There are rumors that Hangzhou is investigating encryption practitioners? It is highly likely that a certain team is involved in the case.

Author: Liu Zhengyao

Regarding the “Hangzhou investigation” incident in the cryptocurrency industry, there has been new progress recently. After Lawyer Liu verified and confirmed with the relevant judicial authorities in Hangzhou, as well as information obtained from two other channels, it appears that the information about the Hangzhou police systematically investigating cryptocurrency practitioners is false.

▍The course of the “Hangzhou Investigation” incident

Early in the morning of June 10th, an X blogger published an article “Hangzhou Police Are Conducting a Systematic Investigation of Cryptocurrency Practitioners”, when Lawyer Liu was shocked when he saw it, thinking that the domestic web3 environment has been completely cool? After analyzing the blogger’s article, I still had some doubts in my heart, so I wrote “Shock! Online rumors that Hangzhou has conducted a big survey of crypto practitioners”, mainly analyzing Chinese mainland based on the “9.24 Notice” in 2021, has launched strong regulatory measures for the entire crypto industry, and it will be difficult to upgrade supervision in the future, in principle, I am inclined to Hangzhou may have a criminal case in the currency circle, resulting in the police investigating some currency circle practitioners.

After multiple verifications (including but not limited to inquiries with local judicial authorities in Hangzhou, lawyer colleagues, and web3 practitioners known to Lawyer Liu), we have confirmed 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? According to the information source from Lawyer Liu, it is basically confirmed that there is a relatively large cryptocurrency team in Hangzhou involved in the case (related to foreign exchange crimes, likely illegal business operations). The information disclosed by the blogger earlier may be due to the cooperation of the involved personnel or witnesses with the public security authorities in the investigation.

Lawyer Liu’s basis is that friends from two channels have sent me private messages, saying that friends in the currency circle in Hangzhou have been missing for several days, and the team of the missing friends is relatively large.

Therefore, I speculate that the truth behind the “Hangzhou investigation” is that there are local cryptocurrency teams involved in the case, rather than Hangzhou intending to investigate, scrutinize, or even crack down on the entire crypto 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 Warning of the Hangzhou Incident for the Crypto Industry

There are two warnings: First, you must know the regulatory boundaries set by mainland regulators; second, you should know how to respond if you are investigated by judicial authorities.

(1) Regulatory Red Line

In fact, Mr. Liu has already written in "Shocked! It has been mentioned in the article “Hangzhou Conducts a Large-scale Exploration of Crypto Practitioners”, and I will repeat here that the things that are currently prohibited by friends in the mainland currency circle include:

• 1. Conduct exchanges between virtual currencies and fiat currencies;
• 2. Exchange between virtual currencies;
• 3. Act as a central counterparty for buying and selling virtual currencies;
• 4. Provide information intermediary and pricing for virtual currency trading;
• 5. Token issuance financing and virtual currency derivatives trading;
• 6. Establishing an exchange (whether domestically or internationally) and providing services to residents in mainland China;
• 7. For providing services to overseas virtual currency exchanges (marketing promotion, payment settlement, technical support, etc.);
• Enterprises, individual businesses and other entities established cannot contain terms such as “virtual currency”, “virtual assets”, “cryptocurrency”, “cryptographic assets”;
• 9. Virtual currency mining, etc.

It should be noted that although the “9.24 Notice” enumerates the above red lines, it does not stipulate clear legal consequences, and the “9.24 Notice” itself is not a law or regulation (it is a departmental normative document and industry regulatory provisions), even if it will be used by the judicial authorities as the basis for law enforcement and justice in judicial practice, it is still necessary to strictly abide by the principle of legality in criminal cases.

(2) How to Respond During an Investigation

But at the same time, Mr. Liu wrote in "Analysis of Web3 Lawyers: Is it true that the “deep-sea fishing” in the currency circle is coming to an end? Ordinary citizens are like ants in the face of a strong national judiciary, so for serious web3 entrepreneurs, Mr. Liu provides the following suggestions, if you are unfortunate enough to encounter criminal legal problems, you can refer to them.

1. First, understand your situation

According to Chinese law, it is the duty of every citizen to cooperate with the judicial authorities in handling cases. However, the person being investigated has the right to know whether he or she is being investigated as a witness or as a suspect; If it is a witness, the transcript made is the “Transcript of Interrogation”. The suspect’s records are all “interrogation records” (of course, this trick is not completely effective, in a small number of cases, the public security first made the “interrogation record” for the suspect, and there may not be a criminal case filed at this time; Then the second transcript becomes the “Interrogation Transcript”);

2. Location of the Investigation

In judicial practice, the requirements for witnesses by public security organs are relatively low. For example, they can cooperate with investigations and understand the situation at the witness’s workplace, residence, or even hotel.

Witnesses may also request to cooperate with the public security organs at their own appropriate time; However, criminal suspects do not have this kind of treatment, and either the public security organs directly come to the door to arrest the person (without giving him a chance to surrender at all), or they are notified by phone to come to the case, and in any case, they cooperate with the investigation at the case-handling organ (police station, case-handling center, etc.).

3. Time for Cooperation in Investigation

For criminal suspects, the initial cooperation time for investigations generally does not exceed 12 hours and must not exceed 24 hours at most (this point is often violated in practice); for witnesses, there are no mandatory time requirements, and the schedule is usually arranged by the public security organs in coordination with the witnesses.

4. Procedures of the Investigation

Investigators need to pay attention to the following: There must be at least two investigators (who must be formal police officers, not auxiliary police) when making a home visit for summons, and there must be a “Summons Certificate”; when searching residences, offices, and other locations, there must be a “Search Warrant”; when seizing items related to the case, a “Seizure Decision” / “Seizure List” is required; for collecting evidence from witnesses, a “Evidence Collection Notification” is needed, etc.

▍Conclusion

The survival environment for cryptocurrency practitioners in the country has become quite harsh. Builders must be very cautious when disseminating information; it is best to verify its accuracy before publishing. If any Web3 builders encounter legal issues, it is advisable to consult a professional Web3 lawyer as soon as possible.