Original source: Xiao Za lawyer
Recently, there has been a surge in USDT theft cases, with various methods employed by victims to lose their assets. Some individuals have even lost millions simply by sending their Tron wallet login information through private chats on an instant messaging app, which is truly bizarre and terrifying.
To prevent many individuals from panicking and seeking help in a rush after an incident occurs, the Sa Jie team will today share practical experience on how to correctly recover stolen funds through legal procedures, maximizing the recovery of losses.
Tracing the Flow of Stolen Funds and Identifying Risk Addresses
Victims of theft must have a basic understanding of their cases. Even if they are unaware of how their assets were stolen, they should grasp the general flow of funds through publicly available blockchain data. Often, by analyzing the flow of funds and the actions of the suspect's accounts, one can gather a significant amount of key information.
Based on the Sa Jie team's experience in handling related cases, using TRC20-USDT issued on the Tron network as an example, most USDT theft cases can be categorized into two types: non-professional/semi-professional acquaintances committing the crime and professional gangs.
(1) Non-Professional/Semi-Professional Acquaintances
In cases involving non-professional/semi-professional acquaintances, it is generally quite simple to trace the flow of funds. Without the involvement of a third-party professional team to conceal or launder the criminal proceeds, the funds typically will not be split and transferred to multiple wallets in a short time, nor will they be withdrawn quickly. With careful analysis by the victim or their lawyer, most of the fund flow can be understood.
In fact, the Sa Jie team has encountered situations where suspects, after obtaining the victim's funds, kept the stolen money in their own wallets because they were unaware of reliable withdrawal channels.
(2) Professional Gangs or Involvement of Professional Money Laundering Teams
Cases involving professional gangs or the involvement of professional money laundering teams are more complex. In most cases, the victim and their lawyer can only see that the stolen funds are quickly split and sent to multiple addresses, with extremely complicated transaction chains that are difficult to trace. In such situations, if the stolen amount is significant, the Sa Jie team recommends directly hiring a professional third-party blockchain team for investigation and evidence collection, and not to waste time.
It is crucial for everyone to note that this step is extremely important. After the funds are stolen, we must promptly clarify the flow of the stolen funds to identify all risk accounts used by the suspect, laying the groundwork for subsequent recovery through legal procedures.
Applying to the Competent Judicial Authority for a Freeze and Issuing Relevant Legal Documents
The Sa Jie team has rich experience in handling such cases. Generally, after investigating and collecting evidence, we will organize all evidence materials and draft communication documents to submit through the reserved communication channels to the issuer of USDT, Tether, and the public chain operator (for example, the Tron network for TRC20-USDT). We will inform Tether and the public chain operator about the case, requesting their attention and conducting a preliminary investigation, marking any risk addresses that the suspect may use for money laundering or concealing criminal proceeds, and conducting special scrutiny on the next transfer actions of users of those risk addresses.
However, it is important for everyone to note that in most cases, a lawyer's letter does not have the direct effect of freezing the suspect's risk accounts. If judicial freezing is required, it must be applied for from a competent judicial authority and obtain relevant judicial legal documents.
Taking the TRC20-USDT theft case, which we handle most frequently, as an example, since the related transactions involve cryptocurrency, unless the evidence in the case is very solid, the public security organs (economic investigation) in mainland China are generally unwilling to initiate criminal cases. In such cases, the Sa Jie team usually opts for a strategic workaround, collaborating with colleagues in Hong Kong or other third-party countries to apply for judicial freezing from a competent judicial authority.
If Hong Kong has jurisdiction over the case, the handling process is generally as follows:
Assist the victim in organizing and collecting evidence of the stolen funds and draft a statement document based on this. Then, assist the victim in promptly reporting to the Hong Kong police (generally under the jurisdiction of the Joint Financial Intelligence Unit) and applying for the Hong Kong police to issue a "Non-Consent Processing Letter." This letter should be sent to the designated email address of Tether and the public chain operator, temporarily freezing the accounts that have been confirmed to still hold the stolen funds (the freezing period is generally short);
After the brief freeze, assist the victim in applying to the competent court in Hong Kong for a property preservation order with a disclosure order, further obtaining the KYC information retained by the user of the stolen funds account, thus achieving a formal freeze of the stolen funds account.
Once the freeze is completed, the recovery work is mostly done, and the next step can be to prepare to file a lawsuit to initiate the recovery process.
Recovering Stolen Funds Through Civil Litigation/Criminal Recovery
The actual process and specific operations for recovering stolen funds vary depending on the laws of the country where the competent judicial authority for the case is located.
For example, if the case is criminally filed in mainland China and relevant legal documents are issued requiring Tether and the public chain operator to freeze the involved addresses, then the case will fall under the jurisdiction of the judicial authorities in China. According to China's Criminal Law, Criminal Procedure Law, and other laws and judicial interpretations, the judicial authorities should pursue recovery and loss mitigation ex officio, without the need for the victim to handle it themselves. The victim can provide relevant evidence and clues to assist the public security organs. Of course, the victim also has the right to hire a lawyer to protect their rights and, if necessary, file a civil lawsuit alongside the criminal case.
In Hong Kong, the judicial authorities are only responsible for the criminal investigation and handling of the case. If the victim needs to recover the stolen funds, they must do so through a separate civil lawsuit. Based on the Sa Jie team's experience, the handling process for cases under Hong Kong jurisdiction is relatively straightforward. In most cases, after the victim files a lawsuit, the holders of the risk accounts that retain the stolen funds generally do not respond as defendants or choose not to appear in court. Therefore, as long as the delivery is proper, it is often possible to win through a default judgment or simplified procedure. With a favorable judgment, the victim can request Tether or the public chain operator to assist in recovering the stolen funds.
In Conclusion
In summary, cases of large amounts of USDT theft are becoming increasingly common, and the methods of crime are constantly evolving. While partners should remain vigilant, they should also keep a calm heart. In the event of a security incident, do not panic; carefully read the guidance articles from the Sa Jie team and contact a professional team for assistance as soon as possible. Do not rush to seek help without proper understanding.
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