Strengthen risk research and judgment, and accurately punish crimes

Author: Wang Xiafang, Chen Yiqun

Digital collections refer to the unique digital certificates generated by specific works, works of art and publications supported by blockchain technology. On the basis of protecting their digital copyrights, real and credible digital distribution, purchase, collection and collection are realized. Use, its core value lies in the assetization of digital content. As an emerging industry, the prospects of digital collections in protecting intellectual property rights, promoting the development of cultural and creative undertakings, and enriching the digital economy are widely optimistic. The "Opinions on Promoting the Implementation of the National Cultural Digitalization Strategy" issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council in May 2022 pointed out that it is necessary to "promote the transformation of cultural stock resources into production factors" and support legal entities and individual citizens to carry out cultural activities in accordance with laws and regulations. Data transactions have clarified the general direction of encouraging the development and innovation of cultural and digital related industries. **However, it should also be noted that the entire industry is still in the early stages of development, and the industry norms and regulatory system are not yet sound. As an application form of NFT, digital collections themselves have virtual asset attributes, and blind and disorderly development can easily lead to illegal Multiple risks such as fund-raising, fraud, malicious speculation, etc. need to be paid attention to urgently. **

** The disorderly development of the industry has a financial tendency. ** In April 2022, the "Initiative on Preventing NFT-related Financial Risks" (hereinafter referred to as the "Initiative") jointly issued by the Internet Finance Association of China, the China Banking Association, and the Securities Association of China mentioned that "no centralized Transactions (centralized bidding, electronic matching, anonymous transactions, etc.), continuous listing transactions, standardized contract transactions and other services, and the establishment of trading venues in disguised violations of regulations.” In view of this, some leading digital collection platforms explicitly prohibit secondary transfers, or only support free transfers under restricted conditions. There are also platforms that open secondary transactions directly or in disguise. The bidding mechanism, short-term trading and illegal setting of exchanges on some consignment platforms are similar to the electronic matching and continuous listing transactions stipulated in the "Initiative". keep accumulating. In addition, the "Proposal" specifically mentioned in "resolutely curbing the tendency of NFT financial securitization" that "do not weaken the non-homogeneous characteristics of NFT through methods such as division of ownership or batch creation, and carry out token issuance financing (ICO) in disguise", while At present, the model of "multiple releases for one copy" of digital collections is relatively common, and the scale of a picture can easily reach tens of thousands of copies, which makes NFT, which has the characteristics of non-reproducibility, indivisibility and uniqueness, no longer unique and affects its non-homogeneity. properties.

**Inflated prices hide the "thunderstorm" crisis. **From relevant news reports, we can understand that many digital collection platforms use marketing methods such as "airdrop", "blind box", "limited sale" and "synthesis" to create market appearances that demand exceeds supply. The lack of uniformity has made some collections that lack cultural imprints and artistic beauty, and even infringe copyrights, to be enthusiastically "sought after", and there is a trend that everything can be NFT. Under the disorderly hype in the secondary market, some collections have been hyped from the sale price of a few yuan to tens of thousands, or even hundreds of thousands of yuan, in a short period of time. There is no reasonable pricing mechanism and sufficient value support behind the inflated prices, and it is easy to deviate from the basic value law, leading to the accelerated formation of market bubbles.

"Concept" hype can easily become a criminal tool. **The first is that there is a risk of fraud in "false chaining". **The digital collection platform is built based on the system of "digital publication + blockchain". The value of blockchain technology lies in confirming the rights and ensuring that the unique digital certificate of the collection is not tampered with, which is the fundamental technical guarantee for the value of digital collection rights If the digital collection platform falsifies the record information of the blockchain, fabricates the fact of "on-chain", and makes illegal profits through false issuance and price speculation, it may be suspected of false publicity, or it may constitute a crime of fraud. **The second is that there is a risk of pyramid schemes in "rebates for attracting newcomers". **According to the transaction characteristics of the blockchain smart contract, the content of the smart contract can be set to pay a certain percentage of commission to the minter or the merchant for each transaction, and digital collections are often tied to concepts such as metaverse and blockchain for hype. Marketing models such as recruiting rewards and dynamic rights and interests can easily evolve into illegal pyramid schemes that use the number of development personnel as remuneration or rebates. **The third is that there is a risk of illegal fundraising in "committed income". **The platform induces consumers to purchase digital collections for investment purposes by means of static income, equity empowerment, premium repurchase, and physical cashback, when the behavior meets the characteristics of illegality, openness, sociality, and lure in illegal fundraising , may be suspected of the crime of illegally absorbing public deposits and fund-raising fraud.

The technical characteristics of digital collections, the possible legal risks in issuance and transfer, have attracted the close attention of the procuratorate. All types of financial activities must be brought under supervision in accordance with the law, adhere to both punishment and governance, and actively crack down on and prevent related crimes.

** The first is to precisely crack down on criminal activities committed under the guise of new technologies and new formats. ** For the new business forms brought about by the development of information technology, the procuratorial organs must be good at accurately grasping the boundaries between innovation and development and crimes. They must not only protect "true innovation" in accordance with the law, but also be able to promptly discover and accurately punish those who commit crimes in the name of innovation. Real "pseudo-innovation" to avoid the phenomenon of "bad money driving out good money". For fraud crimes committed with digital collections as a gimmick, illegal fundraising crimes committed with the promise of high profits, and illegal pyramid schemes using digital collections, the procuratorial organs must crack down on them in a timely manner in accordance with the law, effectively safeguard the interests of the masses, and accurately delineate the industry " Red Line".

**The second is to actively perform duties in accordance with the law, and insist on equal emphasis on punishment and governance. **Comprehensively use procuratorial functions, actively cooperate with administrative agencies to carry out traceability governance and comprehensive governance, guide administrative agencies to make full use of existing legal regulations and industry norms, bring financial activities under the guise of new formats into supervision, and prevent and resolve financial risks. Give full play to the functions and roles of procuratorial organs in preventing crime and promoting social governance, actively put forward relevant procuratorial suggestions, guide the industry to strengthen its own compliance construction, effectively take root in cultural and artistic connotations, continuously enrich high-quality application scenarios, and explore digital collections to empower entities path of economic development.

**The third is to strengthen risk research and judgment and law popularization. **Cooperate with relevant regulatory authorities to strengthen risk research and judgment, deeply analyze the current regulatory risks and industry hidden dangers in the field of digital collections, study the financial and social risks that may be involved in the development of emerging technologies, and provide decision-making advice for financial risk prevention and the improvement of the regulatory system. In response to the phenomenon of ordinary consumers blindly chasing hot spots, the procuratorial organs should strengthen publicity, guide consumers to rationally understand the price risks, financial risks, and policy risks that exist in current digital collections, and be good at identifying illegal financial activities under the guise of NFTs and metaverses , Don't be superstitious about the so-called "high yield", "stable profit without loss", "appreciation and preservation of value" and other gimmicks, avoid falling into "drumming and spreading flowers" financial scams, and effectively safeguard the safety of your own property.

(The authors are the Director of the Fourth Procuratorate Department of the People's Procuratorate of Zhejiang Province and the Director of the Third Procuratorate Department of the Yuhang District People's Procuratorate of Hangzhou City)