Do not believe or spread rumors!
Introduction
Recently, a claim has been circulating on the Chinese internet and in Web3 communities alleging that police in Hangzhou, Chengdu and other places, during street patrols or door-to-door checks, require the "forced transfer" of assets whenever they find a cryptocurrency app installed on a phone or assets in a wallet.
Against the industry backdrop at year-end, this claim has caused considerable panic among practitioners.As a criminal defense lawyer team deeply engaged in the Web3 field, after verification through multiple sources and legal analysis,we are inclined to believe that this is a "false claim" that infinitely magnifies an isolated experience. Like the previous social media claims that "the xx team of xx exchange in xx place was arrested," it is entirely a self-media account-building tactic.
But panic stems from the unknown. Today we will not discuss emotions, only legal principles. We will analyze, from a professional legal perspective, the boundaries of public authority and how practitioners should respond if such an extreme situation occurs.
Why is "seize every coin on sight" legally untenable?
In a society governed by the rule of law, the exercise of public authority must follow the principle of "statutory authority," meaning that any law enforcement action must strictly comply with legal provisions.The operational model of "transfer on sight" described in the rumor is not only seriously unlawful, but would also expose law enforcement officers to extremely high risk of criminal liability.
First, the power to stop and question is not an unrestricted power to search
Under Article 9 of the Police Law of the People's Republic of China, the precondition for public security organs to conduct on-the-spot questioning and inspection is that the targets are 'persons suspected of illegal or criminal conduct.' Where an ordinary citizen exhibits no indications of suspicion, their right to privacy is protected by law.
Absent a search warrant, forcibly unlocking a phone to inspect the photo album and non-public apps (such asTelegram、cold wallets) solely on the basis of a 'routine inspection' is plainly an administrative act with procedural illegality.
Second, law enforcement authorities compelling citizens to transfer funds harms the enemy by a thousand while costing oneself eight hundred.
In the handling of criminal cases, the disposal of property involved in a case is subject to extremely stringent procedures. If case-handling personnel, without having opened a case or obtained seizure formalities, forcibly require a citizen to transfer virtual assets into a non-public account of the public security organ (such as a personal address or an unidentified address), such conduct, in legal characterization, is highly likely to constitute:
- Abuse of power:Improper exercise of authority causing significant losses to public property and to the interests of the state and the people.
- Robbery or extortion:Coercing another person, without lawful basis, into delivering property by use of public power.
At a time when comprehensive law-based governance and police supervision are increasingly stringent, engaging in street-level plunder for a sum of assets whose nature remains undetermined, at the risk of ruining one's career or even imprisonment, does not fit the rational behavioral model of frontline law enforcement personnel.
Therefore, we believe such extreme conduct is by no means the norm, nor could it be the norm. The so-called 'street phone checks and forced coin transfers' are most likely precision enforcement actions targeting specific high-risk individuals involved in fraud or gambling, which have been misread as a universal policy applicable to the entire industry.
Tighter regulation is real, but 'overreach' is not the norm
Although we believe the rumor to be false, it is undeniable that the year-end period is a peak time for tackling fund chains linked to fraud and gambling.As practitioners, we should not fear 'being investigated'; we should fear 'being unprepared.'
At the intersection of administrative and criminal matters, what we need to guard against is:procedural defects or inducement-style enforcement that individual case-handling officers may engage in under KPI pressure.
If this 'extremely low-probability' event does happen to you, please be sure to remain calm; we recommend that you take appropriate measures to safeguard your lawful rights and interests.
The 'four commitments' at the critical moment
If you do encounter case-handling officers requesting to inspect your phone or even transfer assets, please follow the steps below. This is not only to protect your property but also to urge standardized law enforcement, so as to maximize the client's lawful interests:
First, insist on 'verifying identity'
Politely ask the other party to present the People's Police Certificate. This is a right conferred on you by law.If the other party is an auxiliary police officer, a formal police officer must be present. Auxiliary police officers cannot enforce the law on their own; they must be led by a formal police officer. If they do not even dare to show their credentials, you have every reason to refuse to cooperate.
Without a lawyer present, do not casually explain the source of your assets, your counterparties, or your business model. Simply state: 'This is my lawful personal property.' Do not say more out of nervousness; the more you say, the more likely you are to err.
Second, adhere to the principle of "no documents, no transfer."
If the other party asks to inspect your phone, ask whether they have a search warrant.Under the Criminal Procedure Law, warrantless searches are limited to emergency situations.
If the other party demands the seizure of your virtual assets, state clearly: "Officer, I am cooperating with law enforcement. However, please issue on site a Seizure Decision and a Seizure Inventory, and note on the inventory the wallet address to which the assets are to be transferred, the type of asset, the quantity and the hash value. I can only transfer the assets after I sign to confirm."
Under no circumstances cooperate with any "oral transfer" request that has no documentary record and that directs assets to a personal address. You may express this tactfully: "Without a seizure inventory, I am concerned that these funds cannot be accounted for and that I will be unable to explain them to my company/family in the future, and I am also concerned about the risks this may create for your law enforcement."
Third, adhere to the principle of "transfer only to public accounts, never to individuals."
Anyone enforcing the law strictly in accordance with the law will never use a personal wallet to receive funds.Firmly refuse to transfer assets to the wallet address of an individual of unknown identity. "Officer, transferring to a personal account cannot be accounted for. To avoid subsequent legal risks and to protect the compliance of your law enforcement, please provide the public security bureau's dedicated account/address for funds involved in the case."
Fourth, adhere to the principle of "pursue remedies afterward."
If you feel pressured at the scene and are unable to refuse, do not engage in any physical confrontation. Remember as much as possible the officer's badge number, the name of the police station and the address to which the assets are transferred.Once your personal liberty is restored, contact a lawyer immediately. With respect to unlawful seizure, we need to recover the assets through legal channels. The on-chain transfer records are irrefutable evidence that cannot be denied.
Conclusion
The Web3 industry is in the painful throes of a compliance transition. As legal professionals, we understand the anxiety and concerns of industry participants. However, we sincerely hope that people in the crypto space will not build their accounts by instilling fear and creating sensational gimmicks!
Fear stems from the unknown; security stems from professionalism.Public security authorities will not regulate the industry through "robbery"-style enforcement without evidence. What is truly targeted are criminal activities such as money laundering and fraud, not ordinary holders of crypto assets.
But as industry participants, the fundamental safeguard for navigating cycles is to implement asset segregation, retain complete transaction records (KYC/AML records), and seek the involvement of professional lawyers at the first sign of legal risk.
