There has been new progress recently regarding the "Hangzhou investigation" incident in the encryption circle. After verification by Lawyer Liu with relevant judicial authorities in Hangzhou and information obtained from two other channels, the news that the Hangzhou police conducted a systematic investigation of encryption practitioners should be false information .
1. The process of the “Hangzhou investigation” incident
On the morning of June 10, blogger X published an article titled "Hangzhou police are systematically investigating cryptocurrency practitioners". At that time, Lawyer Liu was shocked when he saw it, wondering if the domestic web3 environment has completely cooled down? After analyzing the blogger's article, I still have some doubts in my heart, so I wrote " Is the mainland crypto winter coming again? It is rumored that Hangzhou is conducting a large investigation of crypto practitioners ", which mainly analyzes that mainland China has launched strong regulatory measures on the entire crypto industry based on the "9.24 Notice" in 2021, and it will be difficult to upgrade the supervision in the future. In principle, I tend to believe that there may be a criminal case in the currency circle in Hangzhou, which has led to the police investigating some currency circle practitioners.
After verifying with many parties (including but not limited to the local judicial authorities in Hangzhou, fellow lawyers, web3 practitioners known to Lawyer Liu, etc.), we have determined that the so-called Hangzhou investigation incident is false information.
2. What is the “truth” of the matter?
So what is the truth of the matter? According to the information from Lawyer Liu, it is basically confirmed that a relatively large cryptocurrency team in Hangzhou is involved in the case (involving foreign exchange crimes, most likely illegal business operations). The information leaked by the blogger in the previous article may be due to the cooperation of the personnel involved or witnesses in the investigation by the public security organs.
The basis for Lawyer Liu's argument is that friends from two channels have sent me private messages saying that a friend in the cryptocurrency circle in Hangzhou has been missing for several days, and that the team to which the missing friend belongs is relatively large.
Therefore, I speculate that the truth of the "Hangzhou investigation" is that there is a cryptocurrency team in Hangzhou involved in the case, and it is not that Hangzhou is investigating, investigating or even cracking down on the entire crypto industry. Of course, this is just my conclusion based on the limited information I have obtained. If readers have other information, please inform Lawyer Liu.
3. Hangzhou incident as a warning to the crypto industry
There are two warnings: one is that you must know the red lines of mainland regulators; the other is how to respond if you are investigated by judicial authorities.
In fact, Lawyer Liu has already mentioned this in the article " Is the mainland crypto winter coming again? It is rumored that Hangzhou is conducting a large-scale investigation of crypto practitioners ". I will repeat it here. At present, friends in the mainland cryptocurrency circle are prohibited from doing the following:
1. Carry out the exchange of virtual currency and legal currency;
2. Exchange between virtual currencies;
3. Act as a central counterparty to buy and sell virtual currencies;
4. Provide information intermediary and pricing for virtual currency transactions;
5. Token issuance financing and virtual currency derivatives trading;
6. Opening an exchange (whether onshore or offshore) and providing services to mainland residents;
7. Providing services (marketing, payment settlement, technical support, etc.) to overseas virtual currency exchanges;
8. The entities such as enterprises and individual businesses established cannot contain words such as "virtual currency", "virtual assets", "cryptocurrency", "encrypted assets", etc.;
9. Virtual currency mining, etc.
It should be noted that although the "9.24 Notice" lists the above-mentioned red lines, it does not stipulate clear legal consequences, and the "9.24 Notice" itself is not a law or regulation (it belongs to departmental normative documents and industry regulatory regulations). Even if it will be used as the basis for law enforcement and justice by judicial organs in judicial practice, the principle of legality of crime and punishment must be strictly observed in criminal cases.
2. How to respond when being investigated
At the same time, Lawyer Liu clearly mentioned in the article " Is the "distant ocean fishing" in the cryptocurrency circle coming to an end? " that criminal cases in the cryptocurrency circle are naturally "expandable" and can easily be found as reasons for crackdowns by judicial authorities. Ordinary citizens are like ants in the face of a powerful national judiciary. Therefore, Lawyer Liu provides the following suggestions for serious web3 entrepreneurs. If you are unfortunate enough to encounter criminal legal issues, you can refer to them:
1. Understand your situation first
According to Chinese law, it is the duty of every citizen to cooperate with judicial organs in handling cases. However, the person under investigation has the right to know whether he is being investigated as a witness or a criminal suspect; if he is a witness, the records made are all "interrogation records". And the records of criminal suspects are all "interrogation records" (of course, this trick does not work completely. In a small number of cases, the police first make an "interrogation record" for the suspect, and at this time there may not be a criminal case filed; then the second record becomes an "interrogation record");
2. Location of cooperation investigation
In judicial practice, the public security organs have relatively low requirements for witnesses. For example, they can go to the witness's workplace, address, or even hotel to cooperate with the investigation and understand the situation. Witnesses can also ask to cooperate with the public security organs at a time that suits them. However, criminal suspects do not have such treatment. The public security organs either arrest them directly at their homes (without giving them the opportunity to surrender) or notify them by phone to appear in court. In any case, they must cooperate with the investigation at the case-handling agency (police station, case-handling center, etc.).
3. Time for cooperation with the investigation
For criminal suspects, the initial cooperation with the investigation generally does not exceed 12 hours, and the longest time shall not exceed 24 hours (this point is often breached in practice); if it is a witness, there is no mandatory time requirement, and it is generally the public security organs that cooperate with the witness's time arrangements.
The persons under investigation need to pay attention to the following: there must be no less than two investigators (who must be regular police officers, not auxiliary police officers); a "summons" is required when summoning someone at their home; a "search warrant" is required when searching residences, offices and other places; a "seizure decision"/"seizure list" is required when seizing items involved in the case; and a "notice of obtaining evidence" is required when obtaining evidence from witnesses, etc.
The living environment for domestic encryption practitioners is already quite bad. Builders must be very cautious when spreading some information. It is best to verify it before publishing it. If web3 builders encounter legal problems, it is best to consult a professional web3 lawyer as soon as possible.
