Liu Yuntong

People's Public Security University of China

Abstract：

Owing to their decentralization, anonymity, and cross-border transferability, virtual currencies are deeply embedded in cyber-enabled crime as a core carrier of criminal proceeds, making recovery of illicit gains urgent. China's prohibition-oriented regulation sits in tension with the statutory duty to confiscate illegal gains and restore victims' property, and conventional auction-or-sale methods are largely inapplicable. Local practice has thus developed an "indirect disposal" model built on third-party custody, offshore liquidation, and repatriation of proceeds. While this eases technical constraints, it exposes ambiguous legal characterization, irregular third-party qualification and liability, doubtful compliance, and weak procedural safeguards—rooted in virtual currency's characteristics and third parties' profit orientation combined with regulatory gaps. This article argues for returning disposal to its character as judicial execution, with in-kind preservation as priority and liquidation as exception; a third-party admission and accountability mechanism; dual liquidation channels of domestic compliance and offshore filing; whole-chain supervision with guaranteed participation; and systematized legislation balancing efficiency with procedural justice.

Key Words：

virtual currency; indirect disposal; third-party institutions; disposal of case-related property; recovery of illicit gains