Core Content of the Paper: Full Forensic Workflow Exposed
On July 2, the South China Morning Post reported that Sun Shengbin of Wenzhou Public Security Bureau and Lou Yandi of Zhejiang Provincial Public Security Department's Criminal Investigation Corps, along with other researchers, published a technical paper in the journal Criminal Technology on June 4. The paper systematically discloses Chinese police's forensic tools and case-handling procedures for virtual currency assets such as Bitcoin and Ethereum. This rare publication reveals law enforcement methods in the cryptocurrency field, covering device seizure and cracking, evidence collection, on-chain transaction tracing, and asset freezing and seizure.
The paper points out that many users store seed phrases in phone memos, WeChat messages, or plain text files on computers. Therefore, the first step after confiscating a suspect's device is to thoroughly check for any traces of private keys or seed phrases. This 'low-tech' storage habit provides a critical entry point for investigators.
On-Chain Tracking: Transaction Fee Tracing and Exchange Collaboration
Regarding on-chain tracking, the paper outlines several methods. One key approach is to trace transaction fees back to major exchanges such as Binance, enabling police to obtain user data from those platforms. Through formal legal channels, law enforcement can request Know Your Customer (KYC) records from exchanges like Binance, OKX, and HTX. For funds held on exchanges, police can freeze accounts for six months, with the possibility of extension.
This means that even if suspects move assets to exchanges, authorities can still identify them and control the funds through legal cooperation. The paper emphasizes strict operational boundaries: investigators must not hold private keys themselves. They must adhere to the principle of 'separation of case handling and custody,' implement comprehensive oversight, and maintain a clear chain of custody records.
Industry Impact and Regulatory Signals
The publication of this paper marks the first time Chinese law enforcement has systematically disclosed technical details of judicial forensics involving virtual currencies. For crypto professionals, it sends a clear regulatory signal: Chinese authorities have established a complete chain—from device forensics and on-chain tracking to exchange collaboration—and the techniques are becoming increasingly sophisticated. Although mainland China has banned virtual currency trading, police retain robust capabilities to combat related crimes. The methodologies revealed in this paper may also be adopted by law enforcement agencies in other countries, serving as a significant reference for global cryptocurrency crime investigation.