Translator：Wang Qiyu

Bitcoin, the representative cryptocurrency, reached a price of nearly $20,000 per coin in 2017. However, as of August 15, 2018, the price plummeted to below $5,300. The sharp decline of Bitcoin had a ripple effect across the entire cryptocurrency market. Some even speculated that cryptocurrency trading would decline and eventually come to an end. Yet, by September 22, 2019, a check of major domestic trading platforms (such as Huobi and OKEx) revealed that the price of Bitcoin had rebounded to around $10,000 per coin. In the foreseeable future, cryptocurrency trading is expected to remain active in China.

Is cryptocurrency trading legal? Judicial Authorities lack clear regulatory documents. On August 24, 2018, the China Banking and Insurance Regulatory Commission, the Office of the Central Cyberspace Affairs Commission, the Ministry of Public Security, the People's Bank of China, and the State Administration for Market Regulation jointly issued a "Risk Warning on Preventing Illegal Fundraising in the Name of 'Virtual Currency' and 'Blockchain.'" This warning focused on regulating trading platforms, token issuance companies, and similar entities. Conversely, this regulation does not deny that cryptocurrencies like Bitcoin are legitimate property of citizens. As the principle "what is not prohibited is permitted" suggests, direct transactions between investors (on or off trading platforms) are still considered legal.

However, legality does not ensure complete safety. The decentralized storage, free circulation, and anonymity features of cryptocurrencies have led to their extensive use by criminals for money laundering from telecommunication fraud and online gambling proceeds. In cases where an investor sells a cryptocurrency and receives illicit funds into their bank account, it's possible that even the sender of those funds might be unaware of their origin. If criminal funds become mixed with legitimate ones in the upstream stages of a financial chain involving cryptocurrencies, and if the process of cryptocurrency transactions is difficult for law enforcement to investigate, then funds can easily be deemed suspicious by the police. Consequently, investor bank accounts might be frozen. At this point, investors may find themselves in a situation where they've transferred the cryptocurrency, but their funds have been seized. When investors attempt to communicate with law enforcement, they often struggle to identify the specific personnel responsible for the frozen account and might be required to visit a police station to prove their identity. In cases where there is no established practice of account management after the freezing process, insiders jokingly refer to it as "killing but not burying."

However, the freezing of bank accounts is legally grounded, yet the timeline for unfreezing often remains uncertain. According to Article 144 of China's Criminal Procedure Law, procuratorates and public security units (referred to as "investigative agencies") can freeze the bank deposits of criminal suspects based on the needs of a criminal investigation. Therefore, if an investigative agency determines that a certain sum of money is suspected of being criminal proceeds (such as fraud), they can freeze the funds flowing through the account, following the bank records. Investors often "hope" that the investigative agency will proactively lift the freeze, or that the freeze will be automatically lifted when the statutory period expires. However, in reality, bank accounts can be frozen without notice from the investigative agency or the bank. Investors often only discover that their bank accounts have been frozen when they attempt to withdraw funds and find that they are unable to do so.

Furthermore, investigative agencies sometimes continue freezing accounts beyond the statutory period (since there is no specified limit on the number of freezes), resulting in cases where accounts have been frozen for several years. It is also common for different investigative agencies to take turns freezing accounts (for example, an account might be frozen by the Shanghai Public Security Bureau and then by the Shenzhen Public Security Bureau, with separate freeze periods being calculated). Situations where an investor's legitimate deposits are subject to excessive or prolonged freezes can significantly impact their daily life.

Two months ago, an out-of-town investor engaged in virtual currency trading on a certain exchange reached out to our team and Lawyer Chen Yuyan through the internet. They claimed that their account had been unlawfully frozen, amounting to over 2 million RMB. After conducting interviews with the investor and conducting a thorough examination of the relevant evidence, our team formally took on the case. We provided legal opinions, submitted evidence materials, engaged in negotiations with different departments within the investigative agency, and cooperated with investigations. As a result, we successfully unfroze the bank account of an investor (frozen amount: over 2 million RMB, frozen duration: nearly 7 months, and the freeze had been extended once).

Based on our previous practical experience, we offer the following suggestions for investors. When your account is frozen, you should proactively inquire with your bank about the following details: (1) the freezing authority, (2) the reference number for the freeze order, (3) the duration of the freeze, and (4) the frozen amount. Additionally, confirm the specific investigative agency and the personnel in charge.

Simultaneously, gather relevant case facts and collect evidence of the corresponding transaction process. Promptly get in touch with an experienced and professional legal team specializing in blockchain and digital currency services to seek specialized assistance.