Written by: Huang Wenjing, He Weiyi

Introduction

With global anti-money laundering standards tightening and the implementation of the new Anti-Money Laundering Law in our country, cryptocurrency crimes have exhibited characteristics of "high frequency, high amounts, and high concealment." From early fraudulent trading platforms to today's on-chain phishing and fragmented money laundering using smart contracts, victims not only face asset losses but also find themselves in situations of information asymmetry and difficulties in proving their cases.

However, in judicial practice, victims generally face a core dilemma: knowing that the funds "are still on the chain,” it is difficult to push law enforcement agencies to complete the seizure, freezing, and disposal. Often, this is due to incomplete evidence, unclear reporting, and insufficient communication and cooperation, leading to missed optimal investigation opportunities.

This article combines the latest judicial practices and technical means to provide victims with a clear and feasible response path, helping to break the deadlock in recovery.

The Possibility of On-Chain Asset Tracking

First Point: How Does the Law View Your Cryptocurrency Loss?

This depends on the nature of the matter.

If it is an ordinary investment or trading dispute and you believe the project party did not fulfill its obligations, the court will likely consider this to be a case of self-risk and may have difficulty supporting recovery.

But if you were scammed, stolen from, or robbed, it is entirely different. Judicial practice has now clarified that cryptocurrencies are legally regarded as valuable "property." Therefore, law enforcement has the responsibility to file a case for investigation, and according to the law, recover and confiscate these illegal gains, returning them to victims.

Second Point: Technology Can Track, So Why Don’t the Police Immediately Freeze the Assets?

Blockchain transaction records are publicly accessible, but this does not mean that the police can take immediate action.

For the police to freeze assets, clear evidence is needed to prove that "this money was indeed obtained from the victim and has flowed to this specific address or account." The anonymity of cryptocurrencies and the rapid transfer by criminals (such as using cross-chain and mixing tools) make the first few hours to 48 hours after the report crucial. If the evidence chain is unclear and incomplete, the police cannot effectively carry out their work.

Third Point: The Key to Success Lies in the "Primary Evidence" You Provide

To push for case filing and successfully freeze assets, the quality of the evidence you submit is crucial. Especially when involving overseas platforms or complex transfer paths, having only chat screenshots is far from enough.

You need to prepare a set of evidence that can clearly explain the following questions:

• Identity Proof: Who are you, and who is the other party?
• Behavior Evidence: How did the other party scam you/steal from you? What was the complete process?
• Financial Proof: Where did your money come from, and which blockchain address was it specifically transferred to?
• Technical Analysis: (if possible) Show the subsequent flow of funds to prove where it ultimately went.

In simple terms, the more professionally and clearly you prepare, the higher the speed and success rate of police action!

Building a Systematic Evidence Chain: From Identity Verification to Fund Flow

To help you effectively report to the police and prompt action, you need to prepare a set of clear and strong evidence. This evidence can be organized and understood from the following four levels:

Step One: Prove "Who You Are" and "Where Your Money Comes From"

This is the starting point of everything. You need to prove to the police:

1. Your true identity (ID card).

2. The legal source of the funds you invested. This includes:

Your original records of transferring funds from your bank card or Alipay/WeChat Pay to purchase cryptocurrency. This proves that your money is clean.

Your account information at centralized exchanges (such as UID, real-name authentication screenshots, bound phone numbers). This proves that these asset accounts belong to you and serves as the basis for the future return of funds.

Step Two: Fully and Accurately Restore "How the Money Was Transferred Away?”

This is the core technical evidence and cannot rely solely on screenshots. You need to compile the following "three-piece set" for each amount of money that was transferred away:

1. Transaction Hash (TxID): This is the unique "ID number" for this transaction on the blockchain.

2. Wallet Address: The addresses of the sender and receiver.

3. Exact Time and Amount:

Organize this information into a clear table and attach links found in blockchain explorers. This allows police and tracking experts to see the flow of funds at a glance.

Step Three: Prove That the Other Party "Is Not a Normal Transaction but is Committing a Crime!”

This is to help the police accurately classify the case as fraud or theft and not just a simple investment loss. You need to compile evidence that proves there is fraudulent behavior by the platform or individual, such as:

• The website and promotional materials of the fraudulent platform.
• Chat records and group call screenshots where the other party promised "capital protection and high returns."
• If your account was operated by "someone else" (e.g., stolen unexpectedly), proactively contact the exchange to obtain abnormal login records, IP addresses, or large transfer risk control reports. This can strongly refute the claim of "your own operational error."

Step Four: Provide a Professional "Flow of Funds Chart" Indicating Key Outlets

When funds have undergone complex transfers after multiple transactions or mixing, a flow analysis report issued by a professional agency is crucial. This report can turn chaotic transaction records into a clear "funding pathway map" and achieve two key objectives:

1. Tracking Endpoint: Clearly indicate where your money ultimately flowed to, which platform or address.

2. Finding Leverage: If it ultimately flows into a centralized exchange that requires real-name authentication, law enforcement can quickly send a legal document to the exchange based on this report, requesting the freezing of related accounts. This is a key step in asset recovery.

The core of the report is: pointing out the "outlet" where the assets ultimately flowed. If the funds finally flow to a centralized exchange that requires KYC certification or belong to a known "OTC liquidity" gray fund pool, law enforcement can then send a request for cooperation or take emergency stop-payment measures based on this.

Practical Communication Skills: How to Effectively Dialogue with the Investigative Agency

When reporting to the police, how you clearly and professionally present the case directly affects the police's judgment on the case and subsequent actions. The key lies in three points:

First Point: Accurately State the Nature of the Case:

Do not simply say "I was scammed" or "I lost money in investments." The police need to clearly determine that this is a criminal offense rather than a regular economic dispute. You can express it like this:

"I have encountered a fraud (or theft/illegal fundraising) perpetrated using cryptocurrency. The other party is not a normal trading counterpart but transferred my assets through a fraudulent platform (or phishing links/illegally operated my account).”

This can directly guide the police to handle it according to criminal case procedures.

Second Point: Clearly Explain the Flow of Funds:

In the shortest way, make clear the key information. Let the police quickly grasp the focus, and you can organize it according to this template:

"My money was transferred from my real-name authenticated 【XX Bank/Alipay】 account to my account at 【XX Exchange】 (for example: Huobi), exchanged for 【USDT】, and then transferred at 【X Month X Day X Hour X Minute】 to the wallet address provided by the suspect. Preliminary tracking shows that this asset has flowed to 【XX offshore exchange/some known money laundering address pool】, and it can still be traced."

Stating it this way lets the police immediately understand: the asset flow is clear, and there may be conditions for tracing, and the situation is urgent.

Third Point: Proactively Provide an Action Plan

The police may not be familiar with blockchain operations, and you can proactively provide clear guidance to assist the police in quickly operating, facilitating a swift advance:

Submit "Asset Freezing Suggestions": Organize specific coins to be frozen, wallet addresses, current platforms (if any), and estimated value in a written format. This can significantly save the police's verification time.

Inquire About Technical Support Channels: Many police in various regions have established cooperation with professional blockchain security companies. You can politely ask: "Do we need to contact a professional technical company to provide a flow of funds analysis report or assist with legal documentation?" or "Do you need us to cooperate in issuing a formal technical certification assistance letter?"

Asset Disposal and Monetization: New Judicial Trends in 2026

The freezing of assets does not mean the end of the rights protection process; victims are most concerned that "the disposal and return of assets" is key. The subsequent processes mainly involve the following three core steps:

First: How to Legally Monetize Assets?

In the past, privately seeking channels to sell coins was very risky. Now, there are more regulated paths: for example, places like Beijing have begun pilots where the police entrust officially designated compliant agencies (such as the Beijing Property Exchange) to conduct public auctions for disposal.

You need to pay attention to: ensure that the monetization process is public and compliant, and that what ultimately returns to your account is legal domestic currency (RMB). This can fundamentally avoid the risk of "money being frozen again after it returns."

Second: What Fees Will Be Deducted Upon Return?

During the disposal process, necessary fees for technical analysis, asset custody, and other third-party services may arise.

You need to be aware: with the help of a lawyer, understand whether these fee items are reasonable and whether the deduction ratios are transparent. Ensure that your return amount is clear and traceable to avoid unnecessary losses of assets during the disposal stage.

Third: What If the Money Has Flowed Abroad?

For funds that have been transferred to offshore exchanges or addresses, there are still international cooperation mechanisms that can be attempted:

Core Strategy: Promote the investigative agency to issue a notice for cooperation through INTERPOL or contact stablecoin issuing companies (such as Tether, which issues USDT) to apply for blacklisting the relevant wallet address.

If successful, the USDT in these addresses will be frozen globally, preventing transfers and buying valuable time for our subsequent legal claims.

Conclusion by Mankiw: The process of retrieving money focuses on "legal monetization, transparent return, and utilizing international mechanisms for blocking." Understanding these paths can help you more effectively cooperate with the police and lawyers, promoting the safety of assets and maximizing their return to you.

Conclusion

The rights protection in the realm of cryptocurrency is a protracted battle against time and technology. In the current judicial environment, victims can no longer passively wait but should act as "pioneers of evidence" and "providers of technology," turning passivity into initiative by building a tight evidence chain and professional communication mechanism.

Remember: The earlier you intervene, the more detailed the evidence, and the more professional the expression, the higher the likelihood of asset recovery. Cryptocurrency is by no means an untouchable lawless territory but a "public ledger" where every detail leaves a trace.