Do not believe rumors; do not spread rumors!
Introduction
Recently, a rumor has circulated on the Chinese internet and within Web3 communities, claiming that police in cities such as Hangzhou and Chengdu, during street patrols or home visits, would demand the "forced transfer" of assets upon discovering cryptocurrency apps or wallet holdings on individuals' phones.
Against the backdrop of the industry at year-end, this rumor has triggered significant panic among practitioners.As a criminal defense legal team deeply specialized in the Web3 sector,after conducting multi-source verification and legal analysis,we are inclined to believe that this is a "false rumor" that exaggerates isolated incidents. Similar to previous social media campaigns claiming that "teams from XX exchange were arrested in XX location," this is entirely a strategy by self-media accounts to gain traction.
However, panic stems from uncertainty. Today, we will set aside emotions and focus solely on legal principles. We will deconstruct the boundaries of public power from a professional legal perspective and discuss how relevant practitioners should respond if such extreme situations were to occur.
Why the Logic of "Confiscating Crypto on Sight" Is Legally Unfounded?
In a society governed by the rule of law, the exercise of public power must adhere to the principle of "statutory authority," meaning that any law enforcement action must strictly comply with legal provisions.The alleged operational mode of "forcing transfers upon seeing crypto" is not only a serious violation of law but also exposes law enforcement personnel to extremely high risks of criminal liability.
First, the Power to Question Is Not Arbitrary Search Authority
According to Article 9 of the People's Police Law of the People's Republic of China, the prerequisite for public security organs to conduct on-the-spot questioning and inspection is that the individuals are "suspected of violating laws or committing crimes." In the absence of suspicious behavior, the privacy rights of ordinary citizens are protected by law.
Without a "Search Warrant," forcibly unlocking a phone to view photo albums or non-public apps (such asTelegram、cold wallets) merely under the guise of a "routine check" clearly constitutes an administrative act that violates procedural legality.
Second, Forcing Citizens to Transfer Assets by Law Enforcement Agencies Is Counterproductive and Self-Damaging.
In criminal case proceedings, the disposal of property involved in the case follows extremely strict procedures. If case-handling personnel, without filing a case or issuing seizure formalities, forcibly require citizens to transfer virtual assets to non-official public security accounts (such as personal addresses or unidentified addresses), this may legally constitute:
- Abuse of Power:Illegally exercising power, causing significant losses to public property, state interests, and the interests of the people.
- Robbery or Extortion:Using public power to coerce others into handing over property without legal basis.
In the current context of comprehensive rule of law and increasingly strict police supervision, engaging in street-level predation for assets of undetermined nature, at the risk of ending one's career or even facing imprisonment, does not align with the rational behavioral patterns of grassroots law enforcement personnel.
Therefore, we believe that such extreme behavior is by no means the norm, nor can it be the norm. The so-called "street phone checks forcing crypto transfers" are most likely targeted crackdowns against specific high-risk individuals involved in fraud or gambling, which have been misinterpreted as universal policies targeting the entire industry.
Regulatory Tightening Is Real, But "Overstepping Boundaries" Is Not the Norm
Although we consider the rumor false, it is undeniable that the year-end period is a peak time for governing funding chains related to fraud and gambling.As practitioners, we should not fear "being investigated," but rather fear "being unprepared."
At the intersection of administrative and criminal law, we need to be vigilant about:Procedural flaws or inducement-based law enforcement that may exist among individual case-handling personnel under KPI pressure.
If this "low-probability" event were to happen to you, please remain calm and take appropriate measures to safeguard your legitimate rights and interests.
"Four Principles" to Adhere to in Critical Moments
If you indeed encounter law enforcement personnel requesting to inspect your phone or even transfer assets, please follow these steps. This not only protects your property but also encourages standardized law enforcement, thereby maximizing the legitimate interests of the parties involved:
First, Insist on "Verifying Identity"
Politely request the other party to present their "People's Police Certificate." This is a right granted to you by law.If the individual is an auxiliary police officer, a formal police officer must be present. Auxiliary police officers cannot enforce the law independently and must be led by formal police officers. If they dare not present their credentials, you have every reason to refuse cooperation.
In the absence of a lawyer, 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 speak excessively due to nervousness, as excessive speech may lead to unintended consequences.
Second, Insist on "No Documentation, No Transfer"
If they wish to inspect your phone, ask whether they have a "Search Warrant."According to the Criminal Procedure Law, warrantless searches are limited to emergency situations.
If they request to seize your virtual currency, clearly state: "Officer, I cooperate with law enforcement. However, please issue a 'Decision on Seizure' and a 'Seizure List' on the spot, specifying the wallet address, currency type, quantity, and hash value of the transfer on the list. I will transfer the funds only after signing and confirming."
Under no circumstances should you comply with any "oral transfer" requests lacking documentary records and involving transfers to personal addresses. You may tactfully express: "Without a seizure list, I am concerned that the source of these funds will be unclear, making it difficult to account to my company/family in the future, and I am also concerned about exposing your law enforcement actions to risk."
Third, Insist on "Transferring Only to Official Accounts, Not Personal Ones"
As long as law enforcement is conducted strictly in accordance with the law, personal wallets will never be used to receive funds.Firmly refuse to transfer crypto to personal wallet addresses of unidentified individuals. "Officer, transferring to a personal account creates ambiguity. To avoid subsequent legal risks and to protect the compliance of your law enforcement actions, please provide the special account/address for case-involved funds of the Public Security Bureau."
Fourth, Insist on "Post-Incident Appeal"
If you feel pressured on-site and cannot refuse, do not engage in physical conflict. Try to memorize the police badge number, the name of the police station, and the crypto transfer address.Once your personal freedom is restored, contact a lawyer immediately. Regarding illegal seizures, we need to recover assets through legal channels. On-chain transfer records are irrefutable evidence.
Conclusion
The Web3 industry is undergoing growing pains during its compliance transformation. As legal professionals, we understand the anxiety and concerns of practitioners. However, we sincerely hope that individuals in the crypto community do not resort to instilling fear and creating sensationalism to gain attention!
Fear stems from uncertainty; safety stems from professionalism.Public security organs will not regulate the industry through "robbery-style" law enforcement without evidence. The true target of crackdowns is criminal activities such as money laundering and fraud, not ordinary crypto holders.
However, as practitioners, ensuring asset segregation, maintaining complete transaction records (KYC/AML records), and seeking immediate intervention by professional lawyers when facing legal risks are the fundamental guarantees for navigating through market cycles.
