Author: Attorney Shao Shiwei Team
Is it legal for a company’s account to be frozen by public security authorities from another region? Does initiating a case across provincial borders constitute improper law enforcement? If faced with so-called “far-sea fishing” or profit-driven enforcement, how should companies and their families respond? These are practical issues that Lawyer Shao’s team repeatedly encounters in their daily cases and consultations.
For entrepreneurs, what they often fear most is not the normal fluctuations in profit and loss during operations, but rather the sudden criminal investigation: the company being reported across provinces, bank accounts frozen by authorities in another region, business leaders taken away by police from another area for assistance in an investigation, with unclear allegations, followed by massive asset seizures, detentions, and freezes...
In such cases, certain incidents have been identified by the Supreme People's Procuratorate and the Supreme People's Court as requiring focused rectification of improper extraterritorial law enforcement and profit-driven enforcement. On February 5, 2026, the Supreme People's Procuratorate reiterated measures to correct profit-driven enforcement cases.
Moreover, data released by the Supreme People's Procuratorate shows that as of the end of 2025, procuratorial organs nationwide had handled over 19,000 cases related to profit-driven law enforcement; supervision of such practices has already yielded initial results, reflecting that a significant number of profit-driven law enforcement cases have occurred across various regions.
Under this context, entrepreneurs should consider: What types of enforcement actions might be profit-driven? Could their own business operations encounter "far-sea fishing" or "profit-driven enforcement"? If so, how should they respond?
1. What is profit-driven enforcement?
The Supreme People's Procuratorate has clearly stated that profit-driven law enforcement refers to illegal acts such as using cases as a pretext to seek economic gains or improperly confiscating property. At its core, it involves treating authority as a means of generating income, with fines and confiscations closely tied to local government finances or departmental performance targets.
In recent years, the state has maintained a high-pressure stance against profit-driven law enforcement. On April 26, 2025, the Supreme People's Court issued the "Notice on Upholding Strict and Impartial Judicial Practices and Standardizing the Trial and Enforcement of Cases Involving Enterprises," stating: resolutely prevent and correct the use of administrative or criminal measures to interfere in economic disputes, and effectively guard against unlawful cross-regional enforcement and profit-driven law enforcement. It also requires courts to strictly review jurisdiction to prevent unlawful cross-regional enforcement and profit-driven law enforcement at the source.
On January 19, 2026, the National Conference of Presidents of Higher People's Courts was held, proposing: to strictly adhere to the boundaries of power and focus on addressing practical issues involving the use of administrative and criminal measures to interfere in economic disputes, particularly profit-driven law enforcement and unauthorized cross-regional enforcement.
2. How can businesses identify profit-driven enforcement and unauthorized cross-regional enforcement?
In practice, profit-driven enforcement takes many forms, and its core characteristics can be summarized as follows:
Arbitrary expansion of jurisdiction: Conducting cross-provincial arrests through unlawful extraterritorial enforcement, and indiscriminately seizing, freezing, or even transferring the assets of businesses and individuals from other regions.
This refers to law enforcement agencies not exercising jurisdiction based on the suspect’s place of residence, but rather forcibly establishing jurisdiction through tips provided by cooperating companies, designated jurisdiction, and other means, thereby taking control of the investigation and authority over the disposition of involved assets.
For example, in the case of Li Mou, an IT professional from Shenzhen, who was implicated in two separate investigations due to his possession of a large amount of Bitcoin: authorities in Hunan and Henan provinces successively opened cases and seized assets related to the same matter. Li was first summoned in a location in Hunan on suspicion of operating an illegal gambling den; police seized 103 Bitcoin from his digital wallet. With Li’s cooperation, the Bitcoin were converted into RMB 49.61 million, after which the authorities granted him bail. Just a few days later, Li was taken in for questioning by police in a location in Henan, where the focus of the investigation shifted to the alleged crime of infringing upon citizens’ personal information.
From a practical standpoint, situations involving multiple jurisdictions simultaneously initiating cases and continuously shifting the focus of charges are often key indicators of potential improper extraterritorial enforcement or jurisdictional overreach; businesses and individuals should remain highly vigilant.
Case No. 2, released in 2026 by the Supreme People's Procuratorate, titled "Supervision Case Involving Unlawful Freezing of Funds by an Out-of-Territory Authority," also demonstrates instances of unlawful out-of-territory enforcement. An out-of-territory investigative agency froze 17 accounts of an out-of-territory enterprise on grounds of fraudulent issuance of value-added tax invoices, totaling over 80 million RMB, which was later determined to lack legitimate jurisdictional basis and constituted unlawful out-of-territory enforcement and excessive freezing.
Improper use of criminal measures to intervene in economic disputes: Essentially contractual or investment disputes, but bypassing civil or administrative remedies and directly initiating criminal proceedings.
This is another typical scenario in which civil and commercial disputes originally falling within the scope of contract performance or investment risk are criminalized, objectively increasing the likelihood that certain law enforcement agencies will intervene in economic disputes through criminal proceedings, thereby enabling the seizure of substantial illegal gains and fines.
Taking the case of Liang Liang’s organization and leadership of a pyramid scheme in Wuxi as an example, the case initially came to light in 2021, when Wuxi police discovered the case online and opened an investigation under the charge of illegal use of information networks. The charges were changed multiple times during the investigation, and in March 2023, the prosecution amended the charge to organizing and leading a pyramid scheme. In December 2023, the Xishan District People’s Court handed down its verdict in the Liang Liang case; due to Liang’s refusal to plead guilty or accept punishment, the court imposed a harsh sentence of ten years in prison and a fine of 20 million yuan, while confiscating all platform user assets. For details on the case, see Attorney Shao’s previous article (➡️《On Profit-Driven Law Enforcement in Cryptocurrency-Related Criminal Cases》）
Cases that begin with administrative leads from online authorities and subsequently shift the focus of charges are prone to sparking controversy over the use of criminal measures to intervene in the boundaries of economic activity, and warrant close attention from relevant industry professionals.
Taking as an example Case Three, “Private Loan Wrongfully Classified as Loan Fraud,” published by the Supreme People’s Procuratorate in 2026: A real estate developer obtained a loan from a bank; after both parties had already reached a repayment agreement regarding the default in civil court, local authorities still initiated a criminal investigation against the borrower on suspicion of loan fraud and imposed asset freezes on over 280 units in the project, with an assessed value of RMB 110 million—significantly exceeding the original loan principal of RMB 89 million. Ultimately, the procuratorate issued a supervisory opinion, concluding that the conduct should not be deemed criminal, and the case was dismissed.
This case also illustrates that, in the handling of business-related disputes, improper delineation between criminal and civil matters can indeed cause significant disruption to corporate assets and operational stability.
3. Which Web3 and crypto industry businesses are most vulnerable to cross-border enforcement?
Based on Attorney Shao’s practical experience and cases involving virtual currency and Web3-related criminal matters in recent years, the above risk characteristics exhibit certain commonalities among enterprises that have been investigated. When a crypto business simultaneously exhibits the following traits—highly concentrated funds, users distributed across regions with some concentrated in underdeveloped areas, operations in a gray area, and obvious technological information asymmetry—it is more likely to enter a high-risk zone for criminal exposure. In practice, law enforcement agencies typically rely on policy documents such as the September 4 Announcement, the September 24 Notice, and the latest February 6 Notice of 2026 as legal grounds for enforcement.
Once identified as having characteristics of illegal operation, gambling, etc., it is easily targeted by certain local authorities, who may initiate investigations and freeze assets remotely in a “deep-sea fishing” manner. High-risk businesses can primarily be categorized into the following three types:
- First, centralized or quasi-centralized exchanges are the most high-risk sector. These platforms often hold vast amounts of user funds and digital assets, with users distributed nationwide and even globally. If any local authority claims that players exist within its jurisdiction, it gains grounds to assert jurisdictional control. Authorities unfamiliar with such businesses often mistakenly classify perpetual contracts as gambling games using cryptocurrencies as stakes.
- Second, Web3 applications with clear elements of chance, such as blockchain games, NFT blind boxes, and gambling-style DApps. In judicial practice, any mechanism that offers “small stakes for large returns” with outcomes primarily determined by chance is极易被视作赌博. If law enforcement chooses to classify such activities as operating a casino, the entire platform’s transaction volume may be summarily classified as gambling proceeds. Moreover, since users of these applications are distributed nationwide, they provide a ready-made justification for broad, far-reaching investigations.
- Third, under the magnifying glass of profit-driven enforcement, Web3 project teams, digital wallet service providers, and technology intermediaries offering payment gateways, fiat on-ramp/off-ramp services, and clearing and settlement solutions often become incidental targets. Many downstream service providers are unaware of whether upstream platforms are substantially illegal, but wallet custodial accounts, wallet balances, and settlement reserve funds hold extremely high value for seizure.
4. Steps to take when the company account is frozen remotely and the owner is taken away
This article particularly alerts the following parties to pay close attention to related risks: Web3 project teams and technical personnel, business leaders operating across regions, and enterprises and their families who have already experienced or are concerned about account freezes in other locations.
For the above group, the real challenge is often not whether they will be noticed, but how, after being investigated, frozen, or taken in for questioning by authorities in another region, they can, within the existing institutional framework, steer the case toward a more favorable outcome for themselves.
At a time when the state has explicitly identified improper cross-regional law enforcement and profit-driven enforcement as targets for rectification, and has established a dedicated oversight section on the 12309 China Procuratorate website, parties involved in criminal cases and their families are advised to take the following measures at different stages to turn passivity into proactivity:
Prior to the investigation: Implement an emergency stop-loss and stabilize the situation. On one hand, legally verify procedures, such as confirming the identity of investigators. On the other hand, closely monitor asset-related matters and promptly preserve communication evidence to facilitate subsequent oversight.
During the process: If a family member is taken away by public security authorities or the company’s account is frozen in another region, family members may engage a lawyer to compile written materials outlining issues in the case—such as unlawful seizures or improper jurisdiction—and submit them through the dedicated oversight section on the Supreme People’s Procuratorate’s 12309 website. The case details should be reported to higher-level procuratorial organs, requesting that the supervisory department re-examine the case with a focus on whether there has been improper cross-regional enforcement or profit-driven enforcement, in an effort to promote case dismissal, non-prosecution, or at least a narrowing of the charges at the source.
After the investigating authority has preliminarily classified the company under a specific charge, the focus should shift from loss prevention to loss mitigation. The appropriate response varies depending on the specifics of the case; it is recommended to consult a professional lawyer. The lawyer will engage with the case officers, based on existing materials, to discuss core issues such as the elements of the alleged offense, subjective culpability, and the nature of the business operations.
The public statements from the Supreme People's Court and the Supreme People's Procuratorate indicate that the state is consistently sending a clear signal to address law enforcement abuses such as cross-provincial arrests without jurisdiction, unauthorized account freezes, and profit-driven enforcement.
However, law enforcement practices vary by region, and for ordinary families, once faced with profit-driven enforcement—such as family members being taken away or accounts being frozen—passive compliance or blind resistance rarely resolves the situation. A more pragmatic approach is to seek assistance from a professional lawyer, leverage existing legal frameworks, identify procedural violations on a case-by-case basis, formally raise objections, and push the case into oversight procedures to bring it back onto the path of the rule of law.