The former secretary of the Fuzhou Municipal Party Committee, who supported mining, has been sentenced to life imprisonment, but it has also left us with many questions.

The former Fuzhou Municipal Party Committee secretary, who supported mining, has been sentenced to life imprisonment, leaving us with many questions.

Written by: Liu Yang, Deputy Secretary General of the National Criminal Commission of Beijing Deheng Law Firm

According to Tencent News on August 22, 2023, the Intermediate People’s Court of Hangzhou, Zhejiang Province, publicly sentenced the defendant Xiao Yi to life imprisonment for bribery, deprivation of political rights for life, and confiscation of all personal property. He was also sentenced to six years in prison for abuse of power, with the decision to execute life imprisonment, deprivation of political rights for life, and confiscation of all personal property. The illegally obtained assets and their proceeds of Xiao Yi’s bribery that were sealed and detained in the case shall be recovered according to law and handed over to the national treasury.

Xiao Yi is not unfamiliar to the cryptocurrency community, and some even believe that there is some connection between the collapse of 519 and him.

Xiao Yi is the first corrupt official mentioned in the discipline inspection report who is involved in “mining”. On the morning of November 13, 2021, the website of the Central Commission for Discipline Inspection and the National Supervisory Commission published a news that Xiao Yi, former member of the Party Group and Vice Chairman of the Jiangxi Provincial Political Consultative Conference, was “expelled from the Party and dismissed from public office”. It is worth noting that the report on Xiao Yi has some rare features. The report pointed out that Xiao Yi violated the new development concept and abused his power to introduce and support enterprises in engaging in virtual currency “mining” activities that do not meet the requirements of national industrial policies.

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The case of Xiao Yi was publicly tried and publicly sentenced, but it also left us with many questions, hoping that the judgment will be made public in the future. Today, the circle of friends of Lawyer Liu is full of such words: “How many bitcoins did he actually receive?” Although it has a certain gossip mentality, it also shows that the people do care about this issue.

For this reason, Lawyer Liu has summarized some of his own doubts, hoping to get answers from official reports one day. Some of these questions are also difficult points and doubts in handling blockchain-related cases by judicial authorities at present, and it is hoped that inspiration can be obtained from cases handled by the Central Commission for Discipline Inspection and the National Supervisory Commission, and even serve as guidance for the unified adjudication of cases involving cryptocurrencies.

Question 1: Did Xiao Yi receive virtual digital currency from Lin Qingxing?

Next, let’s analyze the official report. The report mentions two time points and there is an overlap on the timeline: the first timeline is from 2008 to 2021, during which Xiao Yi provided assistance to relevant units and individuals in matters such as engineering contracting, project development, and promotion in positions. It is not clear whether the virtual digital currency mining falls into the category of engineering contracting or project development. At the same time, it is mentioned that Xiao Yi illegally received a total of more than 125 million yuan in property, and it is not clear whether the “equivalent” includes virtual digital currency. From another perspective, if virtual digital currency was received, it means that in the process of handling the case of crimes committed in official positions, virtual digital currency is considered as “property”. It is worth noting that the report mentioned that “more than 57.82 million yuan has not been actually obtained”, and this amount should be included in the 125 million yuan, accounting for nearly half. Is it the rumored virtual digital currency received? If so, it means that Xiao Yi did not sell the received virtual digital currency, so the term “not actually obtained” is used in the report.

The second timeline is during the period when Xiao Yi served as the Secretary of the Fuzhou Municipal Party Committee, from 2017 to 2021. It overlaps with the first timeline. The announcement mentioned that “Xiao Yi violated the new development concept and national regulations, and provided assistance to enterprises engaged in virtual currency mining in terms of fiscal subsidies, fund support, and power guarantee, resulting in significant losses to public property, national interests, and the people’s interests, with particularly serious circumstances and extremely negative impact.” The content does not specify how much property Xiao Yi received during this period, and we cannot speculate. Lawyer Liu believes that this section of the announcement explains the reason why Xiao Yi was convicted of abuse of power. According to the relevant judicial interpretations of abuse of power, the criteria for filing a case include “seriously damaging the reputation of the country, or causing a particularly negative social impact, as well as other circumstances that cause significant losses to public property, national interests, and the people’s interests.”

Question 2: If Xiao Yi received virtual digital currency, how would the judgment determine its value? How will the virtual digital currency be disposed of in the end?

This question is based on the assumption that Xiao Yi received virtual digital currency, and is only for academic exploration without seeking the truth. In current judicial practice, the pricing issue of virtual digital currency involved in a case has always been a dilemma for frontline law enforcement agencies and a focal point of dispute between the prosecution and defense. From my practical experience, there is currently no mainstream viewpoint. Whether it is based on the price at which the victim purchased the virtual digital currency, the price at which the suspect or defendant disposed of the proceeds, or the so-called mainstream trading platform price, there are limitations and even illegality. If Xiao Yi did receive virtual digital currency, and it is the part mentioned in the announcement as “not yet actually obtained,” it would have certain guiding significance for current judicial practice.

At the same time, the announcement mentioned that “the property and its proceeds obtained by Xiao Yi through bribery that has been sealed and detained shall be confiscated according to law and turned over to the state treasury.” If Xiao Yi received virtual digital currency, how should it be confiscated according to law? How should it be turned over to the state treasury? In current cases involving digital currency, the judicial authorities have been criticized for a lack of legality and transparency in the process of disposing of virtual digital currency. Even the most compliant disposal method of “overseas disposal and repatriation” still involves domestic personnel entrusting foreign personnel to handle it. From the perspective of compliance with national policies, there are still some problems. Therefore, if this case involves the disposal of virtual digital currency, the disposal method is also worthy of attention and research.

Question 3: Did Xiao Yi intervene in the civil litigation between GM and Fuzhou Genesis Technology Co., Ltd.?

According to local media reports in Fuzhou, from December 9th to 11th, 2017, the then Secretary of the Municipal Party Committee, Xiao Yi, led a delegation from Fuzhou to visit Germany. They respectively held official talks with the Munich GM Foundation, the Freiburg Economic Promotion Agency, and the Frankfurt TB International Company. It is believed that this visit played a crucial role in facilitating the cooperation between Fuzhou Genesis Company and GM.

In September 2018, a dispute arose between the two parties regarding electricity fees. Fuzhou Genesis Company unilaterally stopped submitting data and sending expense lists to GM. In May 2019, GM filed a lawsuit against Fuzhou Genesis Company with the Fuzhou Intermediate People’s Court, demanding the return of 560,000 GPUs and 60,580 AntMiner S9 Bitcoin ASIC mining machines that were entrusted to Fuzhou Genesis Company. The first and second trials both supported GM’s lawsuit. Fuzhou Genesis Company later submitted new evidence and applied for a retrial to the Supreme Court, but it was ultimately rejected. Interested friends can take a look at Lawyer Liu Yang’s detailed interpretation of this case.

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Question 4: Is there any connection between Xiao Yi’s downfall and the “Interstellar Alliance”?

According to the China Newsweek report, during Xiao Yi’s tenure as Secretary of the Fuzhou Municipal Party Committee, he visited the headquarters of the Interstellar Alliance in Jiangxi. The official website of the Interstellar Alliance mentioned that the Xingchi Big Data Industrial Park, established in cooperation with Fuzhou High-tech Zone, is under construction with a total investment of 8.5 billion yuan and covers an area of 150 acres. In December 2020, it received an investment of nearly 100 million yuan from the Fuzhou High-tech Zone Industrial Fund. Lawyer Liu learned that the Interstellar Alliance case had its first trial on July 12, 2022, at 9 a.m. in the Xuzhou Feng County Detention Center, and the relevant persons involved have already been sentenced.

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