What should Web3 companies do when facing remote law enforcement actions or account freezes?

Author: Attorney Shao Shiwei’s Team

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Is it legal for a company’s account to be frozen by out-of-place public security authorities? Does filing a case across provinces involving a company constitute unlawful enforcement? If you run into so-called “ocean trawling” or profit-driven law enforcement, what exactly should companies and family members do to respond? These are the real issues that Attorney Shao’s team is repeatedly asked about in day-to-day case handling and consultations.

For business owners, what they often worry about is not fluctuations in profit and loss during normal operations, but an unexpected criminal case filing: the company is reported across provinces, the bank account is frozen by agencies in another location, and the company’s负责人 is taken away by out-of-place public security for assistance in investigation—where the alleged conduct is vaguely stated, and afterward comes the freezing, seizure, and preservation of massive assets…

In these situations, some cases have already been explicitly identified by the Supreme People’s Procuratorate and the Supreme People’s Court as requiring key remediation—illegal off-site enforcement and profit-driven enforcement. On February 5, 2026, the Supreme People’s Procuratorate issued another public notice, again emphasizing corrective measures for profit-driven enforcement cases.

Moreover, the Supreme People’s Procuratorate has released data showing that as of the end of 2025, procuratorial organs nationwide had handled more than 19k cases of such profit-driven enforcement, indicating that oversight of profit-driven enforcement has begun to show initial effectiveness, and also reflecting that there are already many profit-driven enforcement cases in different regions.

Against this backdrop, business owners need to examine: what kinds of enforcement actions may be suspected of profit-driven enforcement? Could the business operations of one’s own company encounter “ocean trawling” or profit-driven enforcement? If so, how should you respond?

What is profit-driven law enforcement

The Supreme People’s Procuratorate has clearly stated that profit-driven law enforcement refers to illegal acts such as seeking economic benefits, imposing unlawful fines and confiscating property, and so on, under the guise of handling a case. In essence, it treats power as a way to generate economic benefits. The penalties confiscated and funds/fines/asset seizures are tightly bound to local fiscal revenues or departmental interest targets.

In recent years, the state has maintained a high-pressure campaign to rectify profit-driven law enforcement. On April 26, 2025, the Supreme People’s Court, in the “Notice on Upholding Strict and Impartial Judicial Practice to Standardize Trial and Enforcement in Cases Involving Enterprises,” proposed: firmly prevent and correct using administrative and criminal measures to interfere with economic disputes, and effectively prevent problems such as illegal off-site enforcement and profit-driven enforcement. At the same time, it requires courts to strictly review jurisdiction, preventing illegal off-site enforcement and profit-driven enforcement from the source.

On January 19, 2026, a meeting of directors of the nation’s high courts was held. The meeting proposed that we should adhere to the boundaries of power and focus on resolving practical problems such as using administrative and criminal means to interfere with economic disputes, especially problems of profit-driven law enforcement and illegal off-site enforcement.

How companies identify profit-driven law enforcement and illegal off-site enforcement

In practice, profit-driven law enforcement can take many forms, but its core features can be summarized into the following two points.

Arbitrarily expanding jurisdiction: carrying out cross-province arrests through illegal off-site enforcement, recklessly sealing and freezing assets, and even transferring and deducting property of out-of-place enterprises and individuals.

This refers to the fact that the case-handling agency is not exercising jurisdiction based on the legal basis of the suspect’s place of residence. Instead, it forcibly links jurisdiction through means such as providing leads via assistance companies and designating jurisdiction, thereby directing investigative activities and taking control of the handling and disposition of the property involved in the case.

Taking as an example the situation of “the same case being filed for record in Hunan and Henan in succession due to extremely large assets being involved in the seizure and detention,” an IT practitioner named Li, involved in the Shenzhen IT industry, was drawn into investigation procedures in both places due to holding a large amount of bitcoins. He was first summoned in a certain locality in Hunan on suspicion of the crime of opening a casino. The police seized 103 bitcoins in the digital wallet. With Li’s cooperation, the bitcoins were converted into RMB of more than 49.61 million. After that, the case-handling authorities placed Li under residential surveillance pending trial. Only a few days later, Li was taken away again by a public security authority in a certain area of Henan for investigation, and the direction of the accusation was changed to the crime of infringing on citizens’ personal information.

Based on practical observations, such scenarios of “multiple locations filing in competition and continuously changing the direction of the charges” are often important signals for identifying whether there is illegal off-site enforcement or jurisdictional expansion. Enterprises and individuals should remain highly vigilant.

The typical case three issued by the Supreme People’s Procuratorate in 2026, “A Supervision Case Involving Frozen Funds of a Certain Enterprise in Another Location,” also shows the existence of illegal off-site enforcement. In that case, an out-of-place investigation authority froze 17 accounts of an out-of-place enterprise in one go on the grounds of allegedly issuing false value-added tax special invoices. The total frozen amount was more than 19k yuan. It was later determined that there was a lack of a lawful basis for jurisdiction, and that it constituted illegal off-site enforcement and excessive freezing.

Improperly intervening in economic disputes using criminal measures: essentially, there are contract disputes and investment disputes, but they bypass civil and administrative avenues and directly initiate criminal case-filing procedures.

This is another relatively typical situation—turning what originally belonged to the category of civil and commercial disputes arising from contract performance or investment risk into a criminal matter. Objectively, it increases the possibility that some case-handling agencies will intervene in economic disputes through criminal channels, and thus be able to confiscate huge unlawful proceeds and impose fines.

Taking the example of the “Wuxi Liangliang Organizing and Leading a Criminal Case of Illegal Fundraising/Running a Pyramid Scheme (via promotional chain recruitment),” the case originally broke out in 2021. Wuxi Public Security searched online for sources of the case and initiated investigation by filing for the crime of illegally using information networks. During the process, the charges were changed multiple times. Finally, in March 2023, the public prosecution organ changed the indictment charge to the crime of organizing and leading activities of pyramid schemes. In December 2023, the People’s Court of Xishan District sentenced Liangliang. Because Liangliang refused to plead guilty and accept the punishment, the court imposed a heavier sentence of 10 years, a fine of 20 million yuan, and all platform users’ assets were confiscated. To learn the specific case details, you can check Attorney Shao’s earlier article (➡️《Brief Discussion of Profit-Driven Law Enforcement in Criminal Cases Involving the Coin Circle》)

This type of case path, which starts from online administrative leads and then keeps adjusting the direction of the charges, in practice is prone to triggering controversy over “the boundary of criminal measures being used to intervene in economic activities,” and is therefore worth close attention from practitioners.

Taking, as an example, typical case three issued by the Supreme People’s Procuratorate in 2026, “A Case of Lending Between Private Parties Incorrectly Recognized as a Crime of Deceptive Lending,” a real estate developer obtained a loan from a bank. When the two parties had already reached a repayment agreement for the issue of overdue payment in a civil court, local authorities still filed a case for investigation against the lender for the crime of fraudulently obtaining loans, and they took preservation/seizure measures against more than 280 housing properties in the project. The assessed value of these assets was 110 million yuan, clearly higher than the original principal of more than 89 million yuan. Ultimately, the procuratorial authorities issued a supervision opinion in accordance with the law, determining that it was not appropriate to evaluate the conduct as a crime. The case was withdrawn.

This case also reflects, on the side, that in handling enterprise-related disputes, if the civil-criminal boundary is not properly grasped, it may indeed cause a noticeable impact on an enterprise’s assets and operational stability.

Which businesses in Web3 and the coin circle are most likely to face off-site law enforcement

Based on Attorney Shao’s practical experience, combined with multiple criminal cases involving virtual currency and Web3 businesses handled in recent years, the risk characteristics described above show a certain degree of commonality among the enterprises that were filed for investigation. When a coin-circle business simultaneously has the following features—funds are highly concentrated, users are distributed across regions with some concentrated in less developed areas, the business is in a gray zone, and technical information is obviously asymmetrical—it is often easier for it to enter the high-incidence area of criminal risk. In practice, the prosecuting authorities typically use policy documents such as the 9·4 announcement, the 9·24 notice, and the latest 2·6 notice in 2026 as the basis for law enforcement.

Once such a business is deemed to have characteristics of illegal operations, gambling, and the like, it is easy for certain local authorities to target it. Using an “ocean trawling” style approach to file cases in other locations and seal assets, high-risk businesses can be mainly divided into the following three categories:

First, centralized or quasi-centralized exchanges are the first high-risk sector. These platforms often accumulate massive amounts of users’ funds and virtual assets. Users are distributed across the country or even globally. Once any local authority claims that there are players in the locality, it provides a reason to seize jurisdiction. For authorities that are not sufficiently familiar with these businesses, they often mistakenly classify the perpetual contract segment as a wager game using virtual currency as chips.

Second, Web3 applications with a clearly luck-based/entertainment-and-chance flavor—for example, chain games, NFT blind boxes, and betting/quiz type DApps. In judicial practice, as long as the gameplay is “small bets for big gains, and the outcome is mainly determined by chance,” it is extremely likely to be treated as gambling. Once the case-handling authority chooses to characterize it as the crime of opening a casino, the platform’s entire transaction flow could be simply and roughly included as gambling stakes. Moreover, since users of these applications are distributed nationwide, “ocean trawling” provides a ready-made reason.

Third, Web3 project parties, digital wallet service providers, and technical intermediaries that provide payment gateways, fiat currency exchange channels, and clearing/settlement services. Under the magnifying glass of profit-driven law enforcement, they often become the target for handling “as a side matter.” Regarding whether the upstream platform is actually engaging in illegal conduct, many downstream service providers are not aware. But wallet custodial accounts, wallet balances, and settlement reserves all have very high value for investigation, seizure, and confiscation.

Steps to take when a company account is frozen in another location and the boss is taken away

This article especially alerts the following groups to focus on relevant risks: Web3 project parties and technical teams, corporate executives who operate across regions, and enterprises and family members that have already encountered or are concerned about their accounts being frozen in another location.

For the groups above, what is truly tricky is often not whether they will be put under attention, but rather that after they are filed for investigation, sealed, or even taken away by out-of-place authorities, how—within the existing institutional framework—can the case be brought back as much as possible onto a track that is more favorable to them.

With the country having specifically identified illegal off-site enforcement and profit-driven law enforcement as targets for remediation, and with the establishment of a special oversight zone on the 12309 China Procuratorial Network, in the current situation, for parties to a criminal case and their family members at different stages, it is recommended to take the following measures to turn passivity into initiative:

Beforehand: when an investigation has already been launched, urgently cut losses and stabilize the situation. On one hand, you should verify relevant procedures in accordance with law—for example, verifying the identity of the case-handling personnel. On the other hand, you should keep a close watch on the property-related aspects, and promptly preserve communication evidence to facilitate the subsequent initiation of supervision.

During the process: if a family member is taken away by the public security authorities and the company account is frozen in another location, the family can ask a lawyer to compile the problems that appear in the case (such as illegal sealing and freezing, improper jurisdiction, etc.) into written materials, and submit them through the special supervision zone on the Supreme People’s Procuratorate 12309 website. Report the case situation to higher-level procuratorial authorities, and require the supervisory departments to re-examine the case from the perspective of “whether there is illegal off-site enforcement or profit-driven law enforcement,” seeking to promote the withdrawal of the case and a decision of non-prosecution from the source, or at least to narrow the scope of the charges.

Afterwards: when the case-handling unit has made an initial characterization of the enterprise under a certain crime, the focus of response should shift from stopping losses to reducing harm. Because different case circumstances require different approaches, it is recommended to consult a professional lawyer. Based on the existing materials, the lawyer will negotiate and communicate with the case handlers around the core issues such as the elements required for the crime, the subjective culpability, and the substantive nature of the business.

From the public statements of the Supreme People’s Court and the Supreme People’s Procuratorate, it can be seen that the state continues to release clear signals to rectify law-enforcement chaos such as “cross-province arrests without jurisdiction,” “illegal freezing of accounts,” and “profit-driven law enforcement.”

However, enforcement practices differ across regions. For ordinary families, once they encounter profit-driven law enforcement—having a family member taken away and accounts frozen—neither passive cooperation nor blind confrontation can easily resolve the predicament. A more practical option is to seek the help of professional lawyers, make use of the institutional space under the existing system, identify procedural illegality for the specific case, raise objections in accordance with law, push the case into the supervision procedure, and bring the case back onto a rule-of-law track as much as possible.