Attorney Shao Shiwei | Selling USDT Virtual Assets: Bank Card Frozen—Can It Be Unfrozen?

Introduction:

Let us now proceed with a formal explanation.

In light of relevant policies in China, the following interpretations may be drawn:

1. Virtual assets may not be used as Renminbi in China;

2. Bitcoin and other virtual assets are regarded as “virtual commodities”;

3. Financial activities related to virtual assets are illegal;

4. Transactions between individuals involving virtual assets and fiat currency, as well as transactions between different virtual assets, are not prohibited.

If it is becauseLegitimate(Here, this refers to situations where one is not knowingly involved in others’ illegal or criminal activities.) If you receive illicit funds during virtual currency transactions and, as a result, your bank card is unfortunately frozen, do not panic. Communicate with the police promptly and at the earliest opportunity regarding the unfreezing of your card (based on our practical experience, the earlier you communicate with the handling authority, the easier it is to resolve the matter).If you are genuinely concerned or indeed lack sufficient time and energy (as the process may require multiple rounds of communication and submission of materials), you may engage a lawyer to handle the matter.

In cases involving the unfreezing of bank cards related to the buying and selling of virtual currencies handled by Attorney Shao’s team, 90% were successfully unfrozen. As for the remaining 10%, success was unattainable because certain clients, apart from transaction screenshots, were unable to provide any evidence related to the transactions, and could not even clearly explain the transaction background or the sequence of events. This also serves as a reminder to everyone thatupon discovering that your card has been frozen, you must preserve all evidence immediately.！In some cases, two or three years had already elapsed, making resolution truly difficult. When our lawyers called to inquire,even the seasoned officers at the local police station were shocked,asking: “What? Three years? Why has it taken so long?”)

There are numerous successful unfreezing cases, which we will not detail individually. After all, maintaining a low profile has always been my personal style. Here, we discuss a particularly regrettable case (of course, sensitive information has been heavily redacted to protect the client’s privacy), hoping it will serve as a cautionary tale for our readers.

In a certain month last year, a client came to consult us, stating that their bank card had been frozen one year prior, and recentlythey discovered that RMB 700,000 had been deducted from their account.！Upon consulting with the bank, they learned that the funds had been deducted by a court in a certain locality in Guangdong Province. The client was concerned about potential involvement in relevant criminal cases and thus sought assistance from Attorney Shao. Through further inquiry, we learned that one year ago, when the card was first frozen, the client had been contacted by the public security authorities and required to give a statement. At that time, the public security authorities asked the client to explain the sources of several sums of money in the account. Due to a lack of legal knowledge and being questioned by police officers for the first time, the client was extremely fearful. Regarding the several transaction records inquired about by the public security authorities,He stated in his deposition that all the funds were borrowed from friends.

After obtaining these basic facts, we contacted the handling police officer responsible for the case and learned that, following an investigation of leads by the Anti-Fraud Center, the client’s bank card was implicated in a cross-border online gambling case, with certain funds having been deposited into the card. Previously, the police had contacted the client and requested an explanation of the relevant transaction records. Subsequently, the public security authorities submitted the client’s deposition and corresponding supporting materials to the procuratorate. Ultimately, the court held that the client’s statements were inconsistent with the existing evidence already in the possession of the judicial authorities. After the court rendered its judgment in the case of operating a casino,the client’s funds were deducted and confiscated under the designation of gambling proceeds.。

However, through our communications with the client, we learned thatthese transactions actually represented proceeds from his sale of USDT (Tether).Peer-to-peer trading of virtual assets is not prohibited in China; however, out of fear, the client falsely claimed the funds were loans, which proved counterproductive.

Had he provided truthful statements during the initial deposition, his bank account might have been unfrozen much earlier,and he would not have suffered the unwarranted deduction of RMB 700,000.Nevertheless, if he were to file an appeal, he would need to admit to the public security authorities that all previously submitted evidence regarding the loans was fabricated and that he had made false statements. This could potentially expose him to criminal liability for the crimes of obstructing testimony or destroying or forging evidence. The outcome is uncertain, but the risks are real. Consequently, he had no choice but to accept this misfortune.

First, it goes without saying that providing documentation related to the transactions is the most fundamental requirement.

Second, specific strategies for communication regarding unfreezing should be formulated based on the distinct circumstances of each transaction. For instance, a clear distinction should be drawn between frozen funds involved in the case and those not involved, accompanied by corresponding legal arguments and reasoning. For different portions of the frozen funds, distinct evidentiary materials and legal bases should be provided, supplemented by detailed and thorough interpretations in light of relevant policies and the specifics of the case.Provide legal advice to enable judicial authorities to exclude reasonable doubt regarding the client.

Furthermore, andmost importantly, the issue of restitutionIndeed, although it has been stated above that trading crypto assets is not illegal, based on the current practical circumstances of negotiations with public security organs,making restitution of a certain amount to the victims involved in the case is unavoidable.Although Attorney Shao fully understands the client’s feelings—merely selling USDT resulted not only in frozen bank accounts but also in being treated by the police as a wrongdoer. The client, who considers themselves a victim, is now required to compensate others? However, for instance, if funds from telecom fraud in northern Myanmar flow into your account, the victims’ money is almost certainly lost, and it is difficult for public security organs to apprehend the perpetrators. Nevertheless, the victims have indeed suffered losses. What can be done? Some victims may continuously file complaints and reports if the public security organs fail to initiate an investigation or make no progress after doing so. Therefore, the handling authorities also face their own difficulties... Thus, requiring the account holder to make restitution may represent a balance sought by the handling authorities among the various interests at stake.

However, there is no need to be overly discouraged. Based on our experience in handling cases, there is a relatively high likelihood of successfully negotiating partial restitution.

Regarding how to avoid having bank accounts frozen when selling USDT, Attorney Shao offers some simple recommendations, such as: avoid frequent transactions with the same counterparty; prioritize trading on major platforms, as these platforms typically have more robust risk control measures, effectively pre-screening onboarded users; refrain from frequent trading and frequent cash withdrawals; if the counterparty requests payment from a third party, it is advisable to cancel the transaction immediately, as such arrangements are highly likely to involve issues, regardless of how reasonable the stated reasons may appear.

Finally, if you unfortunately encounter the issue of frozen bank accounts, it is essential to address the matter promptly.

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