A reminder from a case

According to public reports, in some duty-crime cases involving crypto, one of the key lines of inquiry for discipline-inspection or judicial authorities was whether there was a cold wallet and a paper record of the seed phrase. This is a reminder: once a seed phrase is written down, it is itself a very high-risk piece of “physical evidence” and a point of theft risk.

Core principles for lawful holders

First, to be clear: anyone lawfully investigated by discipline-inspection or judicial authorities for suspected wrongdoing must cooperate and tell the truth, and must not conceal, transfer or destroy relevant assets or evidence. That is a legal obligation, not something “storage techniques” can address. For lawfully held crypto, the core goals of seed phrase storage are protection against theft, robbery and accidental loss, while keeping assets traceable for inheritance and emergencies.

Common but risky practices

  • Storing the seed phrase online (cloud drive, email, etc.) — once the account is compromised, the assets are exposed
  • Keeping it only in your head with no backup — if you die or become incapacitated unexpectedly, the assets may be lost forever
  • Entrusting it to a single third party — risk of misappropriation or extortion

A more robust approach

  • Metal backups kept offline, in several copies at separate locations, protecting against both disaster and theft
  • Cryptographic splitting (such as multisig or threshold signatures), so that no single leak gives access to all assets
  • Making specific arrangements for crypto assets in your will or estate plan, with a trusted inheritance path, to avoid “the person is gone and the money can’t be found” or “the money is gone and someone is still held responsible”

How Wang Xin’s team can help

  • Crypto asset inheritance and will planning
  • Defense in crypto-related criminal cases
  • Defense in duty-crime cases

If you need to plan storage and inheritance of crypto assets, contact Wang Xin: phone +86 186-0113-9509, WeChat wang223040.

Quick answers

What are risky ways to store a crypto seed phrase?
Storing it online (cloud drive, email), keeping it only in memory with no backup, or entrusting it to a single third party — each risks theft, permanent loss on death or incapacity, or misappropriation.
What is a safer approach to seed phrase storage?
Offline metal backups in several separate locations, cryptographic splitting such as multisig or threshold signatures, and specific provision for crypto assets in your will or estate plan.
Can seed phrase storage be used to hide assets from investigators?
No. Anyone lawfully investigated must cooperate truthfully and must not conceal, transfer or destroy assets or evidence. Storage advice is only for protecting lawfully held assets.

This is an English edition of Wang Xin’s original Chinese article, 助记词到底该怎么保管？从一起职务犯罪案说起. It explains the law of the People’s Republic of China in general terms and is not legal advice for any particular case; outcomes depend on the specific facts and on how local authorities apply the rules.