The article examines the typical scenario in virtual currency investment where "the money has been transferred but the coins have not arrived": the counterparty collects payment through community recommendations, internal quotas, and promises of returning coins and profits, after which withdrawals are blocked, customer service stalls, and eventually contact is lost. The core determination does not lie in "virtual currency" itself, but in whether the recipient acted with the purpose of illegal possession and whether they fabricated facts or concealed the truth; this may involve offenses such as fraud, fund-raising fraud, illegal absorption of public deposits, organizing pyramid schemes, and money laundering, but the charge is determined comprehensively by the investigating authorities based on the destination of funds, whether the scheme targeted unspecified members of the public, and whether there was any genuine business. The article also notes that mainland China maintains a prohibitive policy toward virtual currency-related business, and the related civil acts may be held invalid, with losses possibly borne by the parties themselves; therefore, criminal asset recovery and civil claims are two distinct paths. For readers, the first step is to stop making further transfers, then to preserve evidence at three levels—identity relationships, fund flows, and platform projects—report the matter to the public security organ with jurisdiction, and, if no case is filed, apply for reconsideration or seek procuratorial supervision over case filing, while consulting a lawyer as early as possible to assess asset recovery and cross-border pursuit.

The money was transferred out, but the coins never arrived—does this count as fraud?

The question clients ask most often is: I invested money in virtual currency, the other party took the money but did not deliver the coins, and now the person has disappeared—is this fraud? This question cannot be answered in a single sentence.

What truly determines the nature of the matter is not the phrase "virtual currency," but whether, when the other party took the money, they actually intended to repay, whether they had the ability to repay, and whether they fabricated facts.

Let me start with the most common scenario. Someone recommends a "guaranteed profit" project in a community group, says the platform has internal quotas, and asks you to transfer RMB or stablecoins to a designated address, promising to return coins and profits within a few days. You transfer the money, the platform shows "received," but the withdrawal button never works, customer service begins to stall, and eventually the group is disbanded and the person disappears.

In this scenario, from the perspective of business conduct, it is "collecting money first and failing to perform later"; from a legal perspective, the key is to determine whether the other party acted with the purpose of illegal possession and whether they fabricated facts or concealed the truth. If the answer is yes, it may constitute a fraud-type crime; if it is merely a failed project, a market decline, or the operator's capital chain breaking, it is closer to a civil dispute or investment risk and may not necessarily lead to criminal case filing.

Here is a common misconception: many people believe that because virtual currency is not protected by law, they cannot report fraud to the police.

This understanding is incorrect. In mainland China, virtual currency does not have the same legal status as legal tender, and related business activities are illegal financial activities—this is a regulatory characterization; but this does not mean virtual currency can be fraudulently obtained at will. Virtual currency can be the object of property crimes, and defrauding others of the virtual currency they hold may likewise be subject to criminal evaluation. In other words, regulation does not protect your "coin speculation," but criminal law can protect you from being defrauded.

What offenses might be involved? In practice, there are several common categories.

The first is fraud, which corresponds to conduct where the perpetrator fabricates projects, creates fake platforms, or directly defrauds property under the guise of investment.

The second is fund-raising fraud. If the other party targets an unspecified majority of people, absorbs funds in the name of virtual currency investment, and acts with the purpose of illegal possession, this offense may apply.

The third is illegal absorption of public deposits, characterized by absorbing funds from the public and promising returns, but not necessarily with an intent of illegal possession from the outset.

The fourth category is the crime of organizing or leading pyramid schemes. If a project operates by recruiting members and paying returns by tier, it may be found to be a pyramid scheme even if packaged as “blockchain” or “mining.” In addition, if funds are transferred through multiple layers of accounts, money-laundering offenses may also be implicated.

It should be noted that the charge is not chosen by the victim, nor is it determined simply by what is written in the report. Public security organs and procuratorial organs make a comprehensive judgment based on facts such as the actor's subjective purpose, the destination of funds, whether the conduct was directed at an unspecified public, and whether there was any genuine business. For readers, this means two things: first, when reporting, do not merely write “I was scammed”; instead, set out in chronological order what the other party said, how the money was transferred, whether the coins arrived, and how the other party became unreachable; second, do not jump to the conclusion yourself that “this is fund-raising fraud”; present the facts fully and let the investigating authorities determine the nature of the case.

There is another practical issue that must be made clear in advance. Mainland China maintains a prohibitive policy stance toward business activities related to virtual currency. Where any unit or individual invests in virtual currency and related financial products in violation of public order and good morals, the relevant civil juristic act may be held invalid, and any resulting losses may be borne by the investor. For victims, this means that the criminal path and the civil path are two different paths: criminally, fraud may be pursued, but civilly, it may be difficult to claim “return of the investment funds” because the transaction itself may not be recognized. Therefore, whether recovery is possible and which path to take must first be based on the facts and then on the path, and must not be taken for granted.

Before reporting, first secure the chain of evidence

Many victims rush to the police station with only a few forwarded screenshots on their phones, half of their chat records deleted, and no clear account of which transfer was which. It is not that the investigators do not want to help; rather, the materials are too scattered to piece together even the basic facts. The particularity of virtual currency cases is that once money is transferred out, it often passes through multiple accounts and multiple wallets, and the window for tracing is very short. Therefore, the first thing to do before reporting is not to look for people, but to secure evidence.

Evidence can be organized in three layers.

The first layer is identity and relationship evidence: the other party's social media accounts, chat records, community names, promotional scripts, business cards, voice messages, videos, as well as how you met, who introduced you, and what identity the other party claimed to have. This layer addresses “who was transacting with you.”

The second layer is fund-flow evidence: bank transfer records, payment platform statements, currency exchange records, on-chain transfer hashes, wallet addresses, transaction times, and amounts. This layer addresses “how the money went out.”

The third layer is platform and project evidence: website screenshots, app interfaces, white papers, promotional materials, withdrawal failure pages, customer service conversations, and announcements. This layer addresses “what the other party promised and what it actually did.”

There are several specific steps for securing electronic evidence.

First, take screenshots and screen recordings promptly, preferably with a time display, and do not save only forwarded copies, because forwarding loses the original information.

Second, preserve the original media. Do not rush to factory-reset your phone or computer or clear chat records; the original device itself is also evidence.

Third, although on-chain records are publicly accessible, they require specialized tools to parse. Before reporting to the police, it is advisable to compile the main transfer hashes, wallet addresses, times, and amounts into a single table, with screenshots attached.

Fourth, if overseas platforms or overseas entities are involved, make every effort to preserve the platform name, place of registration, customer service email, and withdrawal rules.

One point requires particular emphasis here: do not transfer any further money to the other party for the purpose of "organizing evidence," including so-called "unfreezing fees," "security deposits," or "taxes." In practice, many secondary losses occur when victims, eager to recover their funds, are defrauded further by the other party on the pretext that "one more payment will enable withdrawal." The purpose of preserving evidence is to enable the investigating authorities to see the facts clearly, not to have you negotiate with the other party.

Which police station to report to, and whether the police will open a case

Once the evidence is organized, the next question is where to report. The general rule is that the public security organ of the place where the crime was committed and that of the place where the criminal suspect resides both have jurisdiction. For victims, the place where the crime was committed usually includes the place where your property loss occurred, that is, where you transferred or paid the funds. Therefore, in most cases, you may report to the public security organ in your own locality. If the other party has a clear place of residence or place of registration within the mainland, you may also report there. Where cross-border elements are involved, jurisdiction becomes more complex and must be determined in light of the specific fund paths and the locations of the entities involved.

Case registration is not automatic. After accepting a report, the public security organ will examine whether there are facts of a crime and whether criminal liability needs to be pursued. Fraud cases generally have monetary thresholds, and the standards vary somewhat from place to place and must be assessed in light of the local rules currently in force. Beyond the amount, it must also be considered whether the evidence can support the core element that "the other party acted with the purpose of illegal possession." If there is only a single transfer, no chat records, and no identity information of the other party, the difficulty of securing case registration will increase markedly. Therefore, the evidence preservation described above directly determines the likelihood of case registration.

When reporting, it is advisable to prepare a complete set of materials: identity documents, written report materials, an evidence list and the evidentiary materials, and fund flow records. The written materials should be set out chronologically, clearly stating when you became acquainted with the other party, how the other party promoted the scheme, how many separate transfers you made and in what amounts, the corresponding tokens, what the other party promised, what was actually provided, and when contact was lost. Do not write it as an emotional outpouring, and do not write only conclusions. What the case-handling personnel need are verifiable facts.

If the public security organ decides not to register the case, this does not mean there is no remedy. You may apply for reconsideration, and you may also apply to the procuratorial organ for supervision of case registration. If the procuratorial organ considers that a case should be registered but was not, it may require the public security organ to explain the reasons for not registering; if it considers the reasons untenable, it may notify the public security organ to register the case. In practice, this path requires documentary support, so the written materials and evidence list left at the time of reporting are equally important in subsequent remedies.

The practical difficulties should also be stated clearly. Virtual asset cases often involve overseas entities, anonymous wallets, and rapid layered transfers of funds. Money may pass through multiple addresses and multiple accounts within minutes, and may even cross borders. Hong Kong Customs once cracked a case suspected of using virtual assets to launder money, in which those involved processed suspicious funds through accounts opened at multiple banks in Hong Kong and through virtual asset trading platforms, showing that such fund chains can be cross-border and layered. This case is an enforcement case under the Hong Kong jurisdiction and cannot be directly applied to the jurisdictional and prosecution rules of mainland China, but it illustrates a reality: the earlier the report and the earlier the fund paths are preserved, the greater the possibility of freezing and intercepting the funds.

Can the money still be recovered?

The question victims care about most is whether the money can be recovered. The honest answer is: it is possible, but not guaranteed, and it depends on many factors beyond the victim's control.

The criminal path is the main channel. After a case is registered, the public security organ may seal, seize, or freeze the property involved, and the court may order restitution in its judgment. The key to this path lies in "timeliness" and "executable property." If the funds have already been transferred away, squandered, or flowed overseas, the recovery rate will drop substantially. Therefore, the earlier the report, the greater the possibility that the funds are still in domestic accounts or have been intercepted by the platform.

The civil route faces obvious obstacles. As mentioned above, civil legal acts relating to virtual currency may be held invalid, and losses arising therefrom may be borne by investors themselves. This means that even if you bring a civil action against the other party to "return the investment funds," the court may not support it because the transaction itself is not recognized. The civil route is not entirely unavailable, but it requires case-by-case assessment and cannot be treated as a substitute for criminal asset recovery.

Cross-border recovery is another difficulty. If the other party is an overseas entity, or the funds flow to overseas accounts or overseas trading platforms, tracing and freezing depend on judicial assistance or local legal procedures, which involve long timelines and high uncertainty. The Hong Kong case can only serve as an extraterritorial reference, showing that virtual currency fund chains can be layered across borders; it cannot serve as a current legal basis for cross-border asset recovery in mainland China. For victims, in cases involving cross-border elements, it is advisable to consult lawyers with cross-border experience as early as possible and assess whether synchronized action is needed in the jurisdiction where the funds flow.

There is another point that is easily overlooked: asset recovery and loss mitigation are not only about "chasing the money" but also about securing the other party's liability. Even if the money cannot be recovered for the time being, a complete report filing and an officially docketed case may play a role in subsequent civil claims, platform complaints, and credit records. Therefore, do not give up on reporting and preserving evidence merely because you "feel the money cannot be recovered."

What Can Be Done Now: An Action Checklist

If you are in this situation, you can act in the following order.

Step one: immediately stop adding funds. Do not transfer or top up any further funds to the other party, and do not pay any "unfreezing fees," "security deposits," or "taxes." This is loss control and also prevents a second fraud.

Step two: comprehensively preserve evidence. Organize it in three layers: identity, funds, and platform; retain the original devices and original records; organize on-chain records into a table with screenshots attached. Do not delete chat records, and do not keep only forwarded copies.

Step three: report to the public security organ with jurisdiction. Prepare identity documents, written report materials, an evidence list, and fund flow records. In the written materials, state the facts in chronological order; do not write emotions or conclusions.

Step four: follow up on the case progress. If you receive a notice of non-filing, you may apply for reconsideration, and you may also apply to the procuratorial organ for filing supervision. Keep a record of every submission of materials.

Step five: consult professional lawyers. Assess the feasibility of criminal incidental civil litigation or independent civil litigation, assess whether cross-border recovery is involved, and assess whether synchronized action is needed in the jurisdiction where the funds flow.

Finally, it must be made clear what this checklist cannot do. It cannot guarantee that a case will be filed, cannot guarantee recovery of all losses, and cannot guarantee that cross-border assets can be enforced. What it can do is: give your losses a chance to enter legal proceedings, give the other party's liability a chance to be secured, and prevent the possibility of recovery from being further reduced by your own delay and lack of evidence.

Verification Checklist

  • Confirm whether the other party acted with the intent of illegal possession, whether it fabricated facts or concealed the truth, and distinguish criminal fraud from civil investment risk
  • Preserve evidence at three levels—identity, funds, and platform—and retain the original devices and original records
  • Report the case to the public security authority at the place where the crime was committed or where the criminal suspect resides, and prepare written materials and a list of evidence
  • If the case is not accepted, apply for reconsideration or apply to the procuratorial authority for supervision over case acceptance
  • Consult a lawyer to assess the feasibility of criminal asset recovery, civil litigation, and cross-border recovery
  • Stop adding further investment and make no further payments of any unfreezing fees, deposits, or taxes