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Digital currency crimes and its criminal law

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Since the formation of the first human societies until now, money has always been used as the main means of exchange and transactions. The course of the development of money in human history was that it started with commodity money and continued until the production of metal coins, the formation of paper bills (backed by gold) and the printing of unbacked bills. Today, we are witnessing the emergence of a new generation of money that is created on the Internet and transferred by means of new technologies. The general title of this generation of money, digital currency and lawsuits related to them is placed in the category of digital currency and computer crimes.

What is digital currency?

The Central Bank of the European Union has defined a digital currency as: a digital representation of value that is not issued by a central bank or a public entity. These funds are used by natural or legal persons (as a means of exchange) and can only be stored, transferred or exchanged on electronic platforms.

The main idea of creating virtual money was proposed in 1998 by Wei Dai, a famous Chinese computer engineer. The main purpose of proposing such an idea was to remove the intermediary role of the bank in carrying out financial affairs or even creating money. This idea was tried and tested by many engineers over many years; Until it was finally executed in 2008-2009 by an unknown person or group with the pseudonym Satoshi Nakamoto. By publishing a text, this group called the currency they managed to create Bitcoin. In that text, Bitcoin was defined as follows: “Bitcoin is a version of electronic money that allows people to peer-to-peer Peer-to-Peer and have online payments without any financial intermediary.

Satoshi’s solution was to share all financial transfer information within a point-to-point network (designed on the basis of Blockchain) between all computers active in the network (distributed around the world); For example, all the details of the transactions, such as the time and date of their execution or the amount transferred, etc., should be recorded so that the possibility of any fraud or reuse of money is eliminated.

The difference between digital currency and money

Digital currency (a general name that includes various examples such as Bitcoin, Litecoin, Nano, etc.) has differences from money in its traditional sense. For example, in the creation of these currencies, we do not see the monopoly of the power of creating money in the hands of a specific person or group; Rather, any person will be able to produce this currency using a specific method. Also, unlike real money and currencies, digital currency does not have the legal protection of many countries. Only a limited number of countries in the world have legally recognized these currencies. For this reason, digital currency crimes are increasing day by day.

Types of digital currency

In a general classification, digital currency is divided into two parts, convertible and non-convertible. Convertible currencies are currencies that can be converted into real money and vice versa. Generally, these currencies are used to buy real or virtual goods and services. These currencies are divided into two parts, centralized and decentralized. In centralized, the circulation of money and its control is the responsibility of a central institution. Currencies such as Reserve, Liberty, etc. are of this type. In decentralized convertible currencies, all processes, including issuing currencies, reporting transactions, etc., are done by individuals themselves (and through a cryptographic mathematical mechanism) instead of a central institution. Currencies such as Bitcoins, Litecoins, etc. are like this.

What type of currency is non-convertible currency?

Non-convertible currencies are currencies that are generated on a website or a computer game, can only be used in the same environment and cannot be converted into bank money in any way (into the currencies earned in computer games, so called coins). say). Currencies such as Project Entropia Dollars, Q coins are from this category.

Digital currency, which is somewhat defined above, has become popular for a reason. These reasons are: reducing the cost of transactions, easy access and ease of using them (any person and in any position can use them and it is not limited to a specific person or organization), facilitating transactions, respect for privacy and Reduce inflation. These reasons, along with people’s mistrust of the monetary and financial system ruling their countries, as well as the prevention of government institutions’ interference in their assets and transactions, have led to an increase in public interest in this type of currency day by day.

The legal situation regarding digital currency is quite ambiguous. In many countries, it is not clear whether the use of such currencies is allowed or not. Only in some countries, the high risk of using such currencies for transactions, etc. has been warned.

In Iran, at some point in time, efforts were made to determine the task of this emerging phenomenon, but it did not reach a specific end. It was in January 1996 that the central bank issued a directive and announced the ban on the exchange of cryptocurrencies (a type of virtual currency). This directive was completed in 1998, which indicated the exclusive role of the central bank in the production, distribution and management of the country’s money. According to this instruction, the central bank disclaimed its responsibility regarding the legal consequences of doing transactions with cryptocurrencies by people. Also, in February 1997, a legal draft was prepared under the title “Requirements and regulations in the field of cryptocurrencies by the Central Bank’s New Technologies Deputy” (according to which all types of cryptocurrencies were reviewed). This law was never approved.

In 1998, the Cabinet of Ministers approved a regulation entitled “The process of extracting the encrypted processing products of cryptocurrencies and the use of cryptocurrencies” and declared the mining of cryptocurrencies prohibited due to the excessive consumption of electricity; Unless the cryptocurrency mining devices have received a license from the Ministry of Privacy.

The regulations mentioned above are not enough to answer all the challenges in the field of virtual and digital currencies. For example, the ambiguity in the criminal laws regarding digital currency has led to challenges in the stage of discovery, prosecution, seizure, and trial of cases that somehow involve the category of digital currency. Criminals are willing to use them in the process of committing crimes due to the existence of these legal loopholes and the lack of sufficient supervision over the system governing these funds. Also, the legislator’s lack of knowledge and proper understanding of these types of currencies, the lack of familiarity of judicial officials and judges with their nature and function, the anonymity of users and the possibility of using fake identities, etc., have led to the increasing use of them by criminals.

The range of virtual activities related to virtual currencies is very diverse and includes such things as buying obscene content, illegal trafficking of other people’s data, selling fake documents, illegal drug and psychotropic drug trafficking, hiring professional killers to commit proxy murders, etc. to be In general, regarding the relationship between digital currency crimes and criminal activities, four situations can be imagined:

1- Digital currency is used directly to achieve a criminal result (purchase of prohibited items or content).

2- Facilitating the commission of a crime (money laundering)

3- They become the subject of a crime (using virtual currency, giving bribes)

4- They are used as a purpose or a tool to commit a crime (such as when a person spends all his assets on buying digital currency before declaring formal bankruptcy.)

What are the crimes of digital currencies divided into?

Examining court cases and digital currency crimes in different countries, shows that the most crimes that occur in this field are:

1) Theft of digital currency:

Digital currency can be stolen or lost just like cash and movable property. A group of professional thieves have the ability to steal digital currency by using some malware or by hacking the destination system. In some cases, thieves target businesses related to digital currency (such as virtual currency exchanges). Like the theft case from Flexion exchange.

2) Fraud:

In some cases, it is seen that the criminals, by resorting to some fraudulent methods, entice people with high capital to convert their assets into digital currency. But after taking the money of these people, they do not create any virtual currency and do not present it.

3) Money laundering:

In many cases, it is observed that criminals convert the benefits of crime into digital currency and transfer them to regions and countries that have less laws and supervision (about digital currency). One of the famous cases in this field was the case related to the Liberty Reserve site, where the largest money laundering in history took place.

4) Terrorism financing:

One of the worrying phenomena in the world is terrorism and terrorist activities. The activity of terrorists is not limited to attacking a specific place or carrying out a military operation. This group needs support and financial support for other activities such as promoting their thoughts, preparing military items and other matters. Part of the financial needs of this group is provided through digital currency. The cross-border nature of these currencies, the possibility of sponsors and donors remaining anonymous, as well as the lack of sufficient supervision, make the digital currency welcomed by terrorists.


As we mentioned earlier, due to the existence of legal loopholes, there are problems in the field of proceedings and prosecution of digital currency crimes. We can mention some solutions to solve these challenges. In the first step, it is necessary to make a precise legal definition of digital currency and clarify their legal nature. The next point is the training of judges and judicial officers; As long as judges and bailiffs are not aware of the nature and function of digital currency, criminals will always be one step ahead of them. Among the law firms that have complete information on how digital currencies work and the rights related to them, is Dadista Law Firm. You can get help from this institution to track computer crimes.

Since the phenomenon of virtual currency is rapidly developing and evolving, all people involved in this phenomenon should always update their knowledge in this field so as not to be surprised by the actions of criminals. All software and hardware infrastructures for the safe presence of people in the field of digital currency should be provided in order to minimize digital currency crimes. The last solution that comes to mind is to design a system to register the identity and name of digital currency users and determine their transaction records. This makes it easier to pursue the violators of the field of virtual currencies.

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Are digital currencies legal?
The legal situation regarding digital currency is completely ambiguous. In many countries, it is not clear whether the use of such currencies is allowed or not. Only in some countries, the high risk of using such currencies for transactions etc. has been warned.
What are the crimes related to digital currencies?
Theft of digital currency, fraud, money laundering and financing of terrorism are among the cases of crimes in the field of digital currencies.

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