Recently, the Sa sister team found that some old friends in the coin circle had their bank cards frozen and even received calls from the police requesting cooperation in "assisting with investigations" due to selling cryptocurrencies, especially USDT.
Today, the Sa sister team will explain in detail for everyone the reasons, risks, and countermeasures for having bank cards frozen and receiving "assistance with investigations" due to selling cryptocurrencies.
01. Why would I get "hammered" just for selling USDT?
Before discussing the reasons, we need to clarify a major premise: is it illegal to hold cryptocurrencies in China?
Here's the answer: It's not illegal.
This is because China currently has not enacted any laws, administrative regulations, or administrative orders related to cryptocurrencies.
The well-known September 4th notice, September 24th notice, and others are lower-level normative documents, only departmental normative legal documents, and do not constitute "preliminary laws" in the sense of criminal law. Furthermore, these normative documents have never explicitly stipulated that Chinese citizens are not allowed to hold cryptocurrencies. (The September 4th notice prohibits illegal token issuance and financing, but does not prohibit individuals from trading cryptocurrencies. Simply selling USDT purchased with RMB may not necessarily be illegal.)
This means that simply holding cryptocurrencies is not illegal in itself, and of course, it cannot constitute a crime.
So, why would selling cryptocurrencies lead to frozen bank cards and "assistance with investigations"?
1. "Wild" U-channel leading to receiving "dirty money"
"Dirty money" mainly refers to proceeds from telecommunications fraud and online gambling. Some of it is mismatches from U-platforms (these platforms are quite wild themselves), and some U-platforms are colluding with upstream criminal money laundering channels, where the exchange of cryptocurrencies for fiat currency may be a step in laundering dirty money.
In China, money laundering is a red line behavior. Once the bank believes that the money you received may be illicit funds, they will freeze the bank card. U-platform operators are often physically located overseas, and the source of funds is complex and difficult to investigate. For individual traders, it is difficult to judge whether the funds received are dirty money through a single transaction. Banks generally predict this through transaction frequency, fund flow, and whether the account's usage aligns with internal supervision.
2. Greed for high exchange rates and cooperation with "mysterious high-level individuals"
Many "mysterious high-level individuals" are engaged in underground money exchange businesses, mainly in foreign exchange. The usual operation is "matching," where they collect fiat currency in one country and then deposit an equivalent amount of foreign exchange into a designated account in another country. For example, if an employee working overseas wants to send their salary to family members in China without going through the formal channels (high fees, low exchange rates, slow speed), they would seek out underground money exchange businesses to transfer the money, and the exchange rate offered by the money exchange business is more favorable than the official exchange rate, while also avoiding tax costs.
However, it's difficult to say whether the money sent to the domestic account by the money exchange business is clean. For example, the money exchange business may cooperate with other borderline operations or telecommunications fraud platforms to ensure that they have sufficient legal currency. After these unclean funds are sent to domestic customers, it can easily lead to various legal risks.
There are also underground money exchange businesses that provide U-coin exchange services, offering higher prices for purchasing cryptocurrencies and lower fees than the market rate. At this point, the greed for high exchange rates may lead to involvement with upstream dirty money.
3. Improper behavior of the seller
If one is simply profiting from trading cryptocurrencies, there is no major issue. However, the Sa sister team has found in practice that many individuals involved also engage in some borderline behavior or have income that is difficult to explain.
For example, the Sa sister team recently discovered in the process of providing services to a client that the client received some funds related to online gambling due to platform issues during the process of selling USDT, resulting in over 400,000 RMB being frozen in their bank account. The case itself is not complicated, but through multiple communications with the client, we found that the client also has a habit of participating in online gambling and has a large amount of mixed funds, leading to a serious problem: the difficulty in explaining the legitimacy of the fund sources. Coupled with the client's lack of stable legal income sources, this directly led to difficulties in the unfreezing process.
02. Will "assisting with investigations" lead to criminal risks?
If it's simply trading cryptocurrencies, generally speaking, it won't. Article 64 of China's Criminal Law stipulates that all illegal gains obtained by criminals shall be recovered or ordered to be returned. If the funds in the account are illicit, the public security organs have the right to recover them. At this point, the cardholder is not the target of the public security organs, but is merely an innocent party affected by the funds involved, and can be considered a different kind of "victim."
However, the Sa sister team has also found a special situation in handling cases—when the user has a special relationship with the source of funds beyond the ordinary user-platform relationship and has a certain level of awareness of the "improper" source of funds on the platform. This situation is more complex and involves two significant criminal risks: concealing and hiding criminal proceeds and aiding in the commission of criminal activities through information networks.
Article 312 of China's Criminal Law refers to the crime of concealing and hiding criminal proceeds and the proceeds of crime, which means knowingly harboring, transferring, purchasing, selling on behalf of, or concealing and hiding criminal proceeds and the proceeds of crime. Note that this crime requires the subjective element of the suspect "knowingly" dealing with the proceeds of crime, which needs to be judged based on objective behavior. For example, in the cases handled by the Sa sister team, the suspect not only has a specific relationship with the channel and a large amount of chat records that can prove their clear awareness of the source of funds from the channel, but also has behavior of depositing funds after receiving illicit funds, which can easily be determined by judicial personnel in China as constituting "knowingly" concealing and hiding criminal proceeds and the proceeds of crime.
Article 287-2 of China's Criminal Law, the crime of aiding in the commission of criminal activities through information networks, is similar in the subjective element to the crime of concealing and hiding criminal proceeds and the proceeds of crime, also requiring the suspect to "knowingly" assist others in using information networks to commit crimes. This crime is more likely to occur in cases of assisting others in buying and selling cryptocurrencies and must be approached with caution.
03. What to do if your card is frozen and you are asked to "assist with investigations"?
If contacted by the police, refusing to cooperate with the investigation may lead to further coercive measures by the public security organs. According to the "Provisions on the Procedures for Handling Criminal Cases by Public Security Organs," the period for freezing bank cards for criminal investigations is 6 months.
First, self-assess the criminal risks. If the black money was mistakenly matched by the U-platform and you have no other illegal behavior after self-inspection, you can cooperate with the investigation and prepare legal materials to prove your own legitimacy.
Contact the bank to confirm the judicial organ exercising the power to freeze the account and their contact information, and try to print relevant bank transaction records of funds in and out.
Contact the U-platform and request trading records.
Write a statement explaining in detail and in an organized manner your cryptocurrency trading activities, the source of funds, etc. (If you have difficulty explaining, consult a professional lawyer.)
If contacted by the local public security to appear for questioning, consult a professional lawyer in advance, prepare for the investigation, and be cautious if the public security organ in another jurisdiction freezes your account and requests you to appear for questioning.
04. In conclusion
If your bank card is frozen, don't panic, as it may not necessarily involve criminal matters. However, be prepared mentally that whether you are identified as a criminal suspect in a criminal case or the flow of funds in the account is evidence of a criminal case, if it does involve illicit funds, even if the cardholder is "well-intentioned," there is a possibility of the funds being recovered or partially recovered.
Finally, I hope that all friends in the coin circle can unfreeze their accounts in a timely manner and stay safe. We are always here!
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