OTC is a hotbed of money laundering, can the exchange stay out of the way?

What should I do if my account is accidentally frozen?

The over-the-counter market (OTC) is becoming more and more attractive, attracting the attention of investors.

In January, Circle Financial, a crypto-financial company backed by Goldman Sachs, claimed that there were 10,000 over-the-counter transactions in 2018, with a total transaction volume of $24 billion.

According to the consulting firm Tabb Group, in August last year, BTC's over-the-counter market was two to three times the exchange's trading volume; Ari Paul, the founder of the over-the-counter trading platform SigOne Capital, said that the entire cryptocurrency OTC transaction accounted for 25-50% of all trading volume.

The hidden and huge OTC market has attracted many investors. Even the new venture project Matrix, the founder of Bitland, Wu Jihan, is targeting this market.

The combination is not standard, the information circulation is opaque, and many lawless elements try to carry out money laundering operations through OTC, and also put a touch of gray on this market. Although many cryptocurrency exchanges have strengthened KYC (know your customers) and AML (anti-money laundering) measures, "money launderers" still have the means to pass these lines of defense, and the ultimate victims are users.

In the past few years, the freezing of bank card accounts due to the misappropriation of "black money" has occurred one after another. Good luck, it can be thawed in three or five days; if the luck is poor, it will not be thawed in the first half of the year.

“The speculative coin is technical in nature, and no one can play it.” Some OTC dealers lamented.

In order to avoid stepping on the pit, the over-the-counter veterans summed up a set of lightning protection methods: separation of payments and capital filtering.

However, only by doing a good job at the source (exchange) can you stop the trouble.

Three days of thawing VS bitter wait for half a year

When the OTC transaction is frozen, you can only wait for God to give face. It may be necessary to spend money on disaster relief and may be thawed in a few days.

"What should I do if my account is frozen? I just received a sum of money in the trading area of ​​the fire currency, and the account is frozen."

For the first time, when the bank account was frozen, the investor He Xiao was quite overwhelmed. I thought that such a thing would never happen to myself, but I didn't expect it to happen.

At 13:00 on June 10, He Xiao sold 4000 USDT (about 28,000 yuan) on the OTC (OTC) platform. After 2 minutes, the money arrived normally.

However, after only 3 minutes, when He Xiao wanted to pay through WeChat, he was surprised to find that the bank card he received was frozen.

"Firecoin customer service does not provide the other party's information, the other party's phone number is empty." He Xiao, who is helpless, can only go to the bank for help.

However, the bank said that it was not clear why it was frozen and could not help, and suggested to the bank to check the reasons. When he arrived at the bank, he had already passed the hours.

Holding the idea of ​​trying it out, He Xiao tried to use the mobile banking to transfer the account, showing the error code: 93012587.

(freeze screenshot)

“ICBC customer service only said that this code shows that the account has been frozen, which may be frozen by the public security organ. The specific reason can be found by the bank.” He Xiao said with a smile. “I can’t go to the bank to find the account the next day. It is back to normal."

As for the reason for the freezing, he said that it is still unclear and not in mind. However, He Xiao, who is not sure, listened to the suggestions of the group friends and transferred all the funds in the card to other accounts.

A person familiar with the matter told the Odaily Planet Daily that the reason why He Xiao’s account was frozen was because the money collected in his account might be “black money”. "The source of money is not clean (fraud or money laundering), so it is included in key monitoring and freezing measures are taken."

As for why the freezing was only one day, the lawyer of the chain law team Guo Yatao explained that if the public security organ freezes its account, it may be that the investigation has nothing to do with the case, so the freezing is lifted. If the anti-money laundering agency freezes, it may be a temporary freeze. The law stipulates that the freezing time must not exceed forty-eight hours.

"If a financial institution fails to receive a notice of freezing from the investigating agency within 48 hours after taking the temporary freezing measures in accordance with the requirements of the anti-money laundering administrative department of the State Council, it shall immediately lift the freeze," Guo Yatao said.

He Xiao is undoubtedly fortunate. However, the investor Lao Huang has waited for half a year and has not thawed so far.

At the beginning of December last year, Lao Huang also sold Ethereum (ETH) worth 30,000 yuan in the domestic currency exchange area of ​​an exchange. Two days later, when Huang Huang made a transfer, he found that the bank card was also frozen.

After several twists and turns, Lao Huang got in touch with the Nanjing police who blocked the bank card. Through the police, Lao Huang also learned that his account involves a telecom fraud "money laundering."

In August last year, a telecom fraud case occurred in Nanjing, involving more than 300,000 cases. After the successful deception, the suspect conducted money laundering activities through the cryptocurrency exchange. The more than 300,000 funds flowed into the accounts of some dealers on the OTC platform of the exchange. One of the traders who traded with Laohuang was one of them. . Later, part of the money flowed into Lao Huang’s account.

(Alleged money laundering capital chain, all frozen)

"This matter has nothing to do with me. I have no fraud. Why should I freeze my account?" Lao Huang was indignant.

However, the local police only informed Lao Huang that since the case has not been closed, all the funds accounts involved in the case need to be frozen until the end of the case can be thawed.

However, a friend of Lao Huang, similar to the situation, but the account was thawed within a week.

"(Police) said that she had let the victim's 40,000 payment to be thawed. She had more than four million accounts on her account. I thought about it and gave it to the end." Lao Huang explained the reason for the freeze. "A week after paying it." To the thawing, it may be that the victim revoked the report."

However, the stubborn old Huang did not follow the path of friends. "I won't give it, but I don't want to lie." Lao Huang said, "(Account) doesn't cost much, it consumes jealousy."

To this day, the 30,000 yuan of funds in Lao Huang's account card are still frozen.

Xiao Wei, director of the Bank of China Law Research Association, believes that the police’s freezing of investor accounts is legally legal. "Where it involves illegal activities, such as money laundering, organization of leading pyramid schemes, fraud, the police have the right to freeze the relevant accounts. In addition, because it is uncertain whether other assets in the account involve other cases, it is a common practice to freeze all funds."

As for the freezing process, Guo Yatao explained: "It should be approved by the person in charge of the public security organ at or above the county level to produce a notice to assist in the freezing of property, and notify financial institutions and other units to implement it."

With dozens of cards, you can "antifreeze"

In order to avoid pits, users have also been forced out of the complicated "cash out" approach.

"The speculative coin is technical, and no one can play it." For the encounter of He Xiao and Lao Huang, OTC Chen Qi said his opinion.

In Chen Qi’s view, Lao Huang and He Xiao’s coin-operating operations are “a textbook-like error demonstration”.

Due to the high risk of over-the-counter trading, Chen Qi explained that many OTC veterans have at least two points: separation of payments and capital filtering.

The so-called separation of payment is to separate the payment card and the payment card into two or more different cards.

"Everyone has dozens of cards, workers, farmers, China, construction, and various kinds of farmer's banks. We know that you don't know the bank cards." Chen Qixiao said that the over-the-counter transactions are all " Card King."

In the view of multiple OTC dealers, the security card of the payment card is low. Therefore, after receiving the payment, the funds must be filtered and transferred to another secure card for future payment.

“The filtering method is actually through a third-party platform.” Oufu, an over-the-counter dealer, said, “I have used Alipay, WeChat, financial platform, online merchant bank, and even P2P.”

The method that Liu Jiefu said is to transfer the funds in the payment card after the coin is sold to the third-party platform, and then transfer it to another card through the third-party platform.


Take Alipay as an example. After receiving the payment, the payment card will be recharged to Alipay, then transferred to Yu Libao or Yu'ebao, and finally transferred to another card with Yu Libao/Yue Bao.

"Of course, this is not foolproof. If you don't make it easy, Alipay will seal it. The Alipay thawing procedure is more troublesome than the bank card." Liu Jiefu reminded, "So the most important thing is to do it from the source, it is best to bless yourself and those "money laundering." There are entanglements.

How to do it from the source? Liu Qi believes that investors must choose OTC buyers with higher credibility when selling coins, such as whether the registration time is longer or not, and whether the platform has passed multiple certifications.

"Of course, some reputable businesses are not without problems. Generally speaking, these people will not take the initiative to involve "black money", and the cost is too high. Liu Qi explained, "The main reason is that those who trade with the merchants may be "black money", and the merchants are transferred to other people in a confused way. Finally, the entire capital chain is frozen.

In addition, the seller can request the payer to pay the real name (the platform real name and the bank card payment name are the same), and the maximum range is prevented from receiving the first-hand black money.

"If you receive a payment that is not a real name, you must return it in the same way, and make a note when you return: mistyped / transferred errors, to prevent the relationship with black money." Liu Qi said.

Senior OTC trader Du Xiang added that investors must conduct a withdrawal test on the receiving card before collecting the money. "Some cards have been frozen. I still don't know if I am still stupid. I still play money inside. I can get in, but I can't mention it."

In addition, when selling coins, you can choose to split the operation, the amount of a single transfer should not exceed 50,000, so as not to trigger the "Pedestrian Transfer System Freeze".

"Re-send a card to collect money, don't take a salary card or a large savings card to collect money, if it is frozen, it will affect your life." Du Xiang said, "To say a thousand and ten thousand, you must have a sense of prevention." , reduce the frequency of transactions, or get a chance in the morning and evening."

According to Yuan Jun, CEO of MinIPO, it is the trading platform itself that is not well regulated, which requires users to be extremely cautious in over-the-counter trading and prevent black money from being received. “The exchange itself is not particularly serious and professional on KYC. I don’t think this is their own professional issue, but they are intentional.”

Yuan Jun believes that lowering the KYC standard on the platform can increase trading activity. “If you keep gray trades, including this part of money laundering, out of the way, you might reduce a large portion of the volume.”

Although the current cryptocurrency is still in the gray field, in Yuan Jun’s view, the government will definitely supervise the cryptocurrency in the future, which also requires the trading platform to be a good “gatekeeper”.

KYC of the platform still needs to be strengthened

As the first level of the inflow of "black money", how can the platform act as a "gatekeeper" and play its regulatory role?

Under the supervision requirements, many cryptocurrency exchanges including Fire Coin, OKEx and Coin Safety have gradually improved KYC (know your customer), AML (anti-money laundering) and other measures, requiring users to register their real names.

The Odaily Planet Daily test found that it is difficult to register if you use fake ID information when registering on the Firecoin platform. The platform seems to have been networked with the public security department to detect false identity information.

An early user of a fire coin told the Odaily Planet Daily that the fire currency does not need to be KYC in the early days. It can be traded and refilled by registering via mobile phone and email. Until the “May 4th Notice” in 2017, the coin opened the KYC real name verification and required the user to take a photo ID.

The other two exchanges (OKEx, Coin Safety) also started the KYC process at the same time after "May 4th". Among them, OKEx also needs video verification, requiring users to read the authentication text in voice.

At present, foreign cryptocurrency exchanges are also strengthening the KYC mechanism.

According to The Block, on June 10th, Bitfinex sent an email to the user asking the user to take the ID card issued by the local government for image verification. Bitfinex wants to filter US users by this means to avoid head-on conflicts with US regulators.

Another exchange, Bittrex, also requires users to fill out a compliance form that includes personal information, including proof of employment and retirement income, and verification of transactions.

But from the results, Know your customers is not easy.

An anonymous person who has worked in KYC certification said that when the currency security opened IEO, because the domestic identity does not allow IEO, many investors choose to purchase foreign identity for KYC, which has spawned the certification industry. “Certification is a fee of 600-800 yuan, and the identity is basically in Myanmar and Cambodia.”

In March of this year, research company Coinfirm released a report. Through a study of 216 exchanges, Coinfirm said that 69% of these companies do not have “completely transparent” KYC procedures; only 26% of exchanges have “high” levels of anti-money laundering (AML) procedures, such as ongoing transactions. Monitoring and internal compliance personnel with anti-money laundering experience.

The report also believes that Binance has a “high” regulatory risk. Because at the exchange, KYC is not required for the debit of less than 2 bitcoins.

In addition, some start-up exchanges only need to be registered by e-mail, and even the currency and coins are not limited. This undoubtedly gives the criminals a chance to take advantage of it.

"It is very difficult to ensure that there is no problem in order to put an end to "black money." "A cryptocurrency exchange said to the Odaily Planet Daily, "We can ensure the authenticity of his identity, but we cannot guarantee the source of the money."

Therefore, for the exchange, only "post-event supervision" can be carried out, that is, it cooperates with the public security organs to provide relevant registrant information to help solve the case.

Xiao Wei believes that because the exchange is still a gray area in China, it is difficult to regulate with a legal identity. "OTC is just a combination of information, not directly in contact with money, can not say that the exchange has no responsibility at all, can only say that there is no need to blame them. The exchange is also very difficult, the name is not right, it is difficult to use legal status to supervise. ”


Many people are concerned about how to deal with their accounts if they are accidentally frozen.

First, you need to contact the bank to check the reasons for the freeze and ask for the following information: freeze period, freeze method (bank freeze or judicial freeze), freeze authority, and contacts and contact information.

"If it is a bank freeze (such as a large amount of money transfer), don't worry. Bring the materials needed by the bank and cooperate with it. It will be thawed within three working days." Liu Qi said, "But if the judicial freezes, it will be more troublesome. ”

Liu Qi explained that there are two types of judicial freezing:

First, the police temporarily freeze, indicating that your card is not directly accepting the black money card, waiting patiently, the expiration will automatically thaw, usually up to 72 hours.

Second, the police have asked the people's court to freeze, usually six months to one year, and may even extend the freeze period until the case is closed or the case is withdrawn. Different places are different. Some of the information can be thawed; some defrosted half, the funds involved must be frozen; some cases are released to thawing.

"The second kind can only look at luck." Liu Qi added, "I am not afraid of shadows, as long as there is no crime, I am not afraid."

Xiao Wei added that when the funds are frozen by the public security organs, in order to improve the efficiency of thawing, investors can prepare relevant materials to prove the legality of the source of money (such as inheritance, wage income). "The difficulty of falsification is very large, and there are no regulations that require falsification. It is only for early thawing, and it is necessary to provide evidence to improve the efficiency of thawing, which is more cost-effective in terms of time cost."

(Note: Some of the respondents in the article are pseudonyms)

Author | Qin Xiaofeng

Produced | Odaily Planet Daily

Original article; unauthorized reprinting is strictly prohibited, and violation of the law will be investigated.