Author: Wei Fuhai, Mankun
Original Title: Behind Cryptocurrency "Theft and Fraud": Why Does Civil Relief Frequently Encounter Obstacles?
Introduction
When the forest is big, there are all kinds of birds—the world of cryptocurrency is no exception. In the days when Bitcoin was worthless and stablecoins had not yet been invented, this circle was just a small-scale pastime. But as Bitcoin went from "10,000 coins for two pizzas" to "one coin for 10,000 pizzas," everything changed. Especially after the emergence of stablecoins, due to their characteristics, they gradually became a favored money laundering tool for black and gray industries.
Having been engaged in criminal defense for many years, I have handled many cryptocurrency cases. A prominent feeling is that there seem to be an unusually large number of "unlucky" people in this field: some who clearly should not be convicted are found guilty, while others who are clearly suspected of crimes find it difficult to get cases filed.
Perhaps立场 affects judgment; some cases that seem problematic may be viewed by the police, prosecutors, or courts as "not a big issue" or even "handled properly."
Two cases I am currently handling are closely related to this theme and are quite representative. Through this article, I want to discuss the current situation and dilemmas of cryptocurrency criminal cases based on practical experience.
Reproduction of Real Case Details
Case One
A company from Country H planned to list on an exchange with servers in Country S and contacted a Chinese business employee of the exchange. The two parties smoothly negotiated service fees and the listing cycle, agreeing that after Company H paid 800,000 USDT as a service fee, the exchange would initiate the listing process.
After the agreement was reached, the Chinese business employee provided Company H with a wallet address and requested the transfer of 800,000 USDT. After Company H complied, the business employee immediately exited all related group chats and completely disappeared. When Company H noticed something wrong, they immediately contacted the exchange in Country S, which replied that the employee had resigned the day after the transfer and that the exchange had not received the service fee. At this point, Company H confirmed that they had been scammed.
Case Two
A woman met someone online who claimed to be able to guide her in investments. The other party informed her that the investment platform did not accept RMB and only supported USDT transactions. Since the woman did not have USDT, the other party recommended a U merchant to assist with the exchange.
Subsequently, she contacted the U merchant via WeChat and, as requested, transferred a total of over three million RMB to multiple bank accounts. However, after the transfer was completed, she did not receive the corresponding USDT, and no funds were deposited into her investment platform account. When she tried to contact the网友 who had recommended the investment, the other party had already disappeared. At this point, she realized she had been scammed.
Lawyer's Perspective: Ways to Save Client Rights
Case One: Cross-border Reporting Blocked and Legal Basis Negotiation
In Case One, the client (Company H) initially went to the household registration所在地 police station of the Chinese business employee to report the case. However, the police neither issued a receipt for the report nor issued a notice of non-filing, preventing the client from initiating subsequent relief procedures.
After accepting the commission, our lawyers began preparing legal documents and evidence materials that met domestic reporting requirements. Due to the跨国因素 of the case, the material preparation took about two to three months.
Subsequently, we went to the suspect's户籍地 police station to formally report the case. The window辅警 initially refused to accept the case on the grounds that "the victim company is not in the country." We当场 cited the provisions on territorial jurisdiction and personal jurisdiction in the "Criminal Procedure Law" to refute this. The other party then claimed that "cryptocurrency is not protected by law." and we further pointed out that according to the "9.24 Notice," although exchange business is prohibited, personal holding of virtual assets is not illegal, and judicial practice generally recognizes that virtual coins possess property attributes.
Despite多次据理力争, the police still refused to issue a written receipt. Under our insistence, the辅警 finally contacted the duty officer to come to the scene. After multiple rounds of negotiation and our continuous efforts, the case has now been accepted by the police station, but has not yet been formally filed. We are still持续推动中.
Case Two: Difficulties in Recovery After Criminal Filing and Attempts at Civil Channels
In Case Two, the client (the scammed woman) reported the case smoothly. The police quickly filed the case and launched an investigation, successfully arresting the U merchant who provided the currency exchange service. However, because the main fraud suspect's IP address was located overseas, they were not apprehended.
After interrogation and investigation, the police confirmed that the U merchant was merely a businessperson engaged in单纯 USDT exchange and had no criminal intent connection with the upstream fraud group. Therefore, the investigation against him was terminated.
To help the client recover her losses, we attempted to use civil litigation channels, planning to sue the U merchant on the grounds of "unjust enrichment" and request the return of the corresponding funds.
Case Review: Problems in Civil Rights Protection
In Case One, the situation cannot be resolved through civil litigation.
The main reason is that when the same facts involve both criminal and civil cases, the principle of "criminal priority" should be followed. It is necessary to wait until the criminal case is concluded before initiating civil proceedings. Furthermore, if the criminal judgment has already addressed the victim's property rights—for example, if the judgment states "continue to return the property to the victim"—then the victim can no longer file a civil lawsuit based on the same facts, as this would violate the basic principle of "ne bis in idem" in civil litigation.
So, if the client, due to the long cycle of the criminal case, gives up reporting and directly files a civil lawsuit with the court, is it feasible?
In theory, they can sue, but if the court, upon review, believes it involves a suspected crime, it will rule to transfer the case to the public security organs for handling. This way, the procedure will still return to the criminal channel,反而额外耗费数月时间.
If the suspect is ultimately convicted but unable to make restitution, how should the victim protect their rights?
At this point, they can only hope whether the suspect is willing to exchange compensation for a reduced sentence. According to relevant regulations, if an offender has not fulfilled property刑 obligations such as restitution and fines, they are generally not eligible for减刑 or parole and must serve their full original sentence.
In Case Two, although we did attempt to file a civil lawsuit against the U merchant and检索了大量类似案例, the results showed only two判决支持原告诉请, with the rest all resulting in the plaintiff losing. Why?
At the立案 stage, the立案庭 judge clearly stated that they could not accept the case and直言 that even if it was勉强立案, they would ultimately not support our claim. In the end, the civil case was not accepted.
Summary
After cryptocurrency is stolen or scammed, can it be effectively remedied through civil channels?
This article initially planned to use this as a topic for科普, but after深入实务, it was found that: once a case involves criminal offense, the path to civil relief is actually extremely difficult, or even completely impassable.
Perhaps some readers will question that many articles on the market have详细讲解 how to protect rights through civil litigation, including evidence preparation,起诉流程, etc. Why does it become "impassable" in this article?
As we personally experienced in Case Two, the立案庭 judge clearly stated: even if the case is accepted, the hope of winning is extremely slim.
As lawyers, our responsibility is not only to initiate procedures but also to assess risks for clients and choose paths that truly have the potential to recover losses. Therefore, in cases of cryptocurrency theft or fraud, pursuing recovery through criminal channels remains the more realistic choice at present.
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