Background and Core Content of the Paper
According to the South China Morning Post, a technical paper authored by Sun Shengbin of the Wenzhou Public Security Bureau and Lou Yandi of the Criminal Investigation Brigade of the Zhejiang Provincial Public Security Department, among others, was published on June 4 in the journal Criminal Technology. The paper systematically discloses the forensic tools and case-handling procedures used by Chinese police to track and seize virtual currencies such as Bitcoin and Ethereum. The content covers device cracking, evidence collection, on-chain transaction tracking, and asset freezing and seizure. It is considered an important public document regarding Chinese law enforcement's judicial practices in the cryptocurrency field.
Device Seizure: Where Seed Phrases Are Hidden and Search Strategies
The paper points out that many users save seed phrases in their phone memos, WeChat messages, or plain text files on their computers. Therefore, the first step for investigators after seizing a suspect's device is to carefully examine the device for any traces of private keys or seed phrases. This 'digital trace search' strategy covers common local storage methods and provides police with clear operational guidelines during the evidence collection phase.
On-Chain Tracking and Exchange Cooperation
Regarding on-chain tracking, the paper outlines several tracking methods. One method involves tracking transaction fees to trace the flow of funds, ultimately leading to centralized exchanges such as Binance, OKX, and HTX, thereby enabling police to obtain user data. Police can obtain 'Know Your Customer' (KYC) records from these major exchanges through formal legal channels. For funds stored on exchanges, police can freeze accounts for six months, and the freezing period can be extended.
Operational Boundaries and Oversight Mechanisms
The paper emphasizes strict operational boundaries: investigators must not hold private keys privately. The principle of 'separation of case handling and custody' must be adhered to, with comprehensive supervision and clear chain-of-custody records. This regulation aims to prevent power abuse and asset misappropriation during law enforcement, ensuring the legality and transparency of the case-handling process.