A fan consulted and said, "I started trading virtual currency USDT after being introduced by a friend. I had never come into contact with virtual currency before. My friend told me that trading virtual currency is not illegal in China and I can do it. The probability of freezing the card is not high. Even if I receive stolen money, my bank card will be frozen, and then I can return the stolen money. There will be no criminal risk, and the operation is also very simple. It is almost a sure win. So I started trading virtual currency. I didn’t expect that after trading for about 1-2 months, my bank card was frozen by the public security organs in many places, and I was also put on trial and faced a criminal offense. Now I have been released on bail, and the money I earned is not enough to repay the money. If I had known, I would not have traded virtual currency USDT and moved bricks."

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by law

At present, the domestic supervision of virtual currency mainly consists of three major documents.

Document 1: According to the "Notice on Preventing Bitcoin Risks" (hereinafter referred to as the "Notice") issued by the People's Bank of China and other departments on December 5, 2013, the nature of Bitcoin is clarified, and it is believed that Bitcoin is not issued by the monetary authority, does not have monetary attributes such as legal compensation and compulsion, and is not a real currency. However, as a commodity trading behavior on the Internet, ordinary people have the freedom to participate in Bitcoin transactions at their own risk. USDT, as a stable currency, is the anchor object of the value/price of mainstream virtual currencies such as Bitcoin, and should also be equally protected by law.

Document 2: The Announcement on Preventing Risks of Token Issuance and Financing (hereinafter referred to as the “94 Announcement”) issued by the People’s Bank of China and seven other ministries on September 4, 2017. The “token” here refers to the “native token” issued by the issuer, and the so-called “virtual currency” refers to “specific virtual commodities” such as Bitcoin in the central bank’s notice in 2013. The scope of the prohibition of the “94 Announcement” is limited to the field of illegal token issuance and financing, and does not prohibit individuals from holding, trading, and buying and selling virtual currencies (including Tether USDT).

Document 3: The "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Transaction Speculation (Yinfa [2021] No. 237)" (hereinafter referred to as the "924 Notice") jointly issued by the People's Bank of China and ten other ministries on September 24, 2021 reminds citizens to guard against the financial risks brought by virtual currency, but the simple virtual currency trading behavior does not violate the relevant provisions of my country's current laws and administrative regulations.

Through the interpretation of the three major documents, laws and regulations do not prohibit the transaction of virtual currency. If there is no prohibition by law, there is freedom. The above-mentioned 13-year notice, 17-year announcement, and 21-year notice are normative documents and do not prohibit the transaction of virtual currency. In short, the transaction of virtual currency is not illegal in China.

Although virtual currency does not violate the law, it does not mean that transactions in virtual currency will not result in card freezing or criminal liability. Currently, virtual currency transactions are prone to money laundering crimes, which may result in card freezing at the very least, or even criminal liability at the most serious.



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Card freezing risk

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During the withdrawal process of virtual currency USDT, if the other party pays the funds of online fraud, your bank card will be frozen by the court. At present, the three transaction modes corresponding to virtual currency will cause the bank card to be frozen by the court if the stolen money is received.

First, trading on exchanges. Although large exchanges are safer than small exchanges, exchanges are only responsible for the circulation of virtual currencies and USDT. The funds for buying and selling virtual currencies do not go through exchanges, and exchanges cannot determine whether the funds are safe. Therefore, the safety of funds is the responsibility of both buyers and sellers. A common scam in virtual currency trading on exchanges is that the other party changes the card number and pays with a non-real name.

In addition, in practice, more cases occur: in the exchange, if the other party buys your u and is cheated of u, you will also freeze your bank card. An individual or u merchant places an order to sell u on Binance or Ouyi (the seller is Li Si), and a stranger comes to buy u (the buyer is Zhang San). During the transaction, Li Si takes the initiative to ask Zhang San what the purpose of buying u is, and kindly reminds Zhang San on WeChat or phone many times not to transfer u to other exchanges or other platforms for financial management, and be careful of encountering pig-killing capital plates, which will cause u to be unable to withdraw. Zhang San also promised to sell u for his own use, and he would not be cheated, and being cheated had nothing to do with Li Si. Li Si saw that Zhang San had promised, so he released the currency. As a result, within a few days, the bank card that Li Si used to sell u was still frozen by the public security organs in other places. The reason for the freeze was that Li Si received fraudulent funds, that is, Zhang San, who bought u before, was cheated of u. When reporting the case, he said that the money was transferred to Li Si's bank card. The public security organs followed the flow of funds and froze Li Si's bank card for the currency circle to withdraw money. In this case, since the person who transferred money to you to buy your U is a victim, your bank card for receiving the payment is a first-level card involved in the case, and the Ministry of Public Security and the Central Bank will jointly control it, referred to as total-to-total control, resulting in non-counter transactions for all cards under your name. Or if the other party buys your U and invests in other platforms, your bank card will be frozen when you are deceived.

Second, offline transactions, cash deposit transactions, and transactions at an agreed location, all of which cannot avoid giving fraudulent funds, and the bank card used to receive the payment will be frozen by the judiciary. The team received many offline transaction cases, all of which were in existence. After the public security organs cracked the cases, the bank cards were successively frozen by multiple public security organs for 6 months, and some were even involved in concealment crimes.

The third acquaintance introduced that there is a middleman. Transactions with middlemen are more about ensuring that the transaction can be completed, but whether the funds are safe is uncontrollable. The middleman cannot conduct an audit without auditing. Once the funds are stolen money, the bank card will be frozen by the judiciary.



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3

Criminal risks

The most common charges for trading the virtual currency USDT are assisting in information network criminal activities and concealing the proceeds of crime.

The premise of both is that during the transaction of virtual currency, fraud funds are received, resulting in the bank card being frozen by the judiciary. The judicial authorities will convict the person if they presume subjective knowledge based on whether there is any abnormal behavior in the transaction.

So under what circumstances is subjective knowledge presumed? Some people who buy and sell u are detained for criminal offenses. When questioned by the public security organs, they say that they know that they will receive stolen money in the field of virtual currency, but they are not aware that the other party's funds are fraudulent funds in this transaction. In addition, their chat records also inform them of the detour of the stolen money, etc., and they are not aware of it. However, the judicial organs presume that you are subjectively aware based on the rules of presumption of abnormal behavior.

Based on relevant laws and regulations, court precedents, and a large number of criminal cases handled by the team, we summarize the key to presuming subjective knowledge in trading virtual currency USDT, which is whether there are the following abnormal behaviors:

The First Bank card was stopped by the public security agency.

The second bank card has been frozen by the public security agency. (Refer to previous articles)

Third, offline WeChat group transactions, cash transactions, and the other party exists.

The fourth is the smallest exchange trading or online gambling platform trading. Some small platforms are guaranteed to make money and will increase fixed fees, which is very abnormal.

Fifth, using encrypted chat software, overseas chat software transactions, and burning after reading may be considered as evading supervision.

The sixth card test behavior is to transfer 1 yuan to the bank card for each transaction to see if the card is frozen.

Seventh, the price is abnormal, significantly higher or lower than the market price.

Eighth, there is no capital investment. According to the upstream instructions, accept upstream funds to buy u and transfer to the upstream address.

After the ninth transaction was completed, there were multiple cash withdrawals.

10. Using other people’s bank cards for transactions.

Eleventh, a virtual currency studio was established, where people often did business, but their fixed counterparties were involved in money laundering.

The twelfth drove to different places across the country, but the other party was involved in money laundering and could not escape suspicion.

Note: Criminal offenses involving virtual currency are a new type of crime. In some areas, law enforcement agencies have never handled criminal cases involving virtual currency. The same behavior may only result in the card being frozen, refunded and unfrozen in that area. However, if you have abnormal behavior, you may become the next target of crackdown by the public security organs.



Criminal risks

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The team has received many cases of novice cryptocurrency traders having their credit cards frozen and criminal cases, as well as many cryptocurrency traders who have been working in the cryptocurrency circle for many years and now have their credit cards frozen when withdrawing virtual currency USDT. #BTC突破7万大关 #5月市场关键事件