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03/07/2025

Public Opinion Risks in Judicial Handling of Cryptocurrency and Response Strategies

Handling cryptocurrency assets in criminal cases poses a major challenge for China's judicial authorities. One of the most easily overlooked yet far-reaching risks is the public opinion risk. Without tight controls, controversies over the legality, transparency, and process of handling cryptocurrency can trigger fierce online backlash and even erode public trust in the justice system. 1. Public Opinion Risks in Judicial Cryptocurrency Handling Drawing from practical ex

Public Opinion Risks in Judicial Handling of Cryptocurrency and Response Strategies

Handling cryptocurrency assets in criminal cases poses a major challenge for China's judicial authorities. One of the most easily overlooked yet far-reaching risks is the public opinion risk. Without tight controls, controversies over the legality, transparency, and process of handling cryptocurrency can trigger fierce online backlash and even erode public trust in the justice system.

1. Public Opinion Risks in Judicial Cryptocurrency Handling

Drawing from practical experience, there are four main categories of public opinion risk in the process of handling seized cryptocurrency:

1.1. Legal Disputes

Currently, China has no formal legislation specifically governing cryptocurrency. Regulatory oversight relies primarily on guidance documents from the central bank and relevant ministries. This has led to inconsistencies in how courts define the legal nature of cryptocurrency:

  • Some courts treat cryptocurrency as a valueable asset that can be appraised.
  • Others classify it as computer system data with no clear asset value.
  • Some cases have reached intermediate conclusions combining both elements.

This lack of consistency makes cryptocurrency asset handling prone to controversy, especially when the public notices that cases with similar facts produce different outcomes.

1.2. Victim Rights Disputes

In cases involving crypto fraud, crypto theft, or illegal fundraising, seized funds are typically returned to victims. However, in cases involving unlicensed operations, exchange operations, or crypto pyramid schemes, there are no clearly defined legal victims, so seized cryptocurrency is generally forfeited to the state.

This easily creates conflict with retail investors who believe they are victims and demand the return of their invested funds. When those demands go unmet, they may spread negative information and generate public pressure.

1.3. Market Price Volatility Risk

Cryptocurrency values fluctuate dramatically. If seized crypto assets are sold months or years after the fact, price discrepancies can spark major controversies:

  • If the value has surged, defendants may argue they were penalized far more severely than warranted.
  • If the value has dropped sharply, victims may object that they received significantly less than their original losses.

For example, if a case was tried in 2021 when Bitcoin was at $60,000 but the assets were only liquidated in 2023 when Bitcoin had fallen to $20,000, disputes would inevitably erupt.

1.4. Compliance Issues and Non-Transparent Transactions

Under current regulations, China prohibits crypto-to-fiat transactions domestically. Yet some asset-handling firms still conduct covert conversions through personal accounts or unofficial channels.

There have been cases where a Chengdu-based handling firm used confiscated cryptocurrency to trade derivatives on international exchanges and incurred losses. If incidents like these come to light, public backlash erupts immediately and casts suspicion on the transparency of the judicial system.

1.5. International Public Opinion Pressure

China maintains one of the world's strictest cryptocurrency control policies. Meanwhile, the United States and Western nations take a more flexible approach. If China continues handling cryptocurrency assets in opaque ways or with apparent abuses of authority, international organizations may issue sharp criticism, damaging China's image on the global stage.

2. Strategies for Managing Public Opinion Risk in Cryptocurrency Handling

To avoid the risks outlined above, judicial authorities should adopt the following measures:

1️⃣ Follow lawful procedures: Clear guidelines are needed for valuing, processing, and liquidating cryptocurrency during legal proceedings to ensure transparency.
2️⃣ Engage professional handling firms: Partner with companies experienced in and capable of complying with international law, avoiding unlawful transactions.
3️⃣ Disclose information appropriately: Release transparent information about asset handling methods to minimize negative speculation from the public.
4️⃣ Strengthen mainstream communications: Promote public legal literacy around cryptocurrency so that people better understand the handling processes.

3. Conclusion

2025 may well see shifts in China's cryptocurrency regulatory policy, but those changes will materialize first within the judicial sphere — covering issues such as asset valuation, value appraisal, and lawful handling procedures. Legalizing crypto investment or opening up the market, however, remains a distant prospect.

Against this backdrop, judicial authorities must pay particular attention to public opinion risk when handling cryptocurrency assets, ensuring transparency, legal compliance, and fairness to avoid unnecessary controversies.