Cryptocurrency as a criminal legal category in Russian law: concept, meaning and problems of legislative regulation

Khimedenova Dina Nikolaevna ORCID: 0000-0002-1270-7447 PhD in Law Associate Professor; Department of Criminal Law; Southwest State University 374 Achkasova str., sq. 1, Khalino village, Russia, 305545 sadchikova.dina@yandex.ru Other publications by this author

Gorbacheva Tat'yana Igorevna Postgraduate Student; Department of Criminal Law; Southwestern State University 306000, Russia, region, Ponyri district, Oktyabrskaya str., 135g tanya.gorba4yova2017@yandex.ru

Introduction

To date, cryptocurrency as a unit of a decentralized payment system, without a legalized legislative definition in the criminal law dimension (its concept is not integrated into the current Russian Criminal Code), is characterized by a rather poorly developed legal toolkit, primarily due to the uncertainty of its legal regime, which, as a result, inevitably attracts the attention of many "cryptocriminals." Having such characteristic properties as anonymity, decentralization of emissions, volatility, encryption algorithm, absence of mediation, regulator and control, the cryptocurrency, thereby, creates the most favorable conditions for the commission of crimes not only in the field of information and communication technologies, but in other sectors of business and public life. For example, by the end of 2024, as a result of criminal attacks, attackers stole assets of over $51.3 billion. An analysis of this indicator indicates a steady increase in crime in the area under study. In particular, in 2023, the amount stolen amounted to $46.1 billion, which is almost 12% less than in the past year^[1].

The lack of control and, as a result, the impossibility of tracking cryptocurrencies turned it into the main means of payment for illegal transactions in drug trafficking, weapons, people, terrorist activities, etc. ^{[2, p.80]}.

Materials and methods

The methodology of this work is based on the dialectical, normative-legal, logical, formal-legal statistical method, as well as the method of system analysis. Thanks to the competent application of these methods, it was possible to study the object and subject of research, identify the problems of this area and present the most optimal and effective solutions.

The empirical basis of the study was made up of analyzed decisions of Russian courts, which made it possible to assess the current state of crime in the field of illicit trafficking in cryptocurrency valuables.

Based on the results of the study, promising areas for improving current legislation have been developed, the implementation of which will enhance the effectiveness of countering encroachments related to cryptocurrency.

Results and discussion

An attempt to define digital currency was made by the Russian legislator in the framework of Federal Law No. 259-FZ dated 07/31/2020 "On Digital Financial Assets, Digital Currency and Amendments to Certain Legislative Acts of the Russian Federation", which interprets it as a digital code used as a means of payment or savings, or investments.

At the same time, the scientific community continues to discuss the concept and role of cryptocurrencies in the domestic legal system. The controversy in this area is justified, first of all, by the multifaceted legal nature of this currency, due to its ambiguous place in the mechanism of criminal encroachment. The central issue here is the recognition of cryptocurrencies as the subject of a crime.

The resolutions of the highest judicial instance, the Plenum of the Supreme Court of the Russian Federation, contain the following clarifications on this issue:

- cryptocurrency may be the subject of crimes legalized by Articles 174, 174.1 of the Criminal Code of the Russian Federation;

- cryptocurrency can be the subject of commercial bribery, bribery.

In this aspect, it is impossible not to note the ruling of the Supreme Court of the Russian Federation in case No. 44-KG20-17-K7, issued on February 2, 2021, by which the cryptocurrency was actually recognized as property. Excerpt: "by transferring his property (cryptocurrency) in return for the funds received..."). However, as is well known, criminal law does not allow for the analogy of law.

The opinions of legal scholars vary significantly in the context under study. Thus, G.A. Rukavishnikova, in her recent study (2023), points out the complete impossibility of recognizing an immaterial thing, which is cryptocurrency, as the subject of criminal theft due to the lack of a physical feature inherent in objects of the material world. The author also talks about the limitations of the owner in the disposal of the cryptocurrency – the implementation of the transaction – the need for confirmation of which is carried out by all participants ^{[3, p. 66]}. A.V. Zhivogina ^{[4, p. 610]} and S.A. Epifanov ^{[5, p. 5]} adhere to a similar position, believing that cryptocurrency cannot be the subject of theft in any way, since property as part of theft is interpreted by the legislator in a "narrowly materialized" sense.

A radically different or opposite view is expressed by such authors as S.P. Kushnirenko, A.G. Kharatishvili ^{[6, p. 82]}, V.M. Gorelik ^{[7, p. 21]}, who consider cryptocurrencies to be "other property" in their legal status, thereby excluding the problem of its attribution to the subject of criminal encroachment, in particular embezzlement.. We see the stated position in the study of A.O. Mikhailova ^{[8, p. 332]}.

In the very content of the term "other property", these authors proposed to include its constituent components.:

– all kinds of assets – tangible or intangible, as well as movable or immovable, expressed in things or rights;

– documents of a legal nature and properties that establish the rights to such assets, as well as the interest in them.

The position of the authors is quite worthy of attention and support, since the very fact of committing theft of cryptocurrencies has the purpose of obtaining funds in their monetary terms as a means of payment as a result of converting a crypto asset, i.e. it is self-serving, similar to the composition of theft. In support of this position, let us turn to specific decisions from judicial practice.

Thus, the Third Cassation Court of General Jurisdiction in St. Petersburg clarified this position in the case - the digital currency could well have been used and accepted as a means of payment, converted into rubles, sold, therefore the subject of Chapter 21 of the Criminal Code of the Russian Federation is ^[9].

In another case, the court stated the following: "cryptocurrency does not possess the nature of a material property. It cannot be recognized as an object of civil rights. Moreover, it is a cryptocurrency that does not relate to electronic money or currency ^[9]."

Thus, in order to form a uniform practice, as well as eliminate existing contradictions both in legal doctrine and in law enforcement, we consider it advisable to consolidate the stated position in the relevant Resolutions of the Plenum of the Supreme Court of the Russian Federation (for example, in the PPVS "On Judicial Practice in cases of theft, robbery and robbery"), providing for an indication of cryptocurrency – digital currency is treated as "someone else's property", and accordingly, by expanding the subject of theft with the phrase "gratuitous withdrawal and (or) circulation of digital currency."

Interesting in the context under study are the judgments of M.M. Dolgieva, who proposes to include in the current Criminal Code of the Russian Federation, namely Chapter 28 – Article "272.1 of the Criminal Code of the Russian Federation. Theft of cryptocurrencies", burdened by both qualified – "loss of digital data, vulnerability of the device or the entire system", and qualified special features – "committed on a particularly large scale, as well as entailing other grave consequences or the threat of such." At the same time, M.M. Dolgiev suggests that a particularly large amount should be understood as an amount equal in monetary terms to one million or more in ruble equivalent ^{[10, p. 176]}. It is possible that the new edition of the article will contribute to the formation of uniform investigative and judicial practice in the field of qualification of cryptocurrency theft.

There are no legal difficulties in classifying cryptocurrencies as a means of committing a criminal offense. For example, cryptocurrency acts as a means of payment in the illicit trafficking of narcotic drugs, psychotropic substances, firearms, etc., since the very process of owning and using it presupposes anonymity, which means it excludes identification.

Thus, it follows from the verdict of the Volga City Court that on the Internet, through the use of cryptocurrency exchanges, exchange services for transferring virtual assets – cryptocurrencies – to bitcoin wallets opened by members of an organized group, funds were received for the purchase of narcotic drugs under the guise of legitimate transactions ^[11].

In addition, the use of cryptocurrencies as a means of committing criminal encroachment may also be part of fraud – Article 159 of the Criminal Code of the Russian Federation. This phenomenon is quite common in law enforcement practice and is carried out by involving individuals in investment transactions through the sale of cryptocurrencies and tokens using false ICOs, fake exchanges or exchangers. Its criminal origin is carefully disguised by exchanging one currency (cryptocurrency) for another and cashing it out through banking operations, followed by giving the funds legitimate status. Striking examples of the above are the verdicts of the Fokinsky District Court of Bryansk dated July 23, 2020 No. 1-139/20 ^[12], the Yartsevsky City Court (Smolensk Region) dated February 21, 2022 in case No. 1-11/2022 ^[13].

Thus, the widespread and active use of cryptocurrencies as a digital currency as a means of payment or exchange entails the inevitable use of the quasi-financial instrument under study as a means of committing crimes. Against the background of the above, it is rational to state the following. Filling the legal vacuum of the current legislative practice in this area due to the impossibility of an expanded qualification of crimes involving the use of cryptocurrencies within the framework of the current fraud structures – Articles 159-159.6 of the Criminal Code of the Russian Federation, we consider it advisable to supplement the Criminal Code with an updated article - 159.7 "Fraud using digital currency (cryptocurrency)". As an appendix to this article, it is necessary to give a legal definition of cryptocurrency in the criminal law dimension, which has the following form:

"A cryptocurrency is a unit of account for a decentralized payment system that can be converted into any monetary unit."

Moreover, it is necessary to support the judgments of such authors as E.V. Silchenko, A.M. Vasiliev, who propose in their scientific developments to supplement a number of articles of the special part of the Criminal Code with a new sign of qualifying property – "using cryptocurrencies" – such as Articles 205.1, 222, 172, etc.; and in Article 63 of the general part of the Criminal Code to include another aggravating circumstance is "the use of cryptocurrencies for the purpose of committing a criminal act and in relation to it" ^{[14, pp. 170-172]}.

Conclusions

We believe that the outlined innovations will contribute to the correct qualification of crimes, where cryptocurrency is both a means of committing them and a direct subject of criminal encroachment, and will pave the way for subsequent judicial reforms that can bring the administration of domestic justice to a qualitatively new level, strengthening guarantees for the protection of the rights and freedoms of its participants in the field of financial operations and functioning of payment systems of the Russian Federation.

It seems quite reasonable and justified to organize advanced courses and develop various kinds of educational programs with the participation of highly qualified specialists, including foreign ones, who have invaluable experience in the context of the stated issues in the field of IT technologies in order to improve the skills of existing law enforcement officers involved in the disclosure and investigation of such criminal attacks.

Thus, the legal status of cryptocurrencies, both in the criminal law dimension as a whole and in the mechanism of committing certain types of criminal attacks, needs further serious legislative developments, novelties, as well as clarifications and generalizations by the Supreme Court of the Russian Federation.