Cryptocurrency Self-Protection Manual in the Era of Frozen Accounts: Don't Become a Funds Transfer Channel

Author: Daii

First, let me say something you probably need to hear most right now:

The more the market pushes people's emotions to rock bottom, the closer it is to the market completing its "final cleansing."

If you've been looking at the market recently and see the price constantly hitting new lows, and you feel anxious, that's a normal reaction—because a decline is never just about the price falling; it's forcing you to make psychological decisions: to cut your losses, to hold on, or to buy. Many people can't help but comfort themselves with the phrase "the bottom is almost here," but I prefer a more honest and useful way of putting it:

When the market experiences extreme sentiment like "hitting new lows," it's often closer to a temporary bottom, not further away; the probability of a rebound is increasing, but "further declines" are always possible.

We should always maintain a sense of awe towards the market.

But there's another area that demands even greater respect—regulation. This is especially true for those living in China. I studied law and have long followed the developments in domestic cryptocurrency regulation. Five years ago, I wrote an article titled "Is Bitcoin 'Legal' in China?" The opening statement, "Of course it's true," wasn't meant to be sensational, but rather to steer the discussion back to basic legal common sense: in criminal law, what ordinary people understand as "illegal or criminal" must adhere to the principles of "legality of crime and punishment" and the hierarchy of laws; you won't be arbitrarily arrested for holding/trading Bitcoin. At the end of last year, I wrote "China 'Names' Stablecoins—From 'Networked Dollars' to the Coordination Meeting of Thirteen Ministries," continuing along the same line of thought, telling you that stablecoins are no longer a new toy in a certain circle, but a more liquid "digital chip," naturally suited for cross-platform transfers, settlements, currency exchange, and black market activities. Therefore, if you still think that the "risks in the crypto world" are just price fluctuations, liquidation, and going to zero, you may still be stuck in the narrative of 2017. Today, the risk no longer primarily stems from market fluctuations, but from an increasingly sophisticated anti-fraud and anti-money laundering governance mechanism—it doesn't focus on whether you believe in Bitcoin, but rather on: where the money comes from, where it goes, and whether it has been "laundered" within the blockchain. On January 8, 2026, the Ministry of Public Security announced at a press conference that in 2025, 258,000 cases of telecommunications and online fraud were solved nationwide; 3.6 billion fraudulent phone calls and 3.3 billion fraudulent text messages were intercepted in conjunction with relevant departments; public security organs across the country conducted face-to-face dissuasion of 6.747 million people; and special operations such as "cutting off the flow," "removing the nails," and "severing the chain" were carried out. (news.cctv.com) Behind these numbers lies a fact that ordinary people easily overlook: the focus of governance is shifting from "catching scammers" to "cutting off funds." You may not have committed fraud, but if you momentarily act as a "transfer station," "acceptance point," or "payment agent," the system will treat you as part of the chain—first, payments will be stopped, accounts frozen, and you'll be investigated before any discussion of your malicious intent. This is why many people suddenly encounter: bank card suspension or freezing; payment account restrictions; being asked to explain the source of funds and provide transaction receipts; and even being summoned to give a statement. This is not mysterious. Article 20 of the Anti-Telecommunications and Internet Fraud Law, published on the website of the Supreme People's Procuratorate, explicitly states: A system for immediate inquiry, emergency stoppage of payments, rapid freezing, timely unfreezing, and return of funds involved in fraud must be established, and banks and payment institutions are required to cooperate in its implementation. In other words: Freezing doesn't only happen with cryptocurrencies; it's a routine action by the state to regulate the money supply chain. Cryptocurrencies are simply easier to use as a channel for "rapid transfer and difficulty in recovery," thus naturally attracting the attention of the regulatory body. Therefore, this article will not discuss "crypto trading techniques" or "which coins will rise." I only want to make one point clear: In today's Chinese context, the first bottom line for ordinary people participating in the crypto world is not profit, but: Don't become a "funding channel."

Next, let's get to the main text. I'll try to give you a latest self-protection manual for the crypto world using the framework of "Three Main Rules and Eight Points for Attention." Let's start with the "Three Main Rules."

1. Three Main Rules—First, nail down the hardest boundaries

Rule One: Never be a "funding channel."

Being a "funding channel" is a very cruel role: you might only do one thing—receive a sum of money and then transfer it out; or you might think you're just "helping someone buy USDT," "doing a transaction," and "making a profit from the spread." But from the perspective of anti-fraud and anti-money laundering, what you're doing is precisely the most crucial link: laundering funds from unknown sources into "seemingly legitimate destinations."

This is not an exaggeration.

This is not an exaggeration.

The judicial interpretation on money laundering issued by the Supreme People's Court and the Supreme People's Procuratorate in 2024 has included "transactions through virtual assets" in the normative expression of money laundering behavior. In other words, the on-chain segment is no longer just a "new method" in investigations, but a "clear sign" in legal application. More directly, in real-world cases, the "foreign currency—virtual currency—RMB" fund flow has been used by law enforcement agencies as a chain of evidence. In typical case materials jointly released (and made public in PDF format) by the State Administration of Foreign Exchange and the Supreme People's Procuratorate, such a chain reconstruction was shown: the procuratorate identified 309 transaction records related to foreign currency exchange through chat logs, and further investigated the fund flow through bank statement verification, interrogation records, electronic data examination, and comparison of on-chain wallet transaction records with bank statements, clearly revealing the "foreign currency—virtual currency—RMB" path. (Safe.gov.cn) You see, the most terrifying thing here isn't the "advanced technology," but rather: As long as you participate in the step of "turning money from A to B," you may be embedded in the chain of evidence. You may not be the main culprit, but you could be an "indispensable link." Therefore, the first rule must be simple and brutal: Any business that asks you to "collect, pay, exchange, or withdraw cash" is essentially making you a conduit. A conduit is the last place an ordinary person should be in. Discipline Two: For all irreversible transactions, stop for 24 hours. The most counterintuitive characteristic of crypto assets is not volatility, but irreversibility. In the fiat currency world, if you transfer money to the wrong account or encounter fraud, at least there is a complete mechanism for "cancellation, stop payment, freezing, recovery, and dispute resolution"; but for on-chain transfers, once the money is transferred, often only one question remains: "Is the recipient willing to repay?" Scammers understand this characteristic better than you do. Two sets of official data show that the government is desperately using "interception" to combat this irreversibility: in 2025, 3.6 billion fraudulent phone calls and 3.3 billion fraudulent text messages were intercepted, and 6.747 million people were dissuaded in person. (news.cctv.com) Why go to such lengths to dissuade them? Because once you "transfer" the money, the cost of recovering it increases exponentially; and if that money is used to buy "U" (currency unspecified), and then split and transferred away, the difficulty increases exponentially. The Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Public Security, when releasing typical cases of cross-border telecom fraud, also clearly reminded investigators to pay attention to the possibility that fraudulent funds may be converted into real estate, cars, gold, luxury watches, virtual currencies, etc., to prevent "laundering" through conversion. (Spp) Therefore, the second rule is a behavioral habit: Any operation that requires you to convert fiat currency into "U" and then transfer it to an unfamiliar address—stop for 24 hours. Give yourself a "verification-checking-cooling-off period" to prevent emotions from dictating your actions. You're not missing an opportunity; you're giving yourself a way out. Discipline Three: Evidence over Emotions—Secure the evidence first, then discuss protecting your rights. Many people think the pain of being scammed comes from losing money, but a more common source of secondary harm is this: the more eager you are to get your money back, the more likely you are to be scammed again. The second stage of the scam is almost a fixed script: Unable to withdraw funds → Triggering risk control/taxes → Paying a deposit/tax → Paying another verification fee/unfreezing fee → Still not working, more transaction volume/verification required. Each time you pay, the scammer moves the "exit" a step further. Why does this script work so well? Because it precisely targets people's psychology: you've already lost money, and you don't want to admit it; the more unwilling you are to accept it, the more willing you are to believe that "paying one last time will allow you to withdraw." The scammers don't prey on your lack of understanding, but rather on your "sunk costs + emotional outburst." But here's a harsher reality: Emotions are almost useless in recovering funds; evidence is what matters. Because the core of anti-fraud and case handling isn't about "how wronged you sound," but about answering three very crucial questions: Where did this money come from (is the source clear)? How did this money travel (through which accounts/addresses/platforms)? Where did this money go (can its final destination be pinpointed, and was it possible to stop payment/freeze it in time)? Once you understand this point, you'll understand why I wrote it as a "discipline": If all you say when you report a crime is "I was scammed," you're offering emotion; if you provide a "reviewable evidence package," you're providing actionable leads—the efficiency and results of these two are on completely different levels. Therefore, the third discipline can be summarized in one sentence: First solidify the evidence, then discuss rights protection; first nail the chain of events, then discuss right and wrong. How do you solidify evidence to make it "solid"? We recommend the following methods for solidifying information: Screen recording priority: Record key pages within the app (account balance, withdrawal failure prompts, chats where the other party requests payment) from beginning to end, ensuring the system time is visible. Export priority: Export chat logs as original files whenever possible; export exchange records whenever possible, not just screenshots. Save web pages as PDFs: Save platform introduction pages, rule pages, recharge instructions, and customer service guides whenever possible to prevent the other party from changing the text at any time. On-chain information must be "verifiable": Clearly write the transaction hash, address, time, amount, and chain name—this is a hundred times better than "I transferred it once." You'll find that these actions are all quite "clumsy." But anti-fraud isn't about quick thinking; it's about turning clues into evidence. Discipline Three's Implementation: Three Things, in the Right Order Immediately Stop Losses: Stop all transfers, especially any "unfreezing fees/taxes/security deposits." Immediately Solidify Evidence: Package evidence along three lines; record screens if possible, export them if possible. Immediately Seek Official Help: Report to the police/anti-fraud warning channels/bank emergency payment stoppage channels (whether payment can be stopped depends on the time window; the earlier the better). Remember: The worst thing about secondary fraud isn't your condemnation, but your calm and focused evidence gathering. Once you enter "evidence mode," the story becomes very difficult to advance—because its advantage lies only in "your anxiety, your confusion, and your desire to get your money back quickly." The third rule doesn't teach you "how to recover your money," but rather something more realistic: What you can preserve is not emotion, but evidence; what you can fight for is not moral judgment, but room for maneuver. When you have a firm grasp on the timeline, the financial details, and the opposing party, you are no longer a passive victim, but rather you have transformed yourself from "the one being exploited" back into "a party who can be helped."

2. Eight Points to Note—Each Point Corresponds to a Common Pitfall

Note 1: Don't lend your card, don't sell your card, and don't "help collect a sum of money"

This point may seem unrelated to encryption, but it is the most common destination in encrypted money chains: fiat currency inflows and outflows often involve bank cards and payment accounts, and the first place that chains such as telecom fraud, online gambling, and underground banks will pull you into is precisely through these "two cards". ...Note 1: Don't lend your card, don't sell your card, and don't "help collect a sum of money"

Note 2: Don't lend your card, don't sell your card, and don't "help collect a sum of money"

On July 28, 2025, the Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Public Security jointly issued opinions on handling cases involving assisted lending, and disclosed in a press conference and interpretation that with the deepening of the "Card Breaking" campaign, assisted lending crimes involving "two cards" accounted for a very high proportion; and the public security organs disclosed governance data: 780,000 leads for the "Card Breaking" campaign were issued, 230,000 suspects involved in "two cards" crimes were investigated and dealt with, more than 5,500 illegal card opening gangs were dismantled, and more than 170,000 illegal "two cards" were seized. (scio.gov.cn) After reading this, you should have a feeling: This is not a "black industry of a few people." This is a large-scale industrial chain. Once you lend out your card, or help collect one transaction and then transfer another, you have a chance of becoming a node at the end of that chain. Self-protection measures: If the other party asks for anything involving "borrowing a card, collecting payments, making payments, or processing transactions," refuse immediately, regardless of who it is. You're not refusing a favor, you're refusing a criminal risk. Note 2: "High premiums for USDT/high rebates on acceptances" are not benefits, they're risk compensation. There's a very tempting side hustle narrative in the crypto world: "I don't touch leverage, I don't do contracts, I just do OTC acceptances and earn the spread." The question is: where does the spread come from? If a market is transparent and competitive enough, the spread will be very thin. The "abnormal premium" you see is often not because you're smart, but because the other party has high-risk funds that need to be quickly expelled: telecom fraud, online gambling, underground currency exchange... They are willing to pay more just to buy a "faster, more covert, and harder-to-track" channel. In typical cases jointly released by the State Administration of Foreign Exchange and the procuratorate, there are narratives of "knowingly profiting from cryptocurrency exchange despite knowing the source of funds is questionable": for example, one case revealed that the perpetrator knew the funds came from an illegal payment and settlement platform, yet still used his personal bank account to receive RMB and exchange it for cryptocurrency to profit from it, with transaction amounts reaching "tens of millions of yuan," and was prosecuted for crimes such as illegal business operations. You see, the danger isn't "how much you earned," but rather: The small difference you earned might be interpreted from the perspective of the investigators as—the price you paid for providing a channel for illicit funds. Self-protection measures: When encountering a buy/sell price that is "significantly higher than the market price", treat it as an alarm: It's better to earn less than to earn a risk premium. **Note 3: Don't Treat Encryption as a "Shortcut to Currency Exchange"—Foreign Exchange Issues Are Often Intertwined with Criminal Issues** Some people engage in acceptance transactions with very simple initial motives: "I'm just helping others exchange RMB for foreign currency, or foreign currency back to RMB, using a U-junction in the middle—it's very convenient." However, in the domestic context, foreign exchange management is a highly sensitive issue of financial order; and virtual currencies, as a channel, can strongly couple foreign exchange violations with criminal risks: illegal foreign exchange trading, underground banks, money laundering, fraudulent transactions, concealment… these often appear together in a "package deal." The Supreme People's Procuratorate and the State Administration of Foreign Exchange jointly released typical cases of punishing foreign exchange-related crimes, emphasizing the need to closely monitor domestic capital flows, related accounts, bank statements, and communication records to reconstruct illegal foreign exchange trading patterns such as "wash trading." (Spp)

The aforementioned typical case materials even directly show the chain reconstruction of "foreign currency - virtual currency - RMB". (Safe.gov.cn)

This means: what you think you are doing is "technical currency exchange," but what the law enforcement agencies may see is:

you are helping to complete illegal cross-border fund transfers.

Self-protection measures:

Anything involving "cross-border, currency exchange, intermediary exchange, receiving overseas funds and then paying RMB domestically," no matter how gently it is disguised—

stay away from it all.

**Note 4:** Unsolicited payments + being asked to "transfer again" is the most typical "turning you into a conduit" trap. This is a very common scam in reality: You receive 20,000 yuan, the other party says it was a mistake and asks you to transfer it to "his colleague's" card. Once you transfer it, the original cardholder immediately reports it as fraudulently used, and your account becomes a node in the "transfer path"; or the other party claims to be "platform customer service/finance/settlement" and asks you to "pass it through." Why is this kind of rhetoric dangerous? Because it puts you in a "money chain." The Anti-Telecom Fraud Law clearly establishes an emergency payment stoppage and rapid freezing mechanism. In actual cases, many involved funds are traced and frozen along the account chain. (Spp)

Once you "transfer it out again," you change from a "potential innocent recipient" to a "person who actively transfers the money." This represents two completely different situations in terms of evidentiary structure.

Self-protection measures:

Do not handle incoming payments from strangers through private transfers.

There is only one principle: do not touch it if possible; if you must handle it, try to return it via the original route and keep records of communication.

Note 5: If you encounter "unfreezing fees / deposits / taxes / risk control fees," assume it's a second scam.

Many people are scammed the first time because of "greed"; they are scammed the second time because of "urgency."

You've already invested money, the platform shows a profit, and the withdrawal button is there—just one step away. At this point, the scammer only needs to give you a seemingly reasonable excuse: "System risk control requires a deposit before withdrawal"; "You've triggered a tax audit and need to pay back taxes"; "Account abnormality requires an unfreezing fee"; "Repair your credit score by increasing your trading volume, otherwise you can't withdraw." This tactic is so effective because it exploits human instinct: the greater the sunk cost, the less willing people are to admit they've been scammed. This isn't just my guess. The anti-fraud brochure issued by the Ministry of Foreign Affairs of the People's Republic of China (a PDF released by the consular service system) directly records a similar scenario: a victim attempts to withdraw money and is told by "customer service" that they need to pay 200,000 yuan in taxes first; after paying, they are then told that the withdrawal has triggered risk control and another 100,000 yuan needs to be paid. This combination of "tax first, risk control later" is a typical secondary fraud script. (China Consular Service Network)

The same trick has also been directly called out by local police. For example, the Lianyungang Public Security Bureau, in its anti-fraud reminder on its official website, breaks down "virtual currency scams" into three steps, the third of which is described very clearly: after you invest a large amount of money, "the platform seems to be profitable but in fact you cannot withdraw money," and then the scammers will ask you to pay "unfreezing fees," "deposits," etc., under the pretext of "login abnormality" or "bank account freezing," until your wallet is emptied. (lyg.gov.cn)

Self-protection actions:

Any platform that "allows withdrawals, but requires upfront payment"—consider it the second stage of a scam.

A truly compliant exit strategy never uses "paying additional fees in exchange for freedom" in its design.

Note 6: Don't mistake "U" for "dollars"—stability does not equal security, much less recovery.

Many ordinary people's first impression of USDT/USDC is: "It's 1:1 with the US dollar, so it should be very safe."

This statement is only half right: the anchor is a price attribute, not a legal attribute, much less a relief attribute.

In the domestic context, "stablecoins" are more like a type of highly liquid digital token: They can be quickly transferred across platforms; they can be split, redirected, and mixed; and they can lengthen and diversify the "source clues" of fiat currency funds. Because of this characteristic, they repeatedly appear in chains of "money laundering" and "telecom fraud fund transfers"—and the easiest way for ordinary people to get involved in these chains is through "high-premium acceptance," "collection and payment on behalf of others," and "currency exchange assistance." You don't need to rely on imagination to understand its "chain attributes." The Supreme People's Procuratorate's typical case on "Punishing Cybercrime According to Law" fully illustrates how a "money laundering" chain converts fraudulent funds into Tether (USDT): The gang first collects fraudulent funds using bank cards and POS machines, then converts the funds into Tether and hands them over to upstream fraudsters, taking a 12%-15% cut of the transaction volume. An investigation revealed that the gang helped transfer 110 million yuan, including over 12.81 million yuan in fraudulent funds and illegally profiting over 1 million yuan; of which, "helping to convert 110 million yuan into Tether resulted in an illegal profit of over 4 million yuan." More importantly, the law is also directly incorporating "virtual asset transactions" into the normative expression of money laundering methods. The judicial interpretations of the Supreme People's Court and the Supreme People's Procuratorate on handling criminal cases of money laundering explicitly include the transfer and conversion of criminal proceeds and profits "through 'virtual asset' transactions and financial asset exchanges" as one of the identifiable circumstances. (court.gov.cn) This means you must reverse your intuition: In risk identification, treating "U-transfer" as "cash delivery" is the safest approach. "Stability" does not equal "revocability," much less "protection." Self-protective actions: Anyone who asks you to "buy U-transfer first and then transfer it to a certain address"—understand it as "giving cash to a stranger"; stop if this action makes you feel uneasy. Note 7: Avoid "managed/escrow/trading services"—you're not handing over technology, you're handing over control. In the crypto world, the most valuable thing isn't your account balance, but two things: Mnemonic phrase/private key (control); Authorization (the right to transfer your assets). Many scams no longer discuss "whether the project is good or not"; they directly target you by getting you to hand over control.

1) "Phishing Mnemonic Phrase" Scam: It's not about the principal, it's about the fees and authorizations

The official website of the Fengtai District People's Government of Beijing disclosed a new "virtual currency phishing" scam: Scammers deliberately leak mnemonic phrases to lure novices into their wallets, where they find "coins" but cannot transfer them; the scammers then guide them to "deposit a handling fee," which is immediately transferred out by the program—the wallet remains untouched. (bjft.gov.cn)

The essence of this scam is to use a "visible balance" to lure you into a position where you "must pay/authorize first."

2) The "25-Second Cryptocurrency Theft" Scam: You Think You Clicked the Wrong Number, But You've Actually Been Systematically Scammed

The Tianfu New Area People's Procuratorate published an article on its official website disclosing a new type of cryptocurrency theft scam that "succeeds in 25 seconds." The criminal gang also illegally obtained and stored hundreds of other people's wallet addresses, mnemonic phrases, balances, and other data, suspected of crimes such as illegally obtaining computer information system data. (tfxqjcy.gov.cn)

See, it's not "bad luck," it's "mass-operated."

3) Risk of "Acquaintances/Insiders": Once private keys and mnemonic phrases are leaked, it's not a transaction issue, it's a control issue

Media reports on a case handled by the Xuhui District People's Procuratorate of Shanghai mentioned that someone planned to steal virtual currency by implanting backdoors and illegally obtaining users' private keys and mnemonic phrases. (finance.sina.com.cn)

These cases remind ordinary people: the so-called "helping you operate," "setting up your wallet," and "helping you earn more steadily" are essentially tests to see if you can hand over control.

Self-protection actions:

Never send, never read, never screenshot, never store on cloud storage, and never give your mnemonic phrase/private key to anyone.

Any requests for "remote assistance," "screen sharing," or "operation on your behalf" should be treated as an attempt to take control. Note 8: For all "guaranteed profit models," first ask about the exit mechanism—because the backend can decide whether you can withdraw. This last point addresses the most common psychological trap in the crypto world: You focus on returns, scammers focus on your principal; you ask about the source of returns, scammers change the data; you want to withdraw, scammers change the rules. The truly fatal thing isn't that the "project crashes," but that someone else holds your exit rights. In a typical case of cross-border telecom fraud released by the Supreme People's Court, there is a highly standardized script for a "fake investment platform": the criminal group manipulates price fluctuations through the backend, misleading victims into believing their investments are appreciating and that they can withdraw their money at any time; once victims increase their investments, the criminal group then seizes their money through methods such as "restricting withdrawals and shutting down the platform." This case identified over 500 victims and defrauded them of over 150 million yuan. (court.gov.cn) Another, more "encrypted" version: the Supreme People's Procuratorate disclosed a case involving crimes committed using a virtual currency platform: four individuals manipulated data and secretly exchanged and transferred pledged virtual currencies on the platform, causing losses to 103 investors in just two months, with the virtual currency involved valued at approximately 77.76 million yuan. They were ultimately sentenced. (Spp) (The key here isn't the length of the sentence, but rather how much the "platform rules + backend permissions" overwhelm ordinary people.) Therefore, the first question in the "sure-win model" isn't "What is the APR?", but a series of three questions: Who approves your exit? Does the exit path rely on centralized customer service/approval? If the other party mentions "risk control/tax/margin," do you have the ability to stop losses with one click? If you find that the exit right isn't in your hands, then it's not investing; it's handing your life over to someone else. Self-preservation measures: Before entering the market, write down "how to exit, what to do if you can't exit, and how to preserve evidence"; If you can't explain the exit mechanism in one sentence, then pretend there is no exit mechanism. 3. Elevate the "Three Main Rules of Discipline and Eight Points for Attention" to a "risk philosophy" for ordinary people. If you treat the previous 11 points as a "survival manual for the crypto world," then their only real purpose is to make you make the same choice in the face of repeated temptations—improper channels. Many people don't actually fall because of "greed," but because of a misjudgment: They think they are making an "investment," but the system sees them as—participating in the transfer of funds. To understand this, we must first shift our perspective from "individuals" to "governance mechanisms." 3.1 You are not fighting against scammers, but entering a governance battle to "cut off the funding chain." In the past few years, the focus of combating telecom fraud has been very clear: from "arresting people" to "cutting off the chain." In a public announcement on January 8, 2026, the Ministry of Public Security disclosed that in 2025, 258,000 cases of telecom and online fraud were solved nationwide; 3.6 billion fraudulent phone calls and 3.3 billion fraudulent text messages were intercepted; and public security organs across the country conducted face-to-face dissuasion of 6.747 million people. (Spp) The logic behind these numbers is: Scammers are becoming increasingly distributed, cross-border, and chain-like; therefore, governance must be more "systematic, process-oriented, and automated." Thus, you'll see a mechanism of "stopping payments first, freezing funds first, and verifying funds first" written into the legal system: Article 20 of the Anti-Telecommunications Network Fraud Law explicitly establishes a system for "instant inquiry, emergency stop payment, rapid freezing, timely unfreezing, and fund return" of fraudulent funds, requiring banks and payment institutions to cooperate in its implementation. (Spp) This means that an ordinary person must accept the reality that: You don't need to be "convicted" to be subject to "risk control measures." Because in the context of anti-fraud, the primary purpose of many actions is not to judge you, but to hold back the money and prevent it from spreading further. From this perspective, you can understand why being a "channel" is a high-risk profession: being a channel is not a crime, but it is the most important node in the money flow to be controlled first. 3.2 "Personal holding/trading" is not the problem; "commercialization/channelization" is the watershed that leads to a sharp increase in risk. You will find that the target of domestic policy documents has always been very clear: it is not about whether there is an address in your phone, but whether you are providing "quasi-financial services". The 2021 "Nine-Department Notice" ("Notice on Further Preventing and Handling Risks of Virtual Currency Trading and Speculation") clearly stated that virtual currency-related business activities are illegal financial activities; participation in virtual currency investment and trading activities carries legal risks, and related civil legal acts may be deemed invalid, with losses borne by the parties involved. Public reports at the end of 2025 also reiterated that virtual currencies do not have the same legal status as legal tender, do not have legal tender status, and should not and cannot be used as currency in the market; and continued to emphasize maintaining a high-pressure crackdown on related illegal financial activities. (News Network) The recent hot topic—the "Shanghai No. 2 Intermediate People's Court Seminar"—has attracted attention because it explains this watershed in a way that is easier for ordinary people to understand: "Individual holding and trading of cryptocurrency is generally not considered a crime of illegal business operations," but if one "knowingly provides assistance to others in illegally buying and selling foreign exchange through the exchange of virtual currency," one may be considered an accomplice to the crime of illegal business operations. (This seminar information has been reprinted on the websites of courts in many places, with the source marked as the People's Court Daily, January 8, 2026.) (xzzy.xzfy.gov.cn) You don't need to memorize these articles; you just need to remember a simple judgment: Are you trading for "yourself," or are you providing a channel, facilitating, accepting, collecting and paying on behalf of "others," or exchanging currency? Once it's the latter, the risk structure changes immediately. This is the legal basis for "Discipline One: Never be a funding conduit." 3.3 The essence of a "funding conduit": Others sell you risk, you sell yourself into the chain. You might ask: "I'm just making a little profit and collecting some fees, is it really that serious?" Here's a very harsh economic truth: When the risk of something is high, it will inevitably appear in the form of "higher returns." What you see as "high premiums," "high rebates," and "guaranteed profits" are often not benefits, but risk compensation. In a typical case disclosed by the Supreme People's Procuratorate, a "money laundering gang" collected fraudulent funds, converted them into USDT, and then handed them over to upstream suppliers, taking a 12%-15% cut based on the flow of funds. An investigation revealed that they helped transfer 110 million yuan, illegally profiting several million yuan. (mw.shenyang.gov.cn) If you read this material slowly, you'll find it reveals the true pricing of a "channel business": Upstream suppliers are willing to pay double-digit percentages for the rapid transfer and difficulty in tracing funds; Downstream suppliers' "profits" are actually the "risk price" for placing themselves in the chain. So stop comforting yourself with "I'm just making a little money." The danger of a "channel" lies not in how much you earn, but in the function you play within the chain. When the function is "transfer, splitting, redirecting, or evading traces," you naturally approach the structure of "concealment and cover-up." Furthermore, the Supreme People's Court and the Supreme People's Procuratorate have included "transferring or converting proceeds of crime and their profits through virtual asset transactions" in the normative expression of money laundering methods. You don't need to understand criminal law terminology; you only need to understand one sentence: When you provide a service that "makes money harder to trace," you cannot remain a bystander forever. 3.4 Why does being a "channel" cost ordinary people four times more: money, time, credit, and relationships? Many people's imagination of risk is limited to "losing money." However, imagine this: Rent payment failure → Landlord urging → Explanation; Salary frozen → Company finance department inquiring → Explanation; Credit card overdue reminder → Credit score anxiety → Explanation. Because in the context of anti-fraud and risk control, channel risks often become four overlapping costs. The first is the cost of money. Victims will encounter "double charges"—unfreezing fees, security deposits, taxes, etc. The Ministry of Foreign Affairs' anti-fraud manual records a typical sales pitch chain: "Pay 200,000 in taxes first, then 100,000 for risk control." (legaldaily.com.cn)

Second layer: The cost of time

Once a payment stoppage/freeze is triggered, you need to repeatedly explain the source of funds, supplement materials, and go through procedures. There is no "graceful exit" here, only "slowly proving yourself."

Third layer: The cost of credit

Risk management often affects your payment ability and daily life: salary deposits, rent deductions, social security payments, and credit card repayments can all have a chain reaction. The Anti-Telecom Fraud Law has included "delayed payment settlement, restriction or suspension of related business" in the risk management toolbox of financial institutions. (Spp)

Fourth layer: The cost of relationships

The most hurtful thing is often not the loss, but the cost of explanation: you have to explain to your family "why your card was frozen"; to your workplace "why your salary hasn't arrived"; to your friends "I didn't do anything wrong."

These costs are difficult to quantify, but they can erode a person's sense of security in the long run. Therefore, the first rule of "risk philosophy" is not "how to make money," but rather: First, remove yourself from the financial chain. If you do this step correctly, the overall risk will decrease by an order of magnitude. 3.5 The Decision-Making Order of Ordinary People: From "Profit Priority" to "Four Gates" The reason you're easily swayed in the crypto world is because the default decision-making order is: First, look at the returns → then how to participate → finally, consider the risks. The correct order should be reversed: Before any transfer, acceptance, deposit, or withdrawal, pass through four gates. If you can't pass even one, don't do it. Gate 1: Legality Gate Does this matter approach the boundary of "providing services"? Does it become a "collection and payment agent, acceptance matching, or currency exchange channel"? If so, stop immediately. (Spp) Gate Two: Reversibility Gate Is this operation irreversible? Do you need to buy USDT/USDC and then transfer it to an unknown address? Irreversible actions automatically raise the risk level by one level. (Spp) Gate Three: Explainability Gate If your account is questioned tomorrow, can you provide evidence to clearly explain: who the counterparty is, why the transaction occurred, the source of the funds, and their destination? If you cannot explain, do not proceed. Gate Four: Exit Right Gate Can you exit at any time? Does exit depend on "customer service review/payment of additional fees"? A typical case from the Supreme People's Court demonstrated that a fraudulent platform manipulated price fluctuations through its backend, ultimately restricting withdrawals and shutting down the platform, resulting in over 500 victims and losses exceeding 150 million yuan. (court.gov.cn)

If the right to withdraw isn't in your hands, it's not an investment; it's handing over your life.

You see, these four gates don't require you to understand blockchain; they only require you to understand life.

• Who is the opponent? Can they provide a real name/verifiable identity?

• Where did the funds come from? Can they provide a reasonable explanation and proof of the source?

• Where did they go? Was it an unfamiliar address/refund not via the original payment method/required to be split into multiple transactions?

• Who holds the right to exit? Does it mention "risk control / taxes / margin"? 3.6 Translate "Don't be a funding channel" into a statement that will change behavior. If the preceding logic is too rigid, I want to condense it into a conclusion you can actually use: It's better to miss out on a seemingly lucrative return than to risk being "used as a link in the chain." Because under today's governance structure, returns are linear, but troubles are exponential. You might earn a 2,000 yuan difference, but that could result in two months of explanation; you might earn a 20,000 yuan premium, but that could result in a whole chain of "stop payment—verification—record—materials—waiting." This isn't intimidation; it's the result of how the system operates: funds involved in fraud can be urgently stopped and quickly frozen. The intensity of the "card-breaking" campaign also demonstrates that the system's pressure on "two cards" (cards and bank cards) and channel nodes is continuous and frequent. Public reports reveal that since the beginning of this year, public security organs have issued 780,000 "card-breaking" leads, investigated and dealt with 230,000 suspects involved in "two card" crimes, and seized more than 170,000 illegal "two cards." (News Network) When you understand this reality, you'll naturally change your life priorities: Security > Explainability > Exitability > Benefits. At that moment, the "Three Main Rules of Discipline and Eight Points for Attention" are no longer just slogans, but a system of behavior. Conclusion: Don't be a "player," be someone who can survive long-term. The crypto world excels not at price fluctuations, but at turning your life into a "speed race": know a little technology, be bold in decision-making, be quick—and you can win. But in the real context of China, the game table has long since changed. You're not dealing with "market trends," but rather an increasingly sophisticated fund governance system: it doesn't debate your beliefs or discuss narratives; it only asks three questions—where does the money come from, how does it go, and where is it going? Once you assume the function of "transferring" within the chain, even if you're only subjectively "helping," "doing it by the way," or "making a little profit," the system will immediately stop you: stop payments, freeze accounts, and verify your information. You're not convicted; you're convicted of "needing an explanation." Therefore, the core of this article isn't teaching you how to win, but how not to lose outside the rules. You must ingrain that bottom line into your bones: In the present moment, the primary goal for ordinary people participating in the crypto world is not to make money, but to "live an explainable life." You can lose money, but you can't become a "replaceable conveyor belt" in the money supply chain. Many people only realize a harsh reality when their bank cards are frozen and they're called in to give statements: You think you're "investing," but reality might categorize you as a "channel." And the cost of being a "channel" is never just transaction fees, but time, credit, relationships, and dignity. Therefore, I want to condense this into three harsher, more life-saving sentences—you'd better memorize them: Don't live your life as a channel. You can withstand one loss, but you might not be able to afford one "explanation of life." It's better to miss out on gains than to take on a risk premium. A premium isn't a reward; it's someone selling you risk and making you take the fall for them. Treat any irreversible transaction as a cash deposit. Once you transfer money out, often what you're fighting for isn't a return, but a "backdoor." Finally, a word of advice: Maturity isn't about how many projects you understand, but about knowing which money you absolutely cannot earn. Freedom isn't about where you can transfer money, but about never being forced to prove "I'm not a bad person." The crypto world will constantly change its narrative: AI, RWA, on-chain US stocks, restaking, points… there will always be new stories. But for ordinary people, the survival strategy actually only requires one constant answer: Remove yourself from the financial chain and return to your daily life. When you can consistently do this, you'll find that—the "Three Main Rules and Eight Points for Attention" are no longer just slogans in an article; they will brake you the moment you're about to transfer money. You don't need to be a cryptocurrency expert. You just need to be someone who is unlikely to get into trouble.