In recent years, an increasing number of people have invested in the cryptocurrency space, but various risks have followed, especially after the implementation of the Anti-Telecom Fraud Law in mainland China in December 2023, and the implementation of stricter punitive measures in December 2024. The strict enforcement of relevant regulations makes cryptocurrency trading more complex. To avoid inadvertently becoming involved in illegal transactions or facing penalties, this article will analyze common purchasing methods and how to avoid risks in detail.
Common purchasing methods and risks
Purchasing cryptocurrency with bank cards
Risks:
Using bank cards to purchase cryptocurrency, especially for large transactions, can easily be exploited by criminals. Currently, many cryptocurrency exchanges have relatively lax review mechanisms, and some criminals purchase others' identity information and bind bank cards to conduct illegal operations. Specific methods usually include deceiving victims into registering on exchanges and inducing fund transfers under the guise of 'investment and wealth management', ultimately funneling the funds into the criminals' wallets.In this case, victims may unknowingly become a part of the criminal chain. For example, if a victim purchases a large amount of USDT (or other digital currencies) from others through C2C, the other party may ask them to transfer funds to different accounts under the pretext of 'too large a purchase', thus laundering the money. If you fail to identify the other party's criminal behavior, you may fall into legal disputes.
How to avoid:
If you encounter a situation where the other party requests transferring funds to multiple accounts, or claims that a bank card is needed for receiving payments, be sure to be cautious.
Refuse transactions where the merchant's information is inconsistent, and try to avoid trading with merchants of unknown origin.
After completing the transaction, be sure to keep chat records, transaction proofs, and other evidence just in case.
Purchasing cryptocurrency via Alipay and WeChat
Risks:
In addition to bank card purchases, Alipay and WeChat are also commonly used for small cryptocurrency transactions, especially on some C2C platforms. Some criminals utilize Alipay's Xiaohe wallet, password red envelopes, WeChat group red envelopes, and other methods for fund transactions, leading to unclear fund flows and increased transaction risks. Due to the relatively loose payment systems of Alipay and WeChat, these platforms are prone to becoming tools for money laundering and fraud.In this case, merchants may choose to use these opaque payment methods to evade legal responsibility, further increasing transaction risks. Especially when the merchant's transaction volume and history are not transparent, it is easier for victims to fall into fraud traps.
How to avoid:
Try to avoid trading through uncommon methods such as Alipay's Xiaohe wallet, password red envelopes, and WeChat red envelopes.
Before conducting transactions, be sure to verify the other party's identity, confirm the merchant's legality, and retain all records before and after the transaction.
Check merchant information: It is advisable to review the merchant's registration time and historical transaction number. If the merchant's registration time is short and the number of transactions is low, it is best to avoid trading with them.
Conduct transactions through the platform's official payment methods and use payment methods that can provide transaction proofs whenever possible.
Legal risks
In mainland China, with the implementation of the Anti-Telecom Fraud Law, the risks associated with cryptocurrency transactions are increasing. Especially when the trading volume of cryptocurrencies reaches a certain scale, it may violate the crime of illegal business operations. Particularly for U merchants (involving stablecoins like USDT), if their turnover exceeds 2 million RMB, they may face legal accountability.
How to avoid:
Strictly comply with relevant laws and regulations of the platform and the country, and avoid participating in illegal cryptocurrency transactions.
Use compliant trading platforms to ensure that all transactions are legal and compliant, avoiding legal troubles due to negligence.
Safe trading advice
Platform review: It is advisable to choose platforms with a sound review mechanism for trading. The platform should strengthen the review of merchants to ensure that the merchant's identity matches the operator.
Facial recognition and payment proof: It is recommended that platforms enable features such as facial recognition and payment proof uploads to ensure the authenticity and legality of transactions.
Transaction record retention: Regardless of the trading method, it is essential to keep complete transaction records, chat logs, and payment proofs, as these will be important evidence to protect one's rights in the future.
