms to operate its developed video game “Arcade Three Kingdoms.” Players of the “Arcade Three Kingdoms” game purchase game coins “Yuanbao” from Joyful Entertainment Company by funding their game accounts, which are used to enhance game equipment and character attributes.

Shen was engaged in game operation planning at Huanle Huyu Company. During his tenure, he used his game operation management authority to modify backend data without authorization, adding “Yuanbao” game coins from the “Arcade Three Kingdoms” game to the accounts of multiple players, and collected a total of over 150,000 yuan.

Hearing Process:

The People's Procuratorate of Pudong New District, Shanghai, accused Shen of committing the crime of damaging computer information systems, with particularly serious consequences, and should be sentenced to more than five years of fixed-term imprisonment according to law. The first-instance court did not accept this accusation, but instead found him guilty of illegally obtaining data from computer information systems and sentenced him to three years of fixed-term imprisonment.

The First Branch of the Shanghai Municipal People's Procuratorate filed an appeal, stating that Shen was guilty of embezzlement. Ultimately, the Shanghai First Intermediate People's Court sentenced Shen to three years of imprisonment for embezzlement【(2020)沪01刑终519号】.

Lawyer Shao's Analysis:

The facts of this case are actually not complex, but the involvement of “game coins” as a virtual currency has led to disputes over the applicability of charges.

The trial of criminal cases mainly revolves around two issues: one is the characterization, that is, what crime the perpetrator constitutes, and the other is sentencing, which involves determining the amount of money involved in the case and comprehensively considering the amount involved as well as other circumstances to impose an appropriate sentence on the perpetrator. In this case, the issues to be resolved are whether virtual currencies are considered property under criminal law, and how to ascertain the value/amount involved of the virtual currency.

What kind of crime does the behavior of employees constitute?

The focal point of the dispute in the first and second instance judgments is whether the employee's actions constitute embezzlement or the crime of illegally obtaining data from a computer information system. Further examination reveals that the core difference between the two charges actually centers on the same question: can the virtual currency involved (game currency) be recognized as “property” in the legal sense? Only by confirming that game currency has the attributes of property can the employee's actions of using their authority to generate and resell game currency potentially fall within the framework of embezzlement.

The first instance court believed that the game coin in this case exists in the virtual space of the game “Arcade Three Kingdoms” and is merely an electromagnetic record within the computer game program, thus its essence belongs to the data of the computer information system. However, the second instance court denied this viewpoint, considering the game coin to be property in property crimes, for the following reasons:

• In conjunction with the provisions of the Civil Code, it affirms the concept that game coins belong to the category of network virtual property, and believes that the property in criminal law is not limited to tangible objects, but also includes intangible objects and proprietary interests.
• It is believed that game coins have economic and practical value. Operators need to invest manpower and resources in the development and operation of games, and players also need to pay a price to purchase them, which is no different from ordinary goods. Players obtain the game services provided by the operators by purchasing game coins, satisfying their personal spiritual needs.
• Although operators can continuously duplicate game coins by modifying the code, each game coin exists independently. The actor can exclude others from possession and establish new possession relationships, meeting the necessary conditions for the establishment of property crimes. If it is determined that the game coins controlled by players are assets, while simultaneously denying the asset attribute of the game coins controlled by the operators, it will create different evaluations of the legal attributes of the same item, undermining the unity of the concept of property.

However, in a case tried by the Tianhe District Court of Guangzhou in 2023 【(2023)粤0106刑初748号】, the court proposed a completely different viewpoint from that of the Shanghai court: while it affirmed the property attributes of game coins as virtual property, it further emphasized that having property attributes does not equate to conforming to the meaning of “public and private property” in the context of criminal law.

Basic Case Facts:

Chen exploited a vulnerability in a company's program to illegally obtain virtual currency “Yuanbao” from the game in question for free, and then provided paid recharge services to other players. In this case, whether the in-game currency can be classified as property under criminal law determines whether Chen's actions are classified as theft or illegal acquisition of data from a computer information system.

The court believes:

Although game coins have use value and exchange value within the gaming space*, their value is determined by the issuing unit itself and not by market transactions, and game coins cannot serve as a conventional medium of equivalent exchange in market economic activities.*

Moreover, the court believes that, based on the data attributes of the game coins, they actually possess characteristics of being indestructible and non-exhaustive, as well as being capable of batch replication and regeneration. After the perpetrator steals the game coins from the game operator, they still exist on the game operator's servers, and the game operator has not lost possession of the game coins. They can completely seek self-remedy through actions such as banning accounts and data restoration to achieve the goal of loss mitigation. Therefore, the aforementioned behavior is also different from general theft.

Therefore, Chen's actions are classified as the crime of illegally obtaining data from a computer information system.

Summary

From the above two rulings, it can be seen that there is a completely opposite judicial recognition on the issue of whether game coins in the category of virtual currency naturally belong to public and private property in the sense of criminal law in different regions and different courts.

The logic of the Shanghai court emphasizes the practical attributes of “players paying to purchase - virtual coins have countervalue - can be exclusively controlled - have economic value”, thereby incorporating them into the property system of criminal law; whereas the Guangzhou case emphasizes the technical characteristics of “can be infinitely replicated - do not rely on market supply and demand pricing - operators can self-help”, believing that although they are virtual assets, they do not necessarily equate to property in the sense of criminal law.

The divergence between these two viewpoints essentially reflects whether judicial authorities, when faced with new types of criminal forms, base their judgments on traditional property concepts or on the controllability of technology. Should they emphasize “economic substance” or “data attributes”? Currently, there is no unified standard for judgment across the country.

For lawyers handling criminal cases in the Web3 field, this divergence is of significant practical value:

This enables us to recognize more clearly that in criminal cases involving Crypto Assets and other new types of virtual assets, the boundaries between guilt and innocence, and between different crimes, are not clearly defined, but rather exist within a vast, arguable “gray area”. For lawyers, this means we are not passively accepting the prosecution's logic of accusation, but can actively reshape the nature of the case.

Depending on the specific circumstances of the case, lawyers can choose to draw on the ideas of the Shanghai court by proving that the assets involved have a real value basis (such as project development costs, market fair value, liquidity evidence, etc.) and exclusive control characteristics, steering the case towards “property crime”, or opting to apply the logic of the Guangzhou court, striving to classify the case as “data crime” or to negate the necessity of protection using regulatory policies.

The above content discusses whether virtual currencies have property attributes in the criminal law sense. In the next part of this article, we will continue to focus on another key issue: how should the amount involved in criminal cases in the traditional gaming industry and the Web3 field be determined? This issue is directly related to the applicability of charges to sentencing ranges and is also the most contested part in practice.