2026 Police 'Card-Breaking' Operation Escalation: Criminal Law Risks of OTC Withdrawals and the Moat of Licensed Platforms

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When withdrawing funds through cryptocurrency OTC transactions, you must pay close attention to the criminal law risks brought by the escalation of the 2026 police “card-breaking” operation. If OTC withdrawals become involved in telecom fraud, money laundering, or similar chains, you will face criminal liability. You can choose licensed platforms to obtain compliance protection, professional risk control, and fund security. You should understand how compliant platforms help Chinese-speaking users effectively avoid legal risks.

Key Takeaways

• In 2026, the police “card-breaking” operation escalates, and OTC withdrawals face higher criminal law risks; users must pay attention to the legitimacy of fund sources.
• Choosing licensed platforms for cryptocurrency transactions provides compliance protection and fund security, reducing legal liability.
• Understand the application of mainland China’s criminal law to cryptocurrencies to avoid being deemed as money laundering or participation in illegal activities due to inability to prove fund sources.
• Licensed platforms follow strict KYC and AML processes, effectively helping users avoid financial crime risks and enhancing transaction security.
• Users should regularly monitor policy changes, proactively raise compliance standards, and ensure their own fund security and legal rights.

Police “Card-Breaking” Operation Escalation and Policy Trends

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New Policy Focus

You need to pay attention to global regulatory trends on cryptocurrency-related financial crimes in 2026. In 2025, international regulatory authorities have already strengthened sanctions on cryptocurrency-related financial activities, particularly targeting behaviors deemed to facilitate illegal finance and sanctions evasion. The U.S. Treasury’s Office of Foreign Assets Control continues to impose sanctions on cryptocurrency participants involved in ransomware, state-linked evasion networks, and sanctions-evasion services. The EU has also adopted broader sanctions measures, focusing on Russian cryptocurrency service providers and the ruble-based stablecoin A7A5. These policies reflect the increasingly prominent role of digital assets in sanctions evasion and cross-border trade.

• International regulatory authorities increase sanctions on cryptocurrency financial activities
• U.S. Treasury continues imposing sanctions on cryptocurrency participants
• EU focuses on cracking down on cryptocurrency service providers and stablecoins from specific countries

As a Chinese-speaking user, you must understand that these policies not only affect global markets but also directly impact the cryptocurrency environment in mainland China. After the escalation of the police “card-breaking” operation, relevant policies will more strictly combat illegal fund flows conducted through cryptocurrencies.

Impact on OTC Withdrawals

The escalation of the police “card-breaking” operation has a very direct impact on OTC withdrawals. If you exchange cryptocurrency for fiat currency through OTC channels, the fund chain becomes more transparent, making it easier for police to track fund sources and destinations. After policy escalation, any OTC withdrawal behavior involving telecom fraud, money laundering, or illegal fund flows will face higher criminal law risks.

You need to note that the police “card-breaking” operation escalation targets not only traditional bank accounts but also fund flows between cryptocurrency wallets and OTC trading platforms. If you cannot prove the legitimacy of fund sources, you may be deemed to have assisted money laundering or participated in illegal financial activities. Policy changes significantly increase the legal risks of OTC withdrawals, especially in mainland China, where police will use new technological means to strengthen monitoring of cryptocurrency fund chains.

Tip: You should prioritize compliant, licensed platforms for cryptocurrency transactions to avoid involvement in criminal cases due to OTC withdrawals.

Criminal Law Risks of OTC Withdrawals

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Criminal Law Provisions

When conducting OTC withdrawals, you must understand the application of mainland China’s criminal law to cryptocurrency-related behaviors. After the escalation of the police “card-breaking” operation, judicial authorities treat cryptocurrencies as property and apply criminal law provisions on money laundering, assisting information network crimes, illegal business operations, etc. If you cannot prove the legitimacy of fund sources, you may be deemed to have assisted money laundering or participated in illegal financial activities.
Common applicable provisions include:

• Money Laundering Crime: If you knowingly assist others in transferring or exchanging crime proceeds through OTC withdrawals using cryptocurrency, you may constitute money laundering.
• Crime of Assisting Information Network Criminal Activities: If you provide funding channels for telecom fraud, online gambling, or other criminal activities, you may face criminal liability.
• Illegal Business Operation Crime: If you organize or assist others in large-scale OTC withdrawals without relevant financial licenses, you may be deemed to engage in illegal business operations.

After the escalation of the police “card-breaking” operation, judicial authorities will comprehensively judge whether you are suspected of a crime based on multi-dimensional evidence such as fund flows, transaction frequency, and involved amounts. You need to pay special attention that, under the principle of invalid contracts, courts will deem OTC withdrawal agreements related to crimes invalid and will not uphold civil rights claims.

Case Analysis

You can refer to the following typical cases to understand the application of OTC withdrawals in the criminal law field:

Although the Gary Martin case occurred in the United States, its essence is highly relevant to the criminal law risks of OTC withdrawals in mainland China. If you participate in large-scale fund flows and cannot prove the legitimacy of fund sources, you are highly likely to be deemed as money laundering or assisting crime.
In mainland China, after the escalation of the police “card-breaking” operation, investigation and prosecution efforts in similar cases have significantly intensified. If you assist others in exchanging cryptocurrency to USD through OTC channels and are involved in criminal chains such as telecom fraud or online gambling, you are highly likely to face criminal liability.

You also need to pay attention to the role of OTC withdrawals in money laundering chains:

You can see that criminals typically exploit OTC withdrawals in the following ways:

• First convert illegal cash to cryptocurrency.
• Obfuscate fund sources through fast transfers, privacy coins, or mixing services.
• Finally cash out to USD through OTC trades or exchanges in weakly regulated jurisdictions.

If you participate in the above chain, after the escalation of the police “card-breaking” operation, you are highly likely to be identified as a key link in the money laundering chain.

Legal Consequences

If you become involved in criminal chains such as telecom fraud, online gambling, or money laundering during OTC withdrawals, you will face serious legal consequences. After the escalation of the police “card-breaking” operation, judicial authorities will intensify tracking of cryptocurrency fund flows. Once deemed to have assisted crime, you may face the following consequences:

• Criminal Penalties: You may be sentenced to imprisonment, fines, or even long-term incarceration in serious cases.
• Asset Freeze and Confiscation: Funds obtained through OTC withdrawals can be frozen and confiscated by police, with no legal claim to legitimacy.
• Credit Damage: Once listed as involved, it will affect personal credit and future financial activities.
• Civil Contract Invalidity: OTC withdrawal agreements signed with others will be deemed invalid by courts, with no civil litigation rights enforceable.

As a Chinese-speaking user, you must attach great importance to the criminal law risks brought by the escalation of the police “card-breaking” operation. You should proactively choose licensed, compliant platforms for cryptocurrency transactions to avoid involvement in criminal cases due to OTC withdrawals and safeguard your fund security and legal rights.

Advantages of Licensed Platforms

Compliance Advantages

Choosing licensed platforms for cryptocurrency transactions provides higher compliance protection. Licensed platforms such as Biyapay typically strictly follow international standards such as KYC (Know Your Customer) and AML (Anti-Money Laundering), ensuring the legitimacy of every transaction. You will find that compliant platforms not only enhance customer confidence but also attract more institutional clients, reduce regulatory risks, and optimize operating standards. The table below shows the main advantages of compliant platforms:

When opening an account on a licensed platform, the platform will require you to complete customer due diligence, identity verification, fund source verification, and other processes. These measures not only protect your own rights but also effectively prevent illegal funds from entering.

Risk Control and Security

When trading on licensed platforms, you can enjoy multiple risk control and security measures. The platform conducts regular legal audits to ensure all business complies with the latest regulations. You will also benefit from comprehensive contract management and employee training systems, which reduce operational and legal risks. Licensed platforms typically hire professional legal advisors to help you navigate complex legal environments. Your data on the platform is also strictly protected to prevent information leaks.

Licensed platforms also implement the following risk control measures:

• Client fund segregation, ensuring your assets are separated from the platform’s own funds
• Insurance requirements, providing additional protection for your funds
• Dispute resolution procedures, helping you quickly receive support in case of disputes

These measures collectively build the platform’s security moat, allowing you to trade with greater peace of mind.

Platform Comparison

If you compare licensed platforms with OTC withdrawal channels, you will find significant differences in compliance, user protection, and experience. Licensed platforms must follow strict KYC/AML procedures, obtain multi-jurisdictional regulatory licenses, and provide strong user protection and insurance coverage. OTC channels may lack regulation, exposing users to higher counterparty risks. The table below shows the main differences:

By choosing licensed platforms such as Biyapay, you can obtain higher-quality services and stronger legal protection, significantly reducing risks from compliance issues.

Risk Mitigation Recommendations

User Selection Recommendations

As a Chinese-speaking user, choosing compliant platforms for cryptocurrency withdrawals is crucial. You should prioritize licensed platforms, especially those with regulatory licenses in Hong Kong and other regions. When opening an account, cooperate with the platform to complete identity authentication and fund source verification—these processes help protect your fund security. You should avoid large withdrawals through unclear channels or personal OTC, as these methods lack regulation and easily become involved in money laundering or telecom fraud chains. You also need to check whether the platform has a sound internal control system and can promptly identify and mitigate transaction risks. You can refer to whether the platform regularly undergoes legal audits and has dispute resolution mechanisms—these are key indicators of platform compliance.

Tip: When selecting a platform, prioritize security measures such as fund segregation, insurance protection, and multi-factor identity verification to further reduce legal and operational risks.

Practitioner Compliance

As a cryptocurrency industry practitioner, you must strictly comply with mainland China and international anti-money laundering and counter-terrorism financing regulations. You need to establish a sound internal control system to ensure every transaction can trace fund sources and destinations. You should be familiar with legal procedures for asset seizure, understand how to apply for seizure orders and how to legally challenge illegally obtained evidence through improper searches or seizures. You also need to adapt to complex sanctions regimes to prevent criminals from using technology to evade regulation. You can enhance industry compliance through collective solutions, such as sharing risk information with other licensed platforms. You also need to regularly train employees to raise compliance awareness and ensure the company can promptly respond to policy changes.

In daily operations, you must follow sanctions regimes to avoid high fines or criminal liability due to violations. You should also pay attention to rights claim procedures under the Civil Asset Forfeiture Reform Act to protect the legitimate rights and interests of the company and clients.

You face criminal law risks during OTC withdrawals, especially after the escalation of the police “card-breaking” operation. Choosing licensed platforms provides compliance protection and the latest legal resources, reducing legal liability. You should strengthen due diligence, comply with KYC and AML requirements, and prevent financial crimes. You also need to monitor policy changes and proactively raise compliance standards. Industry self-regulation and transparent governance will promote the healthy development of the cryptocurrency market.

FAQ

Is OTC Withdrawal Illegal in Mainland China?

If you conduct OTC withdrawals in mainland China and are involved in money laundering, telecom fraud, or cannot prove fund sources, judicial authorities will deem it illegal. You must comply with relevant mainland China laws and choose compliant platforms to effectively avoid criminal risks.

How Do Licensed Platforms Help Chinese-Speaking Users Reduce Legal Risks?

When trading on licensed platforms, the platform executes KYC and AML processes, strictly verifying identity and fund sources. These measures help you stay away from money laundering chains and reduce legal liability due to policy changes.

What Consequences Do Chinese-Speaking Users Face If OTC Withdrawals Are Investigated by Police?

Once investigated, you may face account freezes, asset confiscation, or even criminal prosecution. You cannot assert rights through civil litigation. You should proactively cooperate with the investigation and promptly provide legitimate fund proofs.

How Do Service Fees on Licensed Platforms Differ from OTC Channels?

Withdrawals on licensed platforms usually involve transparent service fees, priced in USD. OTC channel fees are opaque and may include hidden costs. You should prioritize platforms with transparent fees to safeguard fund security.

How Can Chinese-Speaking Users Determine If a Platform Is Compliant?

You can check whether the platform holds regulatory licenses in Hong Kong or other international financial jurisdictions and whether it publicly discloses compliance reports. You should also pay attention to whether the platform regularly undergoes legal audits and has comprehensive customer identity verification processes.