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The Reason Why China’s Authority Decided to Confiscate $4.2bn Worth Assets from PlusToken Scam

China managed to confiscate after arresting suspects of the PlusToken scam. The amounts withdrawn by the authorities exceed 4.2 billion dollars. Compared with prison terms, this time, more people focused on “the disposal of stolen assets”.

There are three basic disposal principles for property in criminal cases in China. First, all illegally obtained property shall be recovered or ordered to pay compensation; second, the lawful property of the victim shall be returned in time; third, contraband and personal property used for crime shall be confiscated and turned over to the state treasury.

Generally speaking, there are two disposals for illegal property: return the victim or turn it over to the state treasury. As for the contraband, it will be destroyed. Therefore, there is no necessity of refund of compensation in the case of PlusToken.

The core reason is that PlusToken is identified as a pyramid selling platform, and the behavior of the relevant organizers and leaders constitute the crime of organizing pyramid selling activities. In this case, the general judicial practice will not identify other participants or investors as “criminal victims”. Without this identity, it is difficult to enjoy the relevant rights – refund and compensation. The reason is very simple, investors pay membership fees to the organizations and other acts are involved in pyramid marketing, which is illegal. The related property belongs to the illegal income of pyramid selling organizations, which shall be turned over to the state treasury and shall not be returned.

The first step of turning over the illegal income to the state treasury is to change the price. The illegal income in the form of cash or bank deposit can be turned directly. But if the relevant property is tangible property or property rights and interests, it needs to be changed. The so-called “price change” means realization and other forms. The conventional measures include auction and sale.

After the “price change” is completed, they will be handed over to the state treasury one by one. Then, how to deal with it? According to the regulations issued by the Ministry of Finance of China in the early years, all the incomes from fines and confiscations investigated or sentenced by the administrative departments for industry and commerce, public security organs, people’s procuratorates, people’s courts, and state economic management departments subordinate to the local governments shall be handed over to the local finance.

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