Authors: Huang Wenjing, He Weiwei

Introduction

With the tightening of global anti-money laundering standards and the implementation of the new Anti-Money Laundering Law in our country, cryptocurrency crimes have shown characteristics of "high frequency, high amount, high concealment". From early fraudulent trading platforms to on-chain phishing and fragmented money laundering using smart contracts today, victims are not only facing asset losses but are also caught in a situation of information asymmetry and difficulty in providing evidence for their rights protection.

However, in judicial practice, victims generally face a core dilemma: despite knowing that the funds are "still on-chain," it is difficult to promote the public security agency to complete the seizure, freezing, and disposal. This often stems from incomplete evidence, unclear reporting statements, and insufficient communication and cooperation, resulting in missed optimal investigation opportunities.

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

The Possibility of On-Chain Asset Tracking

Point One: How does the law view your cryptocurrency loss?

This depends on the nature of the matter.

• If it is an ordinary investment or trading dispute, and you believe the project party has not fulfilled its obligations, the court is likely to consider this as a risk you must bear, making it difficult to support the recovery.
• However, if you have been defrauded, robbed, or had your funds stolen, it is entirely different. Current judicial practice has clarified that cryptocurrencies are legally regarded as valuable "property". Therefore, public security agencies have the responsibility to file a case for investigation and legally recover and confiscate these illicit gains, returning them to the victims.

Point Two: Technology can track, why don't police freeze immediately?

Blockchain transaction records are publicly accessible, but this does not mean the police can take immediate action.

The police need clear evidence to prove "this money was indeed defrauded from the victim and has flowed to this specific address or account". The anonymity of cryptocurrencies and the quick transfer by criminals (such as using cross-chain and mixing tools) make the initial hours to 48 hours after reporting crucial. If the evidence chain is unclear or incomplete, the police cannot effectively proceed.

Point Three: The key to success is the "first-hand evidence" you provide

To push for case filing and successfully freeze assets, the quality of the evidence you submit is crucial. Especially when involving overseas platforms or complex transfer paths, just having chat screenshots is far from sufficient.

A set of evidence needs to be prepared that clearly addresses the following questions:

• Identity proof: Who are you, and who is the other party?
• Behavioral proof: How did the other party deceive or steal from you? What was the complete process?
• Financial proof: Where did your money come from, and to which specific blockchain address was it transferred?
• Technical analysis: (if possible) Show the subsequent flow of funds, proving where it ultimately went.

In simple terms, the more professionally and clearly you prepare, the higher the speed and success rate of police action!

Building a Systematic Evidence Chain: From Identity Verification to Fund Flow

To effectively report to the police and promote action, you need to prepare a clear and powerful set of evidence. This evidence can be organized and understood from the following four levels:

Step One: Prove "who you are" and "where your money came from"

This is the starting point of everything. You need to prove to the police:

1. Your true identity (ID card).

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

Original records of your purchases of cryptocurrencies from bank cards or Alipay/WeChat Pay transfers. This proves your money is clean.

Your account information on centralized exchanges (such as UID, real-name authentication screenshots, bound phone number). This proves that these asset accounts belong to you and serves as the basis for future fund return.

Step Two: Completely and accurately restore "how the money was transferred away"

This is the most core technical evidence, and cannot rely solely on screenshots. You need to organize the following three pieces of information for each amount transferred away:

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

2. Wallet Address: The addresses of both the sending and receiving parties.

3. Exact Time and Amount:

Organize this information into a clear table and attach links found using a blockchain explorer. This will allow the police and tracking experts to see the fund paths at a glance.

Step Three: Prove that the other party "was not engaged in normal transactions but was committing a crime!"

This is to ensure the police accurately characterize it as fraud or theft, and not merely investment losses. You need to gather evidence that can prove the platform or individual engaged in fraudulent behavior, such as:

• Websites and promotional materials of fake platforms.
• Chat records promising "capital protection and high returns", and screenshots of community promotions.
• If your account was operated by "someone else" (such as being inexplicably hacked), be proactive in contacting the exchange for abnormal login records, IP addresses, or large transfer risk control reports. This can strongly refute claims of "your own operational errors".

Step Four: Provide a professional "flow of funds diagram" and point out key exit paths

When funds have undergone multiple transfers or complex mixes, a flow analysis report provided by a professional agency is crucial. This report can turn disorganized transaction records into a clear "funding path map" and achieve two key objectives:

1. Tracking the endpoint: Clearly indicate which platform or address your money ultimately flowed to.

2. Finding leverage: If the funds ultimately flowed into a centralized exchange requiring real-name verification, the police can quickly issue legal documents to that exchange based on this report to freeze the relevant accounts. This is a key step in achieving asset recovery.

The core of the report is: pointing out the "exit" where assets eventually flow. If the funds ultimately flow to a centralized exchange that requires KYC verification or belong to any known "OTC currency exchange" grey financial pool, the public security authorities can send a cooperation letter or take emergency measures to stop payment.

Practical Communication Skills: How to Effectively Dialogue with Law Enforcement

When reporting, how clearly and professionally you present the case directly affects the police's judgment of the case and subsequent actions. The key lies in three points:

Point One: Accurately state the nature of the case:

Do not simply say "I was scammed" or "I lost on my investment". The police need to clearly assess this as a criminal offense rather than an ordinary economic dispute. You can express it this way:

• "I encountered a scam (or theft/illegal fundraising) that utilized cryptocurrency. The other party was not a normal trading counterpart, but rather transferred my assets through a fake platform (or phishing link/illegally operated my account)."

This will directly guide the police to handle it as a criminal case.

Point Two: Clearly explain the flow of funds:

Use the shortest possible words to make the key information clear. Let the police quickly grasp the main point, you can organize this according to the following template:

• "My money was transferred from my real-name authenticated 【XX Bank/Alipay】 account to my account at 【XX Exchange】 (for example: Huobi), converted into 【USDT】, and on 【Month Day, Time】 was transferred to the wallet address provided by the suspect. After preliminary tracking, this asset has now flowed to 【XX overseas exchange/a known money laundering address pool】, which can still be traced."

This way of speaking immediately conveys to the police that: the asset flow is clear, may have conditions for tracking, and the situation is urgent.

Point Three: Proactively provide an action plan

The police may not be familiar with blockchain operations, you can proactively provide clear guidance, assist the police in acting quickly, facilitating rapid progress:

• Submit an "Asset Freezing Recommendation"**: Prepare a list of suggested frozen specific cryptocurrencies, wallet addresses, current platforms (if any), and estimated values in written form. This can significantly save the police verification time.
• Inquire about technical support channels: Many local police have established cooperation with professional blockchain security companies. You can politely ask: "Do we need to contact a professional technology company to provide a fund flow analysis report, or assist in issuing legal documents?" or "Do you need us to cooperate in issuing a formal technical identification assistance letter?"

Asset Disposal and Realization: New Trends in Justice by 2026

The freezing of assets does not mean the end of rights protection; what victims are most concerned about is that "asset disposal and return" is the key. The subsequent process mainly involves the following three core links:

First: How can assets be legally realized?

In the past, finding ways to sell currency privately was very risky. Now there is a more regulated path: for example, places like Beijing have started pilot programs, with the police entrusting officially designated compliant institutions (like the Beijing Property Exchange) to conduct public auctions for disposal.

• You need to pay attention: Ensure that the realization process is open and compliant, and that the final return to your account is a legal domestic currency (RMB). This fundamentally avoids the risk of "money being frozen again after it returns".

Second: What fees will be deducted upon return?

During the disposal process, there may be necessary technical analysis, asset custody, and other third-party service fees.

• You need to note: With lawyers' help, understand whether these fee items are reasonable and whether the deduction ratio is transparent. Ensure that your returned amount is clear and traceable, and avoid unnecessary losses during the disposal phase.

Third: What if the money has flowed abroad?

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

• Core strategy: Promote law enforcement agencies to issue a cooperation notification through the International Criminal Police Organization (INTERPOL) or contact stablecoin issuers (like Tether, which issues USDT) to request putting the relevant wallet addresses on the blacklist.
• If successful, USDT in these addresses will be frozen globally and cannot be transferred, thus buying precious time for our subsequent legal recovery.

Mankiw's Summary: The process of getting money back is fundamentally about "legal realization, transparent return, and utilizing international mechanisms for interception". Understanding these paths can help you better cooperate with the police and lawyers to ensure that assets are safely maximized and returned to you.

Conclusion

Rights protection in the world of cryptocurrency is a protracted battle against time and technology. In the current judicial environment, victims can no longer passively wait but should act as "evidence pioneers" and "providers of technology", transforming passiveness into proactivity by building a solid evidence chain and professional communication mechanisms.

Remember: The earlier you intervene, the more detailed the evidence, and the more professional the expression, the higher the likelihood of asset return. Cryptocurrencies are by no means an unreachable lawless area but rather a "public ledger" where every detail leaves traces.

Checklist

1. Basic Identity and Account Evidence

• Victim's ID proof
• Bank account information (for deposits/withdrawals)
• Exchange account registration information (UID, bound phone number, email)
• Platform real-name authentication screenshots

2. Fund Transfer and On-Chain Evidence

For each involved transfer:

• Transaction Hash (TxID)
• Wallet Address (sending/receiving)
• Transfer Timestamp
• Cryptocurrency and Amount
• Full page screenshot from the blockchain explorer (including URL)
• Records of transfer failure/interception (if any)
• Request timestamp/notarization proof from a third-party platform (such as evidence storage platforms)
• If the wallet supports on-chain signing, export the signing operation records to prove ownership.

3. Platform and Behavioral Evidence

• Screenshots of the investment platform pages (return promises, rule explanations)
• Customer service chat records
• Group chat, operation promise screenshots
• Abnormal operation records (login logs, IP address records, unauthorized transfer records, unusual large transfer behaviors from the trading platform or wallet)

4. Fund Analysis and Technical Reports

• On-chain tracking path chart
• Multi-address clustering analysis explanation
• Determining the ultimate fund flow (exchange/mixing tool/cross-chain bridge)
• Case amount and cryptocurrency price calculation explanation (noting the time point)

5. Freezing Recommendation Letter

• Cryptocurrency
• Wallet Address
• Current valuation
• Potentially related exchanges
• Explanation of freezing urgency

6. Key Supervision Points During Disposal Phase

When the court decides to dispose of virtual currency, victims and their lawyers should focus on:

• Whether the realization platform is compliant and licensed
• Whether it meets foreign exchange management requirements
• Whether disposal fees are reasonable
• Whether the return path is closed-loop
• Whether the victim's return ratio is transparent

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