Is going out a high-risk behavior? What should I do if I receive a "cooperative investigation" call?

Author: Xiao Sa lawyer

Recently, Sister Sa’s team discovered that some old friends in the crypto had their bank cards frozen due to the sale of cryptocurrencies (especially USDT), and even received calls from the police asking them to cooperate in “assisting in the investigation.”

Today, Sister Sa’s team will explain in detail the reasons, risks, and countermeasures for having your card frozen and receiving a call to “assist in investigation” due to selling cryptocurrencies.

Before explaining the reasons, we need to clarify a major premise: Is it illegal to hold cryptocurrency in our country?

First the answer: It is not illegal.

This is because my country has not yet issued any laws, State Council administrative regulations or executive orders related to cryptocurrencies.

As for the famous 9.4 Announcement and 9.24 Notice, on the one hand, these normative documents are of a lower level and are only departmental normative legal documents, which do not constitute "preliminary laws" in the sense of criminal law; on the other hand, these normative documents have never clearly stipulated that Chinese citizens are not allowed to hold cryptocurrencies. (The 9.4 Announcement prohibits illegal token issuance and financing, but does not prohibit individual transactions in cryptocurrencies. It is not necessarily illegal for individuals to simply sell USDT purchased with RMB.)

This means that simply holding cryptocurrency is not illegal in itself, and certainly is unlikely to constitute a crime.

So, why would selling cryptocurrencies result in card freezing and “assisting in investigations”?

The U channel is "wild", resulting in receiving "black money"

"Black money" mainly refers to stolen money involved in cyber fraud and online gambling. Some of it is mismatched by the U-platforms (these platforms are also quite wild), and some U-platforms are originally colluded with upstream criminal money laundering channels. The step of exchanging cryptocurrency for legal currency may be a link in laundering black money.

Money laundering is a red line behavior in my country. Once the bank believes that the money you received may be black money, it will freeze the bank card first. People who leave the U platform are often physically abroad, and the source of funds is more complicated and difficult to investigate. For retail investors, it is difficult to determine whether the money received is black money in a single transaction. Banks generally predict it through transaction frequency, whether the capital flow is consistent with the account purpose, and internal supervision.

Cooperating with a "mysterious expert" for the sake of a high "exchange rate"

Many of the "mysterious masters" are engaged in underground money houses, mainly engaged in foreign exchange, and the operation method is generally "counter-trading", collecting legal currency in one country, and then depositing the equivalent amount of foreign exchange into a designated account in another country. For example, if an employer's employees abroad receive wages and do not want to go through the foreign exchange settlement channel (high handling fees, low exchange rates and slow speed), but want to give the money to their family members in China, they will find an underground money house, transfer the money to the money house, and the money house will simultaneously transfer the money to the country, and the exchange rate offered is more favorable than the legal exchange rate, and tax costs are avoided.

However, it is hard to say whether the money that the bank transfers to the mainland is clean. For example, the bank will cooperate with other borderline businesses or fraud platforms to ensure that its legal currency is sufficient. After these uncleanly processed money is transferred to domestic customers, it is easy to cause various legal risks.

There are also underground banks that provide U-coin exchange services, and the price offered for purchasing cryptocurrencies is higher than the market price and the fee is lower. At this time, if you covet the high exchange rate, you will be involved in the upstream illicit money.

If the profit is made by speculating in cryptocurrencies, then there is no big problem. However, in practice, the Sajie team has found that many parties themselves actually engage in some borderline behavior or have some income that is difficult to explain.

For example, the Sajie team recently discovered in the process of providing services to customers that a user received some online gambling funds due to the platform during the process of U, so more than 400,000 yuan in the bank card was frozen. The case itself is not complicated, but based on multiple communications with the customer, we found that the customer himself also has the habit of participating in online gambling games, and there is a large amount of confusion of funds, which leads to a serious problem: the legality of the source of funds is difficult to explain clearly. Coupled with the fact that the user himself does not have a stable and legal source of income, it directly leads to difficulties in the unfreezing process.

Will “assisting in the investigation” lead to criminal risks?

If you are just speculating in cryptocurrencies, generally speaking, no. Article 64 of China's Criminal Law stipulates that all property illegally obtained by criminals shall be recovered or ordered to be returned. If the funds in the account are stolen money, the public security organs have the right to recover them. At this time, the cardholder is not a suspect targeted by the public security organs, but merely a person innocently affected by the funds involved in the case, and can be regarded as a "victim" in another sense.

However, the Sajie team also discovered a special situation in the process of handling the case - the user and the source of funds have a special relationship beyond that of ordinary users and platforms, and they have a certain degree of awareness of the "improper" source of funds on the platform. This situation is more complicated and there are two significant criminal risks: concealing the proceeds of crime and assisting information network criminal activities.

The crime of concealing and hiding the proceeds of crime and the proceeds of crime stipulated in Article 312 of the Criminal Law of the People's Republic of China refers to the act of knowingly hiding, transferring, purchasing, selling on behalf of others, or concealing and hiding by other methods the proceeds of crime and the proceeds generated by the crime. Note that this crime requires the suspect to "knowingly" be the proceeds of crime, which needs to be judged in combination with objective behavior. For example, in the case handled by Sister Sa, the suspect not only has a specific relationship with the channel party, but a large number of chat records can also prove that he has a clearer understanding that the source of the channel party's funds may be the proceeds of crime. In addition, after receiving the stolen money, he also deposited the funds. This can easily be identified by the staff of the judicial organs of China as "knowingly" constituting the crime of concealing and hiding the proceeds of crime and the proceeds of crime.

The crime of assisting information network criminal activities stipulated in Article 287-2 of the Criminal Law of my country is similar to the crime of concealing and hiding the proceeds of crime and the proceeds of crime in terms of subjectivity, and also requires the suspect to "knowingly" commit crimes by others using information networks. This crime is more likely to occur in cases of helping others buy and sell cryptocurrencies, and we must be vigilant.

What should I do if my card is frozen and I am asked to “assist in the investigation”?

If you are contacted by the police, refusing to cooperate with the investigation will result in the public security organs taking further compulsory measures. According to the "Procedures for the Public Security Organs to Handle Criminal Cases", the period for freezing bank cards for criminal investigation is 6 months.

1. You should first self-assess your criminal risk. If you are found to have mismatched money with a U platform, and you have no other illegal behavior after self-examination, you can cooperate with the investigation and prepare materials to prove your legality.

2. Contact the bank to confirm the judicial authority and contact information that exercises the power to freeze the account, and try to print out the bank statements of the relevant funds in and out.

3. Contact the U-exporting platform and ask it to provide trading records.

4. Write a statement of facts, and give a detailed and organized description of your cryptocurrency trading, the source of funds, etc. (If you have difficulty explaining it yourself, please consult a professional lawyer)

5. If you are contacted by the local police and asked to be present to explain, you must consult a professional lawyer in advance and cooperate with the investigation after being well prepared. If the public security agency in another place freezes your identity and asks you to go there to cooperate with the investigation, you must be vigilant.

If your bank card is frozen, don’t panic. Being frozen does not necessarily mean it is criminal. But you need to be mentally prepared that whether the cardholder is identified as a suspect in a criminal case or the flow of funds in the account is evidence of a criminal case, if it is indeed stolen money, even if the cardholder is "in good faith", the funds may be recovered or partially recovered.

Finally, I hope that all of you friends in the crypto can unfreeze your funds in time and be safe and sound. We are always here!