Recently, a new round of "freezing card tide" has once again hit the cryptocurrency OTC market. This is not only a continuation of a series of freezing card incidents at the beginning and the middle of the year, but also the result of relevant departments' strengthening anti-money laundering work under the new regulations of the Ministry of Public Security. .
Author|Echo
Edit | Gong Quanyu
01
The current situation and reasons of the new round of "freezing card tide"
Since September, a new wave of "card freezing" once again hit the currency circle. Not only did many readers report to the chain catchers that bank cards participating in OTC transactions were frozen, but also a large number of investors on Weibo and other social platforms talked about similar situations. "Many people I know around have frozen cards, and transactions as large as hundreds of thousands to as low as two thousand yuan have frozen cards." Xue Xu (a pseudonym), an investor in the currency circle who was frozen this time, told the chain catcher.
Although the phenomenon of freezing cards is not uncommon in the cryptocurrency industry, in terms of the coverage and extent, the freezing card tide is more violent than the past few times, and even the phenomenon of users' subway cards being frozen together, and many more Users reported that they could not reopen an account in mainstream banks, which caused a lot of inconvenience to life.
At the same time, the depth of the OTC platforms of major exchanges has also decreased significantly. The unit price gap between the USDT buying area and the selling area often has a price difference of more than 2 points. The OKEx platform also has a maximum price difference of 5 points (see the figure below). This phenomenon reflects the sharp decline in the number and activity of OTC merchants.
The picture shows a screenshot of the OTC platform of the OKEx exchange at the end of September.
Another obvious sign is that most of the pending orders on the OTC platforms of most major exchanges no longer support Alipay transactions and can only be traded through bank cards. A person in charge of an OTC merchant told the chain catcher that the reason was that the Alipay account was "abolished" in three days recently, indicating that the third-party payment channel is likely to be carrying out anti-money laundering operations that are no less powerful than the bank card channel.
The relevant person in charge of Huobi also told Chaincatcher that a large number of users have recently reported that bank cards used for OTC transactions have been frozen, but in fact, it is not only the cryptocurrency industry, but also related information in many fields such as foreign trade and finance. It can be seen from some social media information that there are indeed a large number of people in the foreign trade industry complaining that bank cards have been frozen, and some articles have spread widely.
The problem that this phenomenon reflects is that the large-scale freezing of cards is not aimed at the cryptocurrency OTC field, but the domestic police has strengthened the anti-money laundering work, and the OTC transaction field will inevitably be affected.
According to the chain catcher's interviews with people from various industries and the analysis of online data, the reasons for this large-scale freeze card phenomenon can be roughly summarized into two points.
First, domestic telecommunications fraud, killing pigs, pyramid schemes and other scams continue to occur frequently. A large amount of funds are defrauded from ordinary people. Coupled with long-term active overseas gambling platforms, there is an increasing demand for money laundering. As a more suitable money laundering medium, cryptocurrency has become the preferred tool for many scammers or gambling platforms to transfer funds and launder money. Some criminal groups will also cooperate with cryptocurrency OTC merchants to launder money. This year, many well-known OTC merchants have been investigated by the police. Recently, many related crackdowns have been publicly reported.
According to Hebei News Network, on September 3, Hebei Cangzhou police successfully detected a large telecom network fraud case, arrested 12 suspects including Zhu Mouhui, and seized 3.95 million yuan of stolen money on the spot. Upon questioning, members of the criminal gang confessed to the fact that since 2020, they have helped overseas electronic fraud gangs to split and transfer funds to obtain benefits after "whitewashing" on virtual currency trading platforms such as OKEX and Huobi.
According to reports from the payment industry, the People’s Court of Yongqiao District, Suzhou City recently heard the suspected pyramid scheme of the LON project. The project used LON currency rebates and member rebates to attract registered investment from people from all over the world online and offline, and a total of 13,251 members were developed. Defrauded investment funds of more than 50 million yuan. In the process of handling stolen money, the principal criminals and others, in order to avoid detection by domestic regulatory authorities, convert the investment and rebate money into virtual currencies such as Litecoin through Huobi, in order to achieve the purpose of money laundering.
According to a report from the Beijing News on September 24, Liao Jinrong, director of the International Cooperation Bureau of the Ministry of Public Security, stated at the 9th China Payment and Settlement Forum that preliminary statistics have exceeded one trillion yuan in gambling funds flowing out of China each year, and some gambling gangs used virtual currency to collect The transfer of gambling funds has brought great challenges to the crackdown.
Second, relevant state departments have continuously increased their anti-money laundering efforts, and issued more stringent guidance documents, and the relevant regulatory policies of major banks have become more stringent. OTC industry veteran Fu Mo (anonymous) told the chain catcher that the frozen card wave is likely to be related to the "Decision of the Ministry of Public Security on Amending the "Procedural Provisions for the Handling of Criminal Cases by Public Security Organs" that was reviewed and approved in early July this year. The original rules and regulations have undergone 141 amendments, many of which involve the determination of case jurisdiction.
The chain catcher query, or for use in crime computer network implementation of the new regulations on the basis of recognized website creator or administrator location and criminals use the victim's computer information system location and other places under the jurisdiction of the public security organs, an increase of The public security organs where the victim was infringed and where the victim’s property suffered damage may have jurisdiction. (See the figure below for details)
Since today's telecommunication fraud cases often involve people from all over the country, this adjustment is equivalent to giving the public security organs in most parts of the country the power to exercise jurisdiction over related fraud cases, rather than being limited to a handful of areas where the public security organs have jurisdiction.
According to the existing regulations, as long as the public security organ at or above the county level approves it, the public security organ can prepare a notice of assistance in freezing property and notify financial institutions and other units to implement it. Taking into account that the public security organs in different regions have subtle differences in their understanding of the legal rules and case rules, as well as the degree of emphasis and work energy, the aforementioned adjustments will easily lead to a sharp increase in the phenomenon of freezing cards.
At the same time, the aforementioned amendment decision came into effect on September 1 this year. This time point is also in line with the trend of high incidence of freezing cards since September this year.
It is foreseeable that with the further tightening of relevant regulatory policies, the freezing card phenomenon in cryptocurrency OTC transactions will become the norm in the industry for a long time. Therefore, it is particularly necessary for most cryptocurrency OTC traders to learn more about the precautionary measures for frozen cards and how to deal with the phenomenon of frozen cards.
02
How to deal with the frozen card incident
To deal with possible frozen cards, the most important thing for users is to learn to prevent them and use some techniques to reduce the risks in OTC transactions as much as possible.
Based on relevant interviews and online information, OTC transactions usually have the following points of attention: find trusted merchants to establish fixed deposit and withdrawal channels, take security as the core consideration, and do not need to pursue the best price every time; maintain sufficient legal currency cash flow , Reduce the frequency of OTC transactions; use cards of small and medium banks or local banks for transactions; use unusual bank cards for transactions, reducing the inconvenience caused by bank card freezing.
According to the chain catcher, there are usually two situations in which bank cards are frozen. One is bank freezing, which is also called stop payment by some industry professionals. That is, bank cards can only receive payments but not make payments. Generally, it is due to the user's transaction behavior that triggers the banking trend. If the user’s funds do not involve illegal funds, this situation will usually be automatically unfrozen after three days;
The other is judicial freezing. Generally, the public security organ freezes the bank cards that have fund transactions with the parties involved in the case, usually for half a year or one year, and then unfreeze after the case is completed. But Xue Xu told the chain catcher that there are many cases around him that have not been thawed for more than a year, which may mean a permanent freeze.
Derivative impact of bank card freezing, from WeChat group
Regarding user response measures, Fumo pointed out to the chain catcher that if a user encounters a bank card freezing after an OTC transaction, they can wait for about three days to determine the nature of the frozen card. If the frozen card has not been unfrozen after three days, you need to find the bank and the public security agency to understand the situation. .
Guo Yatao, head of the chain law lawyer team, told the chain catcher that users should find out the reason why the bank has understood the frozen card and the investigative agency that applied for the frozen card in the first time, try to get in touch with the investigative agency in time, explain the whole story, provide corresponding materials, if the investigation If the agency requires the investor to go to the local area to cooperate with the investigation, it is recommended that someone be accompanied or directly seek professional legal help.
"For those who have provided sufficient supporting materials and still cannot be unfrozen, or if the case-handling personnel are found to have violated the regulations during the communication process (for example, it has been verified that the money involved in the case is not related to the case but is not unfrozen), you can appeal or complain in accordance with the regulations. According to the law, the public security organs must deal with the matter within the statutory time limit," said Guo Yatao.
Xue Xu also described his contacts with the police in detail. "The criminal investigation teams in Shanghai and Inner Mongolia explained the freezing of cards in writing on the grounds that they were fraudulent. Then they asked me to provide transaction order records and income statement. I'm consulting a lawyer to see how to appeal," Xue Xu said.
However, the relevant person in charge of Huobi told the Chain Catcher that according to user feedback they obtained , most of the bank cards in the card freezing tide were only frozen for three days, and they were automatically unblocked after three days.
In cryptocurrency OTC trading, the exchange, as the platform party, also plays an important role in the frozen card incident, and even needs to bear certain responsibilities. Many interviewed users have complained that the platform party does not strictly review the qualifications of OTC merchants, resulting in a lot of black money. Pour into the OTC market.
To this end, Chaincatcher interviewed mainstream exchanges such as Huobi and Binance. They all stated that they will further improve the qualification review mechanism of OTC merchants in the future, and at the same time strengthen the construction of transaction risk control systems and user safety education.
At the same time, Huobi also explained in detail how the platform handles user complaints about frozen cards. "We usually guide users to understand the details of frozen cards, such as the freezing period, freezing agencies, and their contact information. If necessary, follow-up. If you cooperate, Huobi will let users contact the police, and then the police will contact Huobi to cooperate."
The relevant person in charge of Binance further told the chain catcher that after the police issue a transfer order, the relevant departments of Binance will cooperate with the police to give relevant transaction information to help users unfreeze bank cards as quickly as possible. Throughout the Q3 quarter, Binance's fiat currency department assisted the police in investigating dozens of cases, including many fraud cases involving hundreds of millions of dollars.
In addition, industry anti-money laundering standards are also advancing. According to Sina News, the blockchain industry application anti-money laundering standard seminar was held in Beijing on September 22. The meeting discussed the blockchain industry application or platform’s basic anti-money laundering technology security code of conduct, and the "Blockchain Industry Application The content of "General Requirements for Anti-Money Laundering" may also help to further standardize the OTC market.
As a gray area of legal supervision, cryptocurrency trading will inevitably cause various asset security issues. This relies on the joint cooperation of supervisors, exchanges, OTC merchants, etc., through good mechanisms to minimize similar incidents and promote industry cooperation. Standardized development.
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