The Truth Behind the Investigation of the Encryption Industry

Recently, news regarding the Hangzhou police conducting a systematic investigation of encryption practitioners has sparked widespread attention within the industry. After multiple verifications, this rumor has been confirmed to be false information.

Event Timeline

On June 10th, a piece of news regarding the Hangzhou police conducting a comprehensive investigation into cryptocurrency practitioners spread rapidly on social media. This news raised concerns among industry insiders, who believed it might signal a further deterioration of the domestic web3 environment. However, after multiple verifications, including confirmations from local judicial authorities, lawyer peers, and industry insiders, this so-called "Hangzhou investigation" event was confirmed to be false information.

The Truth of the Event

According to reliable sources, the actual situation is likely that a relatively large local cryptocurrency-related team in Hangzhou is involved in the case. The case involves foreign exchange-related crimes and may constitute illegal business operations. The information that circulated earlier likely originated from the circumstances when the involved personnel or witnesses cooperated with the police investigation.

There are reports that some encryption industry practitioners in Hangzhou have been missing for several days, and the teams they belong to are relatively large in the industry. Therefore, it can be inferred that the truth behind the "Hangzhou investigation" incident is an investigation targeting specific teams, rather than a comprehensive inspection or crackdown on the entire encryption industry.

Warning to the encryption industry

This event has sounded the alarm for professionals in the encryption industry, and there are two main points to note:

1. Clearly understand the regulatory red lines
2. Understand how to properly respond to judicial investigations

regulatory red line

Currently, the main prohibitions in the domestic encryption currency industry include:

• Exchange between virtual currency and fiat currency
• Exchange between virtual currencies
• Acting as a central counterparty for buying and selling virtual currencies
• Provide information intermediary and pricing services for virtual currency transactions
• Token issuance financing and virtual currency derivatives trading
• Establish a trading platform and provide services to domestic residents
• Provide services for overseas virtual currency exchanges
• The company name must not contain terms such as "virtual currency", "encryption currency", etc.
• Virtual currency mining activities

Although these prohibitions originate from regulatory documents rather than formal laws, they may still be used as a basis for enforcement in practice. However, in criminal cases, the principle of legality must still be strictly adhered to.

Suggestions for Responding to Investigations

If unfortunately faced with a criminal investigation, the following advice may be helpful:

1. Clarify your own role: Understand whether you are being investigated as a witness or a suspect.
2. Pay attention to the investigation location: Witnesses may have more flexibility, while suspects usually need to cooperate with the investigation at designated locations.
3. Attention to the duration of the investigation: The initial investigation of a suspect usually does not exceed 12 hours and lasts a maximum of 24 hours.
4. Verification and Investigation Procedures: Ensure the legitimacy of the investigators' identities, relevant documents, and paperwork.

Conclusion

The operating environment of the domestic encryption industry is becoming increasingly severe, and practitioners need to be particularly cautious when disseminating information, preferably releasing it only after verification. If legal issues arise, it is advisable to consult a professional web3 lawyer in a timely manner to ensure that their rights and interests are effectively protected.