Sweeping Buildings for Phone Checks & Forced Token Transfers? Account Bootstrapping in the Crypto...

This article targets the rumor of “street mobile phone checks and forced cryptocurrency transfers” circulating in the Web3 circle. Verified by a legal team, it is determined to be false news used by self-media to gain account exposure. It analyzes the boundaries of public power from a legal perspective, explains the illegality and irrationality of the behavior described in the rumor, and shares response methods in case of law enforcement inspections, providing legal guidance for Web3 practitioners and alleviating industry panic.

Introduction

Recently, a piece of news has circulated on the Chinese Internet and Web3 communities, claiming that the police in Hangzhou, Chengdu and other places, during street or home inspections, would require “forced transfer” once they found cryptocurrency apps installed on the mobile phone or assets in the wallet.

This news has caused great panic among practitioners against the backdrop of the year-end industry situation. As a criminal lawyer team deeply engaged in the Web3 field, after multiple verifications and legal analyses, we tend to believe that this is a “false news” that infinitely amplifies individual experiences. Just like the previous social media claims that “the local team of xx Exchange in xx place was arrested”, it is completely a strategy for self-media accounts to gain attention.

However, panic stems from the unknown. Today, we will not talk about emotions, but only about legal principles. We will analyze the boundaries of public power from a professional legal perspective and how relevant practitioners should respond if such an extreme situation occurs.

Why “Seizing Cryptocurrency Upon Discovery” Is Not Legally Logical?

In a society ruled by law, the exercise of public power must follow the principle of “statutory authority”, that is, any law enforcement action must strictly comply with legal provisions. The “transferring cryptocurrency upon discovery” operation mode in the rumor is not only seriously illegal, but also exposes law enforcement officers to extremely high criminal risks.

The right to stop and question is not the right to arbitrary search

According to Article 9 of the Law of the People’s Republic of China on the People’s Police, the premise for public security organs to conduct on-the-spot stop and questioning and inspection is to target “persons suspected of illegal or criminal acts”. The privacy rights of ordinary citizens are protected by law if they show no signs of suspicion.

Without a Search Warrant, forcibly unlocking a mobile phone to view the photo album and non-public apps (such as Telegram, cold wallets, etc.) only on the grounds of “routine inspection” is clearly an administrative act that violates legal procedures.

Law enforcement organs forcing citizens to transfer funds will cause severe damage to both sides

In the handling of criminal cases, the disposal of involved property has extremely strict procedures. If the handling personnel, without filing a case and without seizure procedures, forcibly require citizens to transfer virtual assets to an account that is not a public account of the public security organ (such as a personal address or an unknown address), this may be legally characterized as:

Abuse of authority: Exercising power in violation of regulations, causing heavy losses to public property, the state and the people’s interests.

Robbery or extortion: Coercing others to deliver property by using public power without legal basis.

At a time when the country is comprehensively governing by law and police supervision is becoming increasingly strict, it is not in line with the rational behavior pattern of grassroots law enforcement officers to take the risk of ruining their careers or even being imprisoned to conduct street plunder for an asset with undetermined nature.

Therefore, we believe that such extreme behavior is by no means the norm, nor can it be the norm. The so-called “street mobile phone inspection and forced cryptocurrency transfer” is most likely a precise crackdown on specific high-risk persons involved in fraud or gambling, which has been misinterpreted as a universal policy for the entire industry.

Tighter Supervision Is Real, but “Overstepping the Boundary” Is Not the Norm

Although we believe the rumor is false, it is undeniable that the end of the year is a peak period for the governance of funds involved in fraud and gambling. As practitioners, we should not fear “being inspected”, but fear “being unprepared”.

At the intersection of administrative and criminal matters, we need to be alert to the possible procedural defects or induced law enforcement by individual handling personnel under KPI pressure.

If this “very low probability” event really happens to you, please be sure to stay calm, and it is recommended that you take corresponding measures to protect your legitimate rights and interests.

The “Four Insistences” at Critical Moments

If you really encounter handling personnel who ask to check your mobile phone or even transfer your assets, please follow the steps below to respond. This not only protects your property, but also urges standardized law enforcement, so as to maximize the legitimate interests of the parties:

1.Insist on “verifying identity”

Politely ask the other party to show the People’s Police Certificate. This is a right granted to you by law. If the other party is an auxiliary police officer, a formal police officer must be present. Auxiliary police officers cannot enforce the law alone and must be led by formal police officers. If they dare not even show their certificates, you have every reason to refuse to cooperate.

Without a lawyer present, do not casually explain the source of your assets, transaction counterparties or business models. Just state: “This is my legitimate personal property.” Do not say more out of nervousness, as more words may lead to more mistakes.

2.Insist on “no documents, no transfer”

If the other party wants to check your mobile phone, ask if they have a Search Warrant. According to the Criminal Procedure Law, warrantless search is only allowed in emergency situations.

If the other party requires the seizure of your virtual currency, clearly state: “Officer, I will cooperate with law enforcement. But please issue the Seizure Decision and Seizure List on site, and note the wallet address, currency type, quantity and hash value to be transferred into on the list. I can only transfer the currency after I sign and confirm it.”

Never cooperate with the “verbal transfer” request that has no document records and is transferred to a personal address. You can express euphemistically: “Without a seizure list, I am worried that this sum of money cannot be clearly explained, and I will not be able to account for it to the company/my family in the future, and I am also worried about bringing risks to your law enforcement.”

3.Insist on “only transferring to public accounts, not personal accounts”

As long as law enforcement is carried out in strict accordance with the law, personal wallets will never be used to receive funds. Firmly refuse to transfer the currency to a personal wallet address of unknown identity. “Officer, transferring to a personal account cannot be clearly explained. To avoid subsequent legal risks and protect your law enforcement compliance, please provide the special account/address for involved funds of the public security bureau.”

4.Insist on “post-event appeal”

If you feel pressure on the spot and cannot refuse, do not have physical conflicts. Try to remember the police number, the name of the police station, and the transfer address. After your personal freedom is restored, contact a lawyer immediately. For illegal seizure, we need to recover the assets through legal channels. The on-chain transfer records are irrefutable evidence.

Conclusion

The Web3 industry is in the throes of compliance transformation. As legal professionals, we understand the anxiety and worries of practitioners. But we sincerely hope that people in the cryptocurrency circle will not gain attention by creating fear and gimmicks!

Fear stems from the unknown, and safety comes from professionalism. The public security organs will not regulate the industry through “robbery-style” law enforcement without evidence. What they really want to crack down on are criminal activities such as money laundering and fraud, not ordinary cryptocurrency holders.

However, as practitioners, the fundamental guarantee to survive the cycle is to do a good job in asset isolation, keep complete transaction records (KYC/AML records), and seek the intervention of a professional lawyer as soon as possible when encountering legal risks.

〈Sweeping Buildings for Phone Checks & Forced Token Transfers? Account Bootstrapping in the Crypto Space Has Gone Way Too Far!〉這篇文章最早發佈於《CoinRank》。