Is Hangzhou investigating crypto practitioners? It is likely that a certain team is involved.

Author: Liu Zhengyao

Regarding the "Hangzhou Investigation" incident in the encryption industry, there has been new progress recently. After verification by lawyer Liu with relevant judicial authorities in Hangzhou and information obtained from two other channels, the information about the Hangzhou police conducting a systematic investigation of encryption practitioners should be false.

▍The process of the "Hangzhou Investigation" incident

Early in the morning of June 10, blogger X published an article titled "Hangzhou police are conducting a systematic investigation of cryptocurrency practitioners". When lawyer Liu saw it, he was shocked and thought, has the domestic web3 environment been completely destroyed? After analyzing the blogger's article, I still have some doubts in my heart, so I wrote "Shocked! It is rumored that Hangzhou is conducting a large-scale investigation of encryption practitioners" linktype="text">Shocked! It is rumored that Hangzhou is conducting a large-scale investigation of crypto practitioners. It mainly analyzes that mainland China has launched strong regulatory measures on the entire crypto industry based on the "9.24 Notice" in 2021. 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 the police to investigate some currency circle practitioners. After multiple verifications (including but not limited to 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. ▍ What is the "truth" of the matter?

So what is the truth of the matter? Judging from the information source of 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.

Lawyer Liu's basis is that friends from two channels have sent me private messages saying that friends in the cryptocurrency circle in Hangzhou have lost contact for several days, and the team of the lost friends 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 wants to investigate, investigate or even crack down on the entire encryption industry. Of course, this is just my conclusion based on the limited information I have obtained. If readers have other information, they can also inform Lawyer Liu. ▍The Hangzhou incident is a warning to the encryption industry. There are two warnings: 1. You must know the red lines of mainland regulators; 2. How to respond if you are investigated by judicial authorities.

(I) Regulatory red lines

In fact, Lawyer Liu has already written in "Shocked! : It has been mentioned in the article "It is rumored that Hangzhou is conducting a large-scale investigation of encryption practitioners". I will repeat it here. At present, friends in the mainland currency circle are prohibited from doing the following: 1. Conducting virtual currency and legal currency exchange; 2. Exchange between virtual currencies; 3. Buying and selling virtual currencies as a central counterparty; 4. Buying and selling virtual currencies as a central counterparty; 5. Buying and selling virtual currencies as a central counterparty; 6. Buying and selling virtual currencies as a central counterparty; 7. Buying and selling virtual currencies as a central counterparty; 8. Buying and selling virtual currencies as a central counterparty; 9. Buying and selling virtual currencies as a central counterparty; 10. Buying and selling virtual currencies as a central counterparty; 11. Buying and selling virtual currencies as a central counterparty; 12. Buying and selling virtual currencies as a central counterparty; 13. Buying and selling virtual currencies as a central counterparty; 14. Buying and selling virtual currencies as a central counterparty; 15. Buying and selling virtual currencies as a central counterparty; 16. Buying and selling virtual currencies as a central counterparty; 17. Buying and selling virtual currencies as a central counterparty 4. Provide information intermediary and pricing for virtual currency transactions; 5. Token issuance financing and virtual currency derivative transactions; 6. Open exchanges (whether in China or abroad) and provide services to mainland residents; 7. Provide services (marketing, payment settlement, technical support, etc.) for overseas virtual currency exchanges; 8. The established enterprises, individual industrial and commercial households and other entities cannot contain the words "virtual currency", "virtual assets", "cryptocurrency", "crypto assets" and so on; style="text-align: left;">9. Virtual currency mining, etc.

It should be noted that although the "9.24 Notice" lists the above 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.

(II) How to respond when being investigated

But at the same time, Lawyer Liu said in "《》 clearly mentioned that criminal cases in the cryptocurrency circle have a natural "expansion" and it is easy for the judicial authorities to find reasons to crack down on them. Ordinary citizens are like ants in the face of a powerful national judiciary. Therefore, for serious web3 entrepreneurs, Lawyer Liu provides the following suggestions for reference if you are unfortunately faced with criminal legal problems.

1. First figure out your situation

According to Chinese law, it is the obligation of every citizen to cooperate with the judicial authorities 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". The criminal suspect's transcripts are all "interrogation records" (of course, this trick is not completely effective. In a small number of cases, the police first make an "interrogation record" for the suspect, at which time a criminal case may not have been filed; then the second transcript becomes the "interrogation record"); 2. Place of cooperation in investigation

In judicial practice, the public security organs have relatively low requirements for witnesses. For example, they can go to the witness's unit, residence, or even hotel to cooperate in 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 receive 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 either case, they must cooperate with the investigation of the case-handling agency (police station, case-handling center, etc.).

3. Time for cooperation in investigation

For criminal suspects, the first cooperation time for investigation is generally no more than 12 hours, and the longest time is no more than 24 hours (this point is often breached in practice);

4. Investigation procedures

The persons under investigation need to pay attention to: the number of investigators (who must be regular police officers, not auxiliary police officers) must not be less than 2, a "summons" must be available for house summons, a "search warrant" must be available for searches of residences, offices and other places, a "seizure decision"/"seizure list" is required for seizing items involved in the case; and a "notice of obtaining evidence" is required for obtaining evidence from witnesses, etc.

▍Conclusion

The living environment of domestic encryption practitioners is already quite bad. Builders must be very cautious when spreading some information. It is best to verify it before publishing. If web3 builders encounter legal problems, it is best to consult a professional web3 lawyer as soon as possible.