This series is a training manual for new employees, covering the logic of virtual currency trading (traders and retail investors), along with legal knowledge, extremely detailed, and worth collecting.

In practice, when it comes to bank card freezing, it generally falls into a few major categories. Therefore, I am preparing to write this series. Friends who encounter card freezing for the first time should not panic; understanding the logic behind it and the consequences they bear will help them seek solutions. This can also serve as a teaching material for new employees and for novice lawyers who want to enter this field, allowing them to get started after reading my series of articles.

This contributes to the industry as well; after reading my series of documents, there is no need to look at short video scripts from other places.

Fraud scenarios involving virtual currencies generally occur during OTC trading, both on and off the exchange. If you are just playing around, the possibility is minimal because once the principal is lost, there is no more withdrawal transaction.

This article will trigger many trolls to automatically argue, claiming I am creating panic for profit, which is incorrect. Only when you have frozen your card and are panicking do you find me, and I provide you with solutions, is it possible to gain profits from your lack of understanding.

The underlying logic of trading virtual currencies:

First, you need to understand what kind of funds are in the cryptocurrency space. I tell you, there is no so-called "white capital" in the crypto world. The circulating funds of crypto traders mainly come from speculation (retail investors), foreign exchange (bulk), online gambling, pyramid schemes, telecom fraud, and other types. If you want to refute me, tell me what other funds exist in the crypto space?

Let’s first look at it from the perspective of legitimate traders: The risk control standards are: real-name authentication, strict review of transaction records, no deposits in the last half month, risk warning letters, phone recordings, and full transaction records kept on file.

Is it useful? It’s just self-satisfying risk control. This blocks secondary and tertiary black funds, but the only thing it doesn’t block is primary black funds. Third-party and fourth-party fraud can easily bypass the current risk control systems of these traders.

How do traders receive first-hand black funds? This process is unsolvable, leading to retail investors receiving second-hand black funds and having their cards frozen, which is also unsolvable.

From the trader's perspective: Trader Zhang San operates as a trader on the exchange and has strictly reviewed the buyer's transaction records, added them on WeChat, and verified that the exchange, WeChat, and bank card are all real-name matched. The voice communication recording for buying USDT is based on the principle of voluntariness, and the transaction records are very clean, coming from a bank loan, which is very high quality and can be completed.

From the buyer's perspective: Buyer Li Si has a hard time meeting an online big shot Wang Wu who takes me to speculate on futures (for various reasons like investment, romance, etc.), and I need to open an account. So, I gave him my phone number, ID card photo, and email. I received a text message asking me to register on OKX, Binance, Huobi, etc. Anyway, I don’t understand, and the big shot’s assistant helped me operate the whole process. Then I downloaded a futures software that looked very legitimate. Big shot Wang Wu said I could directly recharge to the futures platform, so I transferred money to someone named Zhang San. After I transferred, the corresponding balance was added to the futures software's backend.

When I wanted to withdraw for testing, it went very smoothly, and I withdrew to my bank card. Watching the daily profits, I really felt like I was about to take off.

From a god's perspective: Buyer Li Si was scammed by an online pig-butchering scheme, led into a futures platform, and then the scammer took her trust to obtain her ID card, WeChat, phone number, email, etc., to register on the OKX exchange. Then the scammer Wang Wu used Li Si's information to randomly find traders on the exchange to buy USDT. Since Li Si is a normal person, her information easily passed the review. Whatever information the trader needed, the scammer made Li Si provide.

After passing the review, the trader gave the scammer the bank account number, and the scammer forwarded this account number to Li Si, instructing her to transfer money to this trader. Li Si had no contact with the trader and thought the money was going to the futures platform. The scammer's futures platform could also temporarily display the trader's account number on the platform, adding to the confusion.

After Li Si transferred the money, the trader released the USDT, the scammer took it away, and then manually added the digital amount to Li Si's account on the futures platform, completing the scam.

Throughout the transaction process, the trader and the real buyer Li Si are completely independent and do not know each other, with the scammer conveying information in between.

After the trader sells USDT, they need to list orders on the platform to receive USDT. If at this time, another retail investor goes to sell USDT, then congratulations, the retail investor is taking over second-hand black funds, leading to card freezing. This is similar to retail investors checking the trader's registration time, transaction volume, success rate, etc., which only reveals a little and is not very useful because the trader is a legitimate trader.

Therefore, it is meaningless for retail investors to look at the trader's registration time, transaction volume, success rate, etc. The most critical thing is to look at the source of the trader's funds, not these data, because the trader themselves do not even know how they were blacked.

The initial buyer Li Si is still immersed in the joy of daily profits on the futures platform and cannot extricate herself. If she wants to withdraw a small amount, the scammer will recharge the scammed USDT to the exchange, sell it to the trader, and have the trader transfer money to Li Si. After Li Si receives the money, she becomes even more convinced of this futures platform.

The scammer will encourage Li Si to reinvest, increasing the amount more and more, borrowing, taking loans to invest, and eventually finding ways to make Li Si incur losses. If Li Si does not incur losses or runs out of money, the scammer will close the net, and this may have taken a month.

Li Si finally realizes she has been scammed and reports it to her uncle. The trader's first-hand black funds are frozen, the retail investor selling USDT to the trader's second-hand black funds are frozen, and the retail investor's money from selling USDT transferred to family members to pay the mortgage is also frozen…

This is a series of consequences.

Unsolvable!!!

The trader is listed on the two-card punishment list, and the uncle comes to the door in another location, all bank accounts are frozen, the trader suffers losses and exits, and unfreezing the bank card takes time and cost, while the two-card list cannot be resolved.

This is the underlying logic of traders and retail investors trading virtual currencies and getting their cards frozen.

What I mentioned above is about legitimate traders; what about illegitimate traders? The traders listed on the first ten pages of the exchange are directly laundering money.

If legitimate traders do not make money, they will gradually become illegitimate traders. Every day, I have many novices trading on the exchange who get their cards frozen, all because of schemes set up by these illegitimate traders. How do they set up schemes on the exchange?

The first step is to have their own legitimate trader account, which has been established for a long time and has resources from major account managers, allowing them to open new trader accounts indefinitely.

The second step is to find students for part-time jobs, rural elderly people, etc., who do not use exchange accounts. They might give a few dozen yuan as a red envelope when registering internet accounts, and the exchange account is just registered along with it, or they recruit part-timers on planes, and only after registering and passing verification do they give USDT. A large number of people do this, and then the scammer pays a deposit of 10,000 to 20,000 USDT.

The third step is to deceive, steal, or rent WeChat accounts. For deception and theft, they generally look for elementary school students, claiming to give game skins, etc., and get the students to send their WeChat passwords, then delete all contacts. Once the elementary school student is hacked, they cannot recover it.

Another method is to directly rent or sell WeChat accounts on planes, where the real account owner adds WeChat, and the scammer sends messages to the owner on the plane, which the owner forwards to the seller, similar to mobile phone scams.

Then they rent or sell a phone number, or a mobile phone, and the scammer calls the phone number owner, and the owner dials the seller's number from their second phone, creating a call.

At this point, they have WeChat accounts, phone numbers, and trader accounts on the exchange.

The scammer's large trader account starts listing orders. When novices sell USDT, they listen to those half-baked lawyers who tell them to check registration time, transaction volume, etc. These lawyers use outdated strategies that have long been cracked by scammers, and it pains me to see this.

When the novice seller finds these large trader accounts, the trader will immediately call the seller using a rented phone number, saying, "Hello, my card is limited; I will use my family’s card to transfer money to you. We will bear any issues with the funds."

These promises are just a gimmick; in reality, the exchange does not impose any penalties on traders. At this point, if the novice seller agrees, the trader will tell them that this trader account has limits and instruct the seller to place an order at another store, increasing the price by one cent.

Basically, the novice can now be deceived, so they provide their account number to prepare for receiving payments. The scammer connects the account number to a telecom fraud platform, and the platform's people instruct the victim to directly transfer to the seller, leading to the seller receiving first-hand black funds and getting their card frozen, entering the two-card list, and when trying to unfreeze, they will seek compensation.

Traders generally profit by more than 50%.

For example, for a single order of 300,000 yuan, the trader earns over 150,000 yuan; just one order recoups the cost, and doing two orders is a huge profit, while the novice seller bears a loss of 300,000 yuan in black funds, and even half of the lawyer's fees for compensation is also 150,000 yuan.

This is the method of illegitimate traders.

At this point, many trolls will come to criticize me, claiming they have made a lot of money without ever having their cards frozen, saying I am just scaring novices.

I generally ignore such people; their understanding is limited, and they will only have one or two large transactions in their lifetime.

Every transaction you make in the crypto space has risk records with the bank. You can ask acquaintances to check if your account has been queried by multiple authorities. Every time you log into an exchange, there is a record, and in some areas, it directly triggers anti-fraud warnings.

This is the point where many people cannot find the reason for being frozen.

Retail investors are better off here; if the trader's exchange real name matches the person making the payment, then it is definitely not a primary case. In this case, they can appeal for good faith gains.

So how do you unfreeze your bank card, and what materials are needed?

How to professionally organize the materials so that the authorities can understand at a glance?

The most important thing is to provide a clear explanation; find a professional to help write it, so you don’t suffer losses.

The materials needed for good faith gains are:

First, number the evidence materials, for example, A1 (bank card transaction record) to prove the purpose, usually showing incoming transaction records.

A1: Bank transaction record (receiving record).

A2: A copy of your ID card (front and back), holding the day's newspaper along with the bank card and ID card, to prove you have not rented, lent, or sold your bank card.

A3: Provide proof of employment, business license, social insurance proof, labor contract, ID card, and other supporting evidence to prove you have legitimate work.

A4: A detailed description of the transaction process.

This should include time, place, people, events, requests, the other party's identity information, and chat records with the trader.

A5: Exchange UID.

A6: Trader UID, real-name authentication screenshot.

A7: Transaction order records.

A8: Order completion records.

A9: A list of all evidence, like A1-A9 listed out. The main point is to express that you were unaware and did not engage in renting, lending, or selling behavior, and the legality of the transaction.

What you need is not just to verbally state or provide a few screenshots as evidence; you must organize a document that even someone unfamiliar with virtual currency trading can understand at a glance. Otherwise, you will definitely receive the response: "Virtual currency trading is illegal, and your card cannot be unfrozen."

So what are the relevant laws and regulations? Regarding the legal status and legitimacy of digital currencies:

In China, the legal positioning of cryptocurrencies like Bitcoin is "virtual goods," and related rights such as possession, use, benefits, and disposal are equally protected by law. According to the notice issued by the People's Bank of China and other five ministries on "Preventing Bitcoin Risks," Bitcoin and other digital currencies are treated as a form of online commodity trading, and the general public has the freedom to participate at their own risk.

(1) On December 3, 2013, the People's Bank of China, the Ministry of Industry and Information Technology, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the China Insurance Regulatory Commission jointly issued the "Notice on Preventing Bitcoin Risks" (Yin Fa [2013] No. 289).

According to the provisions of Article 1 and Article 5 of this regulation, virtual currency is a type of virtual commodity, and rational investment is allowed.

(2) On December 5, 2013, the People's Bank of China released a policy interpretation document titled "Q&A on Bitcoin-related Matters."

According to the last answer, virtual currency is treated as a form of online commodity trading, and the general public has the freedom to participate at their own risk.

(3) On September 15, 2022, the People's Bank of China, the Central Cyberspace Administration, the Supreme People's Court, the Supreme People's Procuratorate, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange jointly issued the "Notice on Further Preventing and Dealing with Risks of Virtual Currency Trading and Speculation" (Yin Fa [2021] No. 237).

According to the provisions of Article 1, Item (4) of this notice, the virtual currency trading contract relationship between citizens, provided it does not violate public order and good customs, does not fall under invalid civil legal acts.

With the support of laws and regulations, you should not directly refute what the authorities say, but rather present proof materials; it is not enough to simply state whether something is legal or illegal.

With the backing of laws and regulations, you need to help the authorities understand how virtual currencies are traded:

This requires explaining the concept of C2C trading to them. C2C trading (Taobao model) specifically refers to a peer-to-peer trading model between individuals. In the virtual currency space, it is also known as OTC trading (where the platform does not act as a central counterparty, and transactions are agreed upon between users). Buyers and sellers seek trading counterparts in the market or are matched randomly through the trading platform. Once a trading intention is reached for a specific virtual currency, payment is made based on both parties' account information (using Alipay, WeChat, or bank transfer), and the seller delivers the virtual currency once payment is confirmed.

Once the authorities understand the virtual currency trading process, you need to prove that you are a good faith acquirer:

The "exchange trader," as the buyer, pays the corresponding price through bank transfer. As the seller, upon receiving the funds, I transfer the virtual currency USDT to them. The relationship between me and the "exchange trader" is a sales contract relationship, and the funds transferred by trader Zhang San are based on my delivery of the corresponding equivalent value of the virtual currency USDT, thus constituting a good faith acquisition.

At this point, you can assert that I have never rented, lent, or sold my bank account. Although I am unclear about the reasons for the victim's claim to the public security authorities, it is certain that the funds I received via bank transfer were solely based on the trading activity…

This constitutes a complete set of appeal materials, which include laws and regulations, trading concepts, claims, and corresponding evidence for every statement you make. This is what makes a perfect appeal document. Providing this set of materials can lead to a non-refund situation.

If a trader's card is frozen, it is necessary to verify whether the person you traded with is indeed you, along with their trading model and path.

The core logic of appealing against virtual currency card freezing is whether you have strictly verified the identity information of the trading counterpart and ensured that you have not engaged in any illegal transactions. Unfortunately, most people fail to find a professional to assist them with their appeals, and after being intimidated a few times, they end up accepting compensation, or even worse, being scammed.

This appeal logic cannot be applied to transactions involving pseudo-virtual currencies, such as various platform-issued pay coins or Easy Currency Payment, nor is it applicable to cross-platform arbitrage fraud cases leading to card freezing.

Class dismissed! Lawyers who have not yet entered the field or those with insufficient knowledge can take note of this.

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