Authors: Huang Wenjing, He Weiyi

introduction

With increasingly stringent global anti-money laundering standards and the implementation of China's new Anti-Money Laundering Law, cryptocurrency crimes have become characterized by " high frequency, high amount, and high concealment ." From early fake trading platforms to today's on-chain phishing and fragmented money laundering using smart contracts, victims not only face asset losses but also find themselves in a predicament of information asymmetry and difficulty in providing evidence.

However, in judicial practice, victims generally face a core dilemma: knowing that the funds are "still on the blockchain," they find it difficult to get the police to complete the seizure, freezing, and disposal . This often stems from incomplete evidence, unclear reports, and insufficient communication and cooperation , leading to missed opportunities for the best investigation.

This article combines the latest judicial practices and technological means to provide victims with a clear and feasible response path, helping to break the deadlock in the recovery process.

The possibility of on-chain asset tracking

First point: How does the law view your cryptocurrency loss?

It depends on the nature of the matter.

If it is a regular investment or transaction dispute, and you feel that the project party has not fulfilled its obligations, the court is likely to consider it as a matter of risk borne by the party, making it difficult to support recovery.
However, if you are scammed, robbed, or stolen from, the situation is entirely different. Legal practice now clearly defines cryptocurrency as valuable "property." Therefore, public security organs have a responsibility to investigate and prosecute such illegal gains, and to recover and confiscate them, returning them to the victims.

Second point: If technology can track it, why doesn't the police immediately freeze the accounts?

Blockchain transaction records are publicly available, but that doesn't mean the police can take immediate action.

Police need clear evidence to freeze assets, proving that "the money was indeed defrauded from the victim and flowed to this specific address or account." The anonymity of cryptocurrency and the rapid transfers by criminals (such as using cross-chain or coin mixing tools) make the first few hours to 48 hours after a report is filed crucial. If the chain of evidence is unclear or incomplete, the police cannot effectively carry out their work.

Thirdly: The key to success lies in the "first-hand evidence" you provide.

To successfully initiate a case and freeze assets, the quality of the evidence you submit is crucial. Especially when it involves overseas platforms or complex transfer paths, chat screenshots alone are far from sufficient.

You need to prepare a package of evidence that clearly explains the following issues:

Identification : Who are you, and who is the other party?
Actions demonstrating how the other party lied to you/stole from you? What was the complete sequence of events?
Proof of funds : Where did your money come from, and to which blockchain address was it specifically transferred?
Technical analysis : (If possible) Show the subsequent flow of funds, proving where it ultimately went.

Simply put, the more professional and clear your preparation, the faster and more successful the police operation will be!

Building a systematic chain of evidence: from identity verification to fund flows

To help you effectively report a crime and advance police action, you need to prepare a clear and compelling set of evidence. This evidence can be organized and understood from the following four perspectives:

Step 1: Prove "who you are" and "where your money comes from".

This is where it all begins. You need to prove to the police:

1. Your real identity (ID card) .

2. The legal source of your invested funds. This includes:

The original records of your purchases of cryptocurrency via bank card or Alipay/WeChat Pay transfers . This proves your money is clean .

Your account information on the centralized exchange (such as UID, screenshot of real-name authentication, and linked mobile phone number) . This proves that these asset accounts belong to you and serves as the basis for future fund returns.

Step 2: Completely and accurately reconstruct "how the money was transferred?"

This is the most crucial technical evidence, and screenshots alone are insufficient. You need to compile the following three pieces of information for each instance of money being transferred out :

1. Transaction Hash (TxID) : This is the unique "identity number" of this transaction on the blockchain.

2. Wallet address : The address for sending and receiving money.

3. Precise time and amount :

Organize this information into a clear table, along with links to the results found in a blockchain explorer. This will allow police and tracking experts to clearly see the flow of funds.

Step 3: Prove that the other party is "not conducting a legitimate transaction, but committing a crime!"

This is to ensure the police accurately classify it as fraud or theft , rather than simply investment loss . You need to gather evidence to prove the platform or individual engaged in fraudulent activity, such as:

Websites and promotional materials of fake platforms.
Chat logs and screenshots of group chat recommendations promising "guaranteed principal and high returns" were found.
If your account is accessed by someone other than yourself (e.g., it is stolen without your knowledge), you should proactively contact the exchange to obtain abnormal login records, IP addresses, or large transaction risk control reports. This will strongly refute the claim that it was due to your own operational error.

Step 4: Provide a professional "funds flow chart" to indicate key exit points.

When funds have undergone complex transfers, such as multiple transactions or coin mixing, a fund flow analysis report issued by a professional institution is crucial. This report can transform messy transaction records into a clear "fund path map" and achieve two key objectives:

1. Track the destination : Clearly indicate which platform or address your money ultimately went to.

2. Finding a leverage point : If the funds ultimately end up in a centralized exchange that requires real-name authentication, the police can use this report to quickly issue legal documents to the exchange, demanding the freezing of the relevant accounts. This is a crucial step in achieving asset recovery.

The core of the report is to point out the "exit" point where the assets ultimately flow . If the funds ultimately flow to centralized exchanges that require KYC verification, or belong to a known "OTC money laundering" black market fund pool, then the public security authorities can send a letter of assistance to the exchange or take emergency payment suspension measures.

Practical Communication Skills: How to Effectively Engage with Law Enforcement Authorities

When reporting a crime, how clearly and professionally you present the facts directly impacts the police's assessment and subsequent actions. The key lies in three points:

First point: Accurately state the nature of the case:

Don't simply say "I was scammed" or "I lost money on my investment." The police need to clearly determine that this is a criminal offense, not a simple financial dispute. You can express it like this:

“I was a victim of a cryptocurrency scam (or theft/illegal fundraising). The other party was not a legitimate trading partner, but rather transferred my assets through a fake platform (or phishing links/illegally operating my account).”

This will directly guide the police to handle the case according to criminal procedure.

Second point: Clearly explain the funding path:

Use the fewest words possible to clearly state the key information. This will allow the police to quickly grasp the main points. You can organize your message using this template:

"My money was transferred from my verified [XX Bank/Alipay] account to my account on [XX Exchange] (e.g., Huobi), and after being converted into [USDT], it was transferred to the wallet address provided by the suspect on [X Month X Day X Hour X Minute]. According to preliminary tracking, this asset has now flowed to [XX Overseas Exchange/A Well-known Money Laundering Address Pool], and it can still be traced."

This way, the police will immediately understand that the flow of assets is clear, there may be conditions for investigation, and the situation is urgent.

Third point: Proactively provide action plans

Police officers may be unfamiliar with blockchain operations. You can proactively provide clear guidance to assist them in operating quickly and facilitating rapid progress.

Submit an "Asset Freeze Recommendation" : Compile a written document outlining the specific cryptocurrencies to be frozen, their wallet addresses, current platforms (if applicable), and estimated value . This can significantly reduce police verification time.
Inquire about technical support channels : Police departments in many regions have partnered with professional blockchain security companies. You can politely ask , "Do you need us to contact a professional technology company to provide a fund flow analysis report, or assist in issuing legal documents?" or "Do you need our assistance in issuing a formal technical verification letter?"

Asset Disposal and Realization: New Judicial Trends in 2026

The freezing of assets does not signify the end of the rights protection process. The key concern for victims is the "disposal and return of assets." The subsequent procedures mainly involve the following three core stages:

First: How can assets be legally liquidated?

In the past, selling cryptocurrencies privately through unofficial channels was very risky. Now, there are more standardized procedures: for example, pilot programs have begun in Beijing and other places, where the police entrust officially designated compliant institutions (such as the Beijing Equity Exchange) to conduct public auctions to dispose of the assets.

You should pay attention to ensuring that the cash-out process is transparent and compliant, and that the money ultimately returned to your account is in legal local currency (RMB). This can fundamentally avoid the risk of "the money being frozen a second time after it returns."

Second: What fees will be deducted when the refund is returned?

During the disposal process, necessary third-party service fees may be incurred, such as technical analysis and asset custody.

You should note: With the help of a lawyer, understand whether these fees are reasonable and whether the deduction percentages are transparent. Ensure that your refund amount is clearly traceable to avoid unnecessary losses during the asset disposal process.

Third: What if the money flows overseas?

For funds that have already been transferred to overseas exchanges or addresses, there are still international cooperation mechanisms that can be explored:

Core strategy: Encourage law enforcement agencies to issue a notice of assistance through Interpol, or contact stablecoin issuers (such as Tether, the issuer of USDT) to request that the relevant wallet addresses be blacklisted.
If successful, the USDT in these addresses will be frozen globally and cannot be transferred, thus buying us valuable time for subsequent legal recourse.

Mankiw summarizes : The core of recovering your money is "legal realization, transparent return, and utilizing international mechanisms to pursue and stop wrongdoing." Understanding these pathways will help you cooperate more effectively with the police and lawyers, maximizing the safe return of your assets to you.

Conclusion

Safeguarding rights in the cryptocurrency field is a protracted battle against time and technological challenges. In the current legal environment, victims can no longer passively wait, but should act as "forerunners of evidence" and "providers of technology," turning passivity into initiative by building a robust chain of evidence and a professional communication mechanism.

Please remember: the earlier you intervene, the more detailed the evidence, and the more professional your explanation, the higher the likelihood of asset repatriation . Cryptocurrencies are not an untouchable lawless zone, but rather a "public ledger" where every detail leaves a trace.

Guide List

1. Basic identity and account evidence

Victim's identity certificate
Bank account information (used for deposits/withdrawals)
Exchange account registration information (UID, linked mobile phone number, email address)
Screenshot of platform real-name authentication

2. Fund Flow and On-Chain Evidence

For each of the transfers involved in the case:

Transaction hash (TxID)
Wallet address (send/receive)
Transfer timestamp
Currency and Quantity
Full screenshot of the blockchain explorer page (including URL)
Transfer failure/blocking records (if any)
Apply for timestamps/notarized certificates from third-party platforms (such as evidence storage platforms).
If the wallet supports on-chain signatures, the signature operation records can be exported to prove ownership.

3. Platform and Behavioral Evidence

Screenshot of the investment platform page (return promises, rules explanation)
Customer service chat history
Group chat and operation commitment screenshots
Abnormal operation records (login logs provided by the trading platform or wallet, IP address records, unauthorized transfer records, unusually large transfers, etc.)

4. Capital Analysis and Technical Report

On-chain tracing path graph
Multi-address clustering analysis description
Determining the final destination of funds (exchanges/mixers/cross-chain bridges)
Explanation of the amount involved and currency value calculations (with time points noted).

5. Freeze Recommendation

Currency
Wallet address
Current valuation
Potentially related exchanges
Emergency Notice

6. Key areas of supervision during the disposal phase

When a court decides to dispose of virtual currencies, victims and their lawyers should pay close attention to the following:

Are the monetization platforms compliant and licensed?
Does it comply with foreign exchange management requirements?
Are the disposal costs reasonable?
Is the reflux path closed loop?
Is the proportion of victims' compensation transparent?

萨尔瓦多总统签署取消对技术创新征税的法律

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