Criminal Law Regulation of Illegal Funds Raising through ICO Based on Blockchain Technology

Abstract

ICO is a mechanism for issuing and offering tokens to investors, which can be classified into three main categories: crowdfunding ICOs, profitable ICOs, and ICOs that meet the characteristics of securities. Most ICO projects fall into the category of productive crowdfunding. Profitable ICOs are divided into two types: those backed by real assets and those that are not backed by real assets. Tokens with the characteristics of securities can be recognized as issuing shares or investing in funds, depending on their characteristics. As a carrier and application of blockchain technology, ICOs provide modern businesses with the opportunity to radically transform their economic models, but they also give rise to many new forms of illegal and even criminal activity. In this regard, it seems expedient to carry out a comprehensive analysis of the theoretical foundations and norms of national criminal legislation in order to ensure legal regulation of illegal ICOs. Deceptive ICO schemes should be classified as fraud (Article 266 of the Criminal Code of the People’s Republic of China). In particular, multi-level marketing aimed at obtaining tokens may be considered as the organization and management of a financial pyramid (Article 224.1 of the Criminal Code of the People’s Republic of China); Unlawful actions related to non-deficit forms of ICO may be classified as illegal economic activities (Article 225 of the Criminal Code of the People’s Republic of China).