Cryptocurrencies And Criminal Law

Recently, crypto coins, which have been occupying our agenda mostly by being used for illegal activities, have started to be mentioned together with the phenomenon of crime. Due to the “fraud” news that also resonates significantly in the press, crypto coins (known as bitcoin publicly ) are associated with criminal and criminal law. Although the technology of crypto currencies is available for use as a criminal element due to its unique features and the fact that it is in an area that is not yet legally regulated and supervised, crypto currencies are not actually connected to crime alone. The fact that it has a number of features that only provide a favorable basis for malicious use does not make crypto coins illegal.

In this article, we share with you what you are wondering about whether the use of cryptocurrencies in its current form is a crime, whether such crimes are regulated among IT crimes, whether bitcoin-related transactions have a counterpart in criminal, and what sanctions, if any, will be applied to them.

1.      What Is Cryptocurrency(Bitcoin) And How Is It Used?

Crypto money, bitcoin and blockchain, that is, decoy technology, are seen in the same sense among the public and are used instead of each other. However, in fact, these are closely related concepts, but they do not mean exactly the same thing.

Blockchain (blockchain) technology is the name of a kind of new information technology used by cryptocurrencies. Crypto coins are produced, used, transferred and stored on this site. Bitcoin (BTC) is just one type of cryptocurrency. However, because it is the first crypto currency to be announced, the word bitcoin is also used instead of crypto money. There are many different crypto currencies besides bitcoin. They are called alternative coin(altcoin). LiteCoin, Ripple, Libra are examples of these.

  • TCMB crypto money “is defined as distributed notebook technology or using technology similar to digital networks that are created and distributed virtually, however, fiat money, bank money, electronic money, payment instruments, securities, or other capital market instruments do not qualify as intangible assets.” It is a kind of digital currency based on its characteristics, if we make a definition, it is exported, produced, used, transferred, stored using blockchain technology by private entrepreneurs that are not supplied by any country or central organization, encryption (cryptography) is a method of ensuring the functioning and security of

For the purchase and use of cryptocurrency, the user must download open-source software on his computer. This process does not incur any fees, and the user stores their bitcoins in a digital wallet.

The transfer of bitcoins is carried out through digital wallets, sites that provide services in this regard, brokerage firms or exchange platforms. For more detailed information on the subject, you can look at our article on “CRYPTO COINS, BLOCKCHAIN TECHNOLOGY AND TURKISH LAW”.

2.      Is the Use of Crypto Currency a Crime Under the Law?

The way countries look at crypto currencies and their approaches to this issue are different. Some countries have made various legal regulations regarding crypto currencies with a tax dimension and some with a criminal law dimension. In Turkey, however, no legal basis has yet been established regarding cryptocurrencies and their use. There is no clear ban on the use of Bitcoin, as well as legal regulations governing its use have not been established.

Today, there are only two regulations in Turkish law related to crypto currencies in our legislation. These are the following; published by the Presidency in the Official Gazette No. 31471 dated May 1, 2021 “Regulation on Amendments to the Regulation on Measures to Prevent Laundering of Proceeds of Crime and Financing of Terrorism and published in the Official Gazette of the CBRT dated April 16 “Regulation on the Non-Use of Crypto Assets in Payments”. However, since these regulations are made by the administrative authorities and there are no regulations issued by TBMM, the law (the law) is not in force in terms of the hierarchical relationship between the rules of

“ The general criminal law principle expressed as nullum crimen, nulla poena sine lege called “unlawful crime and punishment will not happen” “according to the 7th article, which is the equivalent of this principle in the European Convention on Human Rights.“No one may be found guilty of an act or omission that does not constitute a crime under national or international law at the time it was committed. In the same form, no more severe punishment can be imposed than the one that was applicable at the time of the commission of the crime.

This article does not prevent the trial and punishment of a person convicted of an act or omission that is considered a crime according to the principles of common law recognized by civilized nations at the time of its commission.”

According to the Article 38 of our Constitution  “No one may be punished for an act that the law in force at the time of its commission does not consider a crime; no one may be given a more severe punishment than the punishment imposed for that crime in the law when they commit the crime. Security measures that replace punishment and punishment are established only by law.”

 

Therefore, the first conclusion to be reached regarding criminal law based on the general principles of international criminal law and our Constitution is that no criminal and security measures can be applied to anyone due to the commission of an act that is not clearly defined as a crime in the law, in accordance with the principle of legality in crime and punishment. Since there is no legal regulation prohibiting the use of bitcoin today, that is, using bitcoin is not regulated as a crime by the provisions of the law, and criminal sanctions are not provided for in return, it cannot be said that the use of bitcoin is a crime. But the main issue that needs to be addressed is that according to the provisions existing in our criminal laws, acts that constitute a crime and require punishment can be caused by the use of bitcoin. For example, fraud, laundering of criminal proceeds or tax evasion can be carried out using bitcoin. In this case, is it possible to impose criminal sanctions on the perpetrators of such actions using bitcoin and blockchain technology on the grounds that they have committed a crime? Below we will mention about this topic in relation to various types of crimes.

3.      Crimes That Can Be Committed with the Use of Crypto Currency

It is known that cryptocurrencies are used in many illegal activities such as money laundering, terrorist financing, manufacturing and trading of drugs and stimulants, tax evasion around the world. The anonymity provided by crypto currencies is a suitable basis for such illegal activities because it is extremely convenient to hide people’s identity information and it is very difficult to track money transfers.

Recently, it has been come up that fraud and abuse of trust crimes have been committed in our country due to the fact that the owners of “brokerage firms” that we have witnessed in the news about crypto currencies have disappeared with their bitcoins, as a result of which people have lost money due to the inability to access their virtual wallets.

4.      Crimes That May be Associated with Crypto Currencies in Our Laws

4.1.            Breach Of Trust

A person who has saved on property that belongs to someone else and has been transferred to him for storage or use in a certain way, for the benefit of himself or someone else, except for the purpose of transferring the property, or denies this transfer phenomenon, commits an breach of trust.  One of the ways this crime is committed is  the crime (TCK a. 155/2) of abuse of security related to the goods deposited and delivered within the framework of the authority to manage someone else’s goods.

It is a matter of debate whether this crime related to crypto currencies can be committed. In order for the offense of breach of trust to occur, the person must transfer one’s property to another with his own consent and within the framework of a contractual relationship. In the event that the secret key to the Bitcoin account is given to someone else, if the recipient transfers these coins to his own account, it may be mentioned that they has committed a crime of breach of trust. Again, the person who spent the coins in the Bitcoin account handed over to him, even if it was unauthorized, or who refused to return the coins in the account when he was asked to return them, claiming that the account belonged to him and refusing to return the secret key, can be argued to have committed a crime of breach of trust.

4.2.            Fraud

Cheating by fraudulent behavior, causing harm to the victim or someone else, and providing benefits to them or someone else are the legal conditions for the occurrence of a fraud offense. These terms and conditions related to crypto currencies can be argued whether it is provided or not. Considering that the text of the article regulating the crime of fraud does not directly use concepts such as money, movable property, it is enough to provide only material benefits and incur material damage, it can be argued that a crime of fraud related to crypto currencies can be committed. For example, a person who does not ensure that someone is paid with bitcoins in exchange for giving someone else his car and delivering the car may have committed this crime.

Especially about cryptocurrencies commiting Qualified Fraud Crime by Using Information Systems (TCK 158/1-f)  whether the qualified version is processed can be brought to the agenda. Some lawyers believe that these crimes can also be committed in relation to crypto currencies. However, it should be noted here that since these funds are seized by fraud, for example, a person who shares a bitcoin key with his own consent cannot be qualified as a victim of a fraud crime.

 It is believed that another qualified state is included in the provision Article 158/h of the Turkish Commercial Code  the crime of fraud can also be committed by brokerage firms and their owners operating in this area, especially related to cryptocurrencies during the commercial activities of persons who are traders or managers of the company or act on behalf of the company. Because these institutions are structures in the form of commercial companies. Its activities are a kind of commercial activity. For this reason, there is no legal obstacle to the assessment of the grievances suffered by brokerage firms that are on the agenda today within the scope of this article.

There are authors who argue that a Qualified Fraud Crime (TCK 158/1-f) can also be committed in relation to cryptocurrencies by Using a Bank or Credit Institution as a Tool. Certainly, it is possible that this crime will also be raised in cases where cryptocurrency transfers and other transactions are carried out through banks but brokerage firms are not covered by a bank or credit institution.

In our opinion, it is possible to commit fraud crimes through crypto coins. Crime, especially through the use of Information Systems, banks, and lending institutions as a tool of commercial activities committed through the use of qualified skills with the form and processed within the scope of commercial activity, is possible to come up with the crypto money.

  • Robbery

Another type of crime that is considered suitable for processing related to crypto currencies is the commission of a crime of robbery, which is a qualified version of the crime by using information systems (TCK m.142/2-e) The subject of the crime of robbery is movable property. Whether someone else’s crypto coins can be processed by stealing digital wallets depends on whether the crypto coins can be qualified as movable property. There are different opinions about this in the doctrine. But the general consensus is that cryptocurrencies are not a movable property. For this reason, it is thought that theft crimes related to cryptocurrencies cannot be committed. However, it is also possible that crypto currencies will be evaluated as movable property as a digital currency in the future.

In terms of having data on the subject in 2009, the General Assembly of the Supreme Court of Cassation issued a noteworthy decision that recognizes the internet banking password is seized, and the money in the account is transferred to another account constitutes a qualified theft crime by using information systems. (TCK m.142/2-e) Therefore, it is possible that the same approach can be adopted in terms of the seizure of ciphers related to cryptocurrencies. But it should also not be ignored that there is real money here that was transferred by deciphering passwords. It should be noted that if cryptocurrencies are considered a type of “money”, only such an approach can be adopted. Therefore, for today  since it is forbidden to make expansive comments to a comparable extent according to the principle of legality in crimes and punishments, there are also lawyers who argue that the commission of the act specified in this article in relation to crypto currencies will not constitute a crime in the sense of 142/2-e.

4.4.            Acquitment of the Values of Assets Arising from Crime

According to the article 282 Of the Turkish Criminal Code.;

The person who exports values of assets that arise from a criminal offense which requires imprisonment of six months or more, issuing illegitimate or disguise the origin of them or has been obtained legitimately, to arouse opinion about where various processes subject to, and the person who holds this against crime without the participation, purchasing the value of the assets that comprise the subject of this crime knowing that future, accepting, possessing or using of the assets, commits values laundering crime, known as the offense of money laundering.  Published in the 31471 numbered official gazette dated May 1, 2021, by the presidency laundering proceeds of crime and financing of terrorism, according to a regulation amending the regulation on measures for the suppression of Law No. 5549 on prevention of laundering proceeds of crime who are regarded as responsible for the implementation of the law, “the crypto service provider entity” has also been added. This situation also shows that the necessary steps have been taken with the expectation that this crime related to cryptocurrencies has been committed and can be committed. With this regulation, several obligations have been imposed on brokerage firms to notify the relevant authorities of transactions related to crypto currency. The fact that the text of the article mentions “asset values”, and not expressions with a clear legal definition, such as money or movable property, also makes it possible that the type of crime can be committed with crypto currencies.

4.5.            The crime of entering the information system (TCK m.243), The Crime of Blocking, Disrupting, Making the System Inaccessible, Destroying or Changing the Data (TCK a.244),

It is also possible that these crimes, which are among the information crimes, can be committed in relation to decoy technology systems. After all, one of the biggest risks associated with cryptocurrencies is cyber attacks. It is possible that money transactions stored in data sets called blocks can be sabotaged by entering various methods into the systems and disrupting, modifying, making them inaccessible and destroying them. Therefore, there is a very strong possibility that we will hear the name of these crimes related to cryptocurrencies.

The qualified form of the crime located in Article 244/4 of the Turkish Commercial Code Providing Unfair Interests Through Cyber Crimes is also a crime that may be raised related to the actions of “cryptocurrency fraud” that are covered in the media. In some decisions of the Supreme Court, the act of transferring funds to one’s own account by breaking a bank password was considered in this context. However, in the YGCK decision, which we mentioned above under the heading of robbery, it has been accepted that this crime does not occur, but 142/2-E. Moreover, this type of crime is in the category of auxiliary crime, and it can only be raised if the act subject to the crime does not give rise to another crime contained in the law,  But in the current situation, it is possible that this crime was committed through crypto coins and requires punishment.

4.6.            Other Crimes

As we mentioned briefly above, it is certain that many crimes related to the integration of crypto currencies into our lives and actually their assets can be committed through these coins. In this context, it is possible that many crimes such as financing terrorism, manufacturing, and trading of drugs and stimulants, tax evasion, and illegal betting may be committed through the use of cryptocurrencies.

Conclusion

The concept of crypto makes it necessary to make changes and innovations in the field of criminal law and all areas of law. In order for the law to protect people’s fundamental rights and freedoms, it is a reality that it has and will have to monitor the technology. In this bulletin, we have made general and some subjective opinions on the grievances that may arise related to the use of cryptocurrencies and their equivalents in the field of Turkish Criminal Law. Our team, which is doing the necessary legal studies related to the grievances created by cryptocurrencies for today, is closely monitoring the changes that cryptocurrencies will create in the field of IT law and criminal law in the future within the scope of international law and Turkish law. You can request legal assistance from the lawyers of the Solmaz Legal and Consulting team who are experts in the field of IT law and criminal law in relation to this issue.

References

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CHASON, Eric D., “How Bitcoin Functions As Property Law” (2019). Faculty Publications. Faculty Publications / Faculty and Deans | William & Mary Law School (wm.edu ).

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https://www.mevzuat.gov.tr/MevzuatMetin/3.5.200713012.pdf

https://www.resmigazete.gov.tr/eskiler/2013/06/20130627-14.htm

https://www.resmigazete.gov.tr/eskiler/2021/05/20210501-5.pdf

Turkish Penal Law