In recent years, with the rapid development of the Web3 industry, more and more programmers, smart contract developers, and outsourced technical teams have participated in the system construction, contract deployment, and platform operation and maintenance of cryptocurrency projects as on-chain engineers and project consultants. However, many projects under the names of "blockchain incentives", "token rebates", "GameFi game revenue", "decentralized node rewards", etc., are actually operating pyramid schemes such as "hierarchical promotion", "rebates for recruiting people", and "locked warehouse release", and there is a legal risk of being classified as organizing and leading pyramid schemes.
Judging from public judicial precedents in recent years, in many cases involving virtual currency pyramid schemes, although technical participants such as programmers and contract developers did not participate in promotion and publicity or fund operations, they were ultimately identified as "playing a key role in the implementation of pyramid schemes" because they were responsible for developing rebate logic, designing token models, or deploying smart contracts with a tiered reward structure. They were then treated as accomplices and accessories, and some were even classified as "organizers and leaders."
In view of this, this article will combine typical cryptocurrency project cases and, from the perspective of technical developers, systematically analyze the common criminal risk exposure points and judicial qualitative logic in Web3 positions, focusing on the following five major issues:
• What behaviors might a programmer engage in that could lead to him being considered an accomplice in a pyramid scheme?
• Does the technology outsourcing party constitute an accomplice in assisting the pyramid scheme organization?
• How are CTOs and technical partners defined as “organizers” in the judiciary?
• How can technology actors fight for innocence, non-prosecution, or downgrading of characterization?
• How can developers identify risks in advance, define technical boundaries, and build legal defenses?
Finally, based on his practical experience, Lawyer Shao provides actionable risk prevention suggestions for Web3 technology participants, helping technical personnel improve their ability to identify sensitive signals and clarify behavioral boundaries during project development, so as to avoid being accidentally involved in criminal cases due to unclear role positioning and misjudgment.
I Author: Lawyer Shao Shiwei
1
Web3 Projects Involved in MLM
Typical judicial cases
In recent years, the number of cases in which cryptocurrency projects are classified as pyramid schemes due to suspected "recruiting people for rebates" and "capital operation" has continued to increase. In these cases, programmers, technical outsourcing teams, contract developers and other roles often become the focus of judicial authorities. After all, whether it constitutes a pyramid scheme often depends on the platform's business structure and underlying technical logic.
For example, in the PlusToken case , the “Smart Dog Arbitrage System” developed by the technical team was used by the platform to promote “more than 10% static income per month, and even up to 60% income”, becoming a key gimmick to attract user investment. The court ultimately determined that the function constituted a technical implementation tool for the pyramid scheme structure, and several people involved in the case were sentenced to 2 to 11 years in prison for organizing and leading pyramid schemes.
In the EOS Ecological Platform case, the defendant Chen Mouzhi and others jointly established the EOS Ecological Platform (hereinafter referred to as the EOS Platform) pyramid scheme organization, which provided digital currency value-added services, developed members through "holding currency value-added", "static income + dynamic rebate" and other methods, built a multi-level team structure, and used EOS coins as the basis for investment and rebates. The platform was identified as a pyramid scheme crime, and several employees were identified as principal and accomplices for participating in the daily operation and system maintenance of the pyramid scheme organization and were dealt with together.
In addition, in projects such as blockchain games, NFT digital collections, and coin issuance, if developers design contract modules containing logic such as "tiered rebates," "locked position release," and "node commissions," they are also easily included by judicial authorities in the category of technical supporters of pyramid schemes and become the subject of accountability.
From the above cases, it can be seen that whether technical personnel bear criminal responsibility depends on whether their actions substantially participate in the construction, deployment or maintenance of the platform's pyramid scheme structure.
2
Technical personnel were held accountable
Three typical identities
Based on the judgments of many virtual currency pyramid schemes in recent years, the technical participants who are held accountable can be roughly divided into the following three categories. When determining whether a crime has been committed, the judicial authorities usually make a comprehensive judgment based on their specific role in the project, their understanding of the project's business model, and whether their technical behavior has played a key supporting role in the establishment and operation of the pyramid scheme structure. The following will explain each category in detail.
1. Project Technical Leader/CTO/Technical Partner [High Risk]
Such personnel are usually at the core of the project team, with deep involvement and comprehensive access to information. In projects such as blockchain games, virtual wallets, and mining machine leasing, technical partners are often directly responsible for key links such as platform architecture construction, economic model design, and rebate system deployment.
Although some technical leaders did not actually participate in recruiting people to promote the activity, since their technical behaviors directly built the operating basis of the pyramid scheme structure, judicial authorities usually classify them as "organizers", "leaders" or "persons who play a key role in the activity" and hold them accountable when making their characterizations.
This type of technical role is regarded as the "core builder" of the pyramid scheme model, and judicial authorities often classify them as organizers, leaders or key accomplices.
2. Technology outsourcing companies/freelance developers [high-risk areas for disputes]
In the cryptocurrency/Web3 projects, it is very common to see outsourcing teams or independent developers who complete system development through contractual cooperation. Although these people are not members of the platform, and may not hold shares or participate in operations, the content they deliver often involves key functional modules such as the inviter structure, hierarchical rebate algorithm, and promotion path design.
When judicial authorities determine whether a crime has been committed, they usually focus on the following aspects:
Do you know that the project adopts a multi-layer rebate model?
Whether you are aware that the incentive logic has characteristics of pyramid schemes;
Whether to continue to provide function development or online maintenance support while knowing the risks.
If the technical personnel can prove that they only delivered according to the contract, did not participate in the business model decision-making, and did not obtain tokens, rebates or other consideration from the project other than the contract price, they still have a chance to argue that they did not commit a crime or receive a lighter sentence.
3. Smart contract development/economic model consultant [large defense space]
During the token issuance or economic model design phase of some Web3 projects, the project owners often introduce external technical personnel as consultants or contract developers to assist in the design of token structures, profit-sharing logic construction and deployment. Although such technical behaviors occur in the early stages of a project, once pyramid scheme-like mechanisms such as “tiered rebates,” “dynamic returns,” and “locked position release” are embedded in the contract, their effects will continue to be embedded in the underlying structure of the platform.
From the perspective of judicial authorities, even if such technical personnel do not participate in daily promotion and operation and maintenance, if the technical logic they write is used to attract investors and promote project fission and expansion, their behavior may also be characterized as "assisting in building a pyramid scheme structure" and bear criminal responsibility for being an accomplice or aiding and abetting the crime.
However, in practice, there is still a lot of room for defense if the following points are met:
The developed contract is a general logic module, not a pyramid scheme-specific structure ;
Did not participate in the launch, promotion and ongoing maintenance of the platform ;
I do not hold any coins, receive any rebates, or serve as a consultant or partner.
The judicial authorities are more concerned about whether there is "subjective knowledge + objective behavior". If the development process itself is clearly separated from the project's business model, they can strive for innocence or non-prosecution by providing evidence of the development boundaries.
3
Developers are prone to stepping into the "MLM minefield"
Five typical business scenarios
Judging from the judicial practice in recent years, the cases where Web3 technicians are held accountable in cryptocurrency projects are no longer limited to the core technology leaders of the platform. With the diversification of project forms, more and more programmers, outsourced developers, contract deployers, etc. have become the focus of judicial authorities because they participate in the construction of key system functions such as "incentive structure" and "rebate logic".
The following are common business scenarios where technicians are involved in related cases:
1. Chain Games/GameFi Project: Developing “Task Incentives” and “Profit Sharing Props” Systems
Many blockchain games/GameFi projects often use phrases such as "Play to Earn", "Invite friends to hunt for treasures and upgrade together", and "Community partner mechanism" to package their economic structure in external publicity to attract players to participate in investment.
If a programmer is responsible for developing modules such as "invitation rewards", "level rebates", and "brick-moving incentives", even if their logic is manifested as game functions, from the perspective of judicial authorities, if the structure is linked to profit sharing by recruiting people, it may be identified as the technical support for a pyramid scheme system.
2. NFT/digital collection platform: design “invite rebate” and “level unlock” functions
Although some NFT projects are packaged as "artworks" and "limited sales", the core gameplay is actually "invitation fission + graded commission". For example, programmers are responsible for developing functions such as "invitation registration rebate" and "grade-linked rewards". Especially when these logics are directly tied to token realization, technical behavior may be considered to play a key role in the structure of driving platform revenue growth.
3. Token issuance/IDO/private placement projects: deploy smart contracts with rebate structures
Contract developers usually participate in token issuance, economic model building, etc. in the early stages of a project. If the smart contract they participate in deploying embeds functional logic such as "referral code registration", "locked position release", "multi-level rebate", and the structure is later determined to constitute a pyramid scheme, then even if the technicians do not participate in the promotion, they may still be regarded by the judicial authorities as "assistants" or "accomplices" in building a pyramid scheme.
4. Virtual mining machines and computing power leasing platforms: Participate in the construction of the “computing power rebate system”
Some platform projects claiming to be “cloud computing power subscription” and “daily settlement income of mining machine subscription” often attract users to participate in the name of “lying down to earn money in mining”, “intelligent profit sharing” and “national mining farm”. The underlying logic is essentially a dual-track structure of “static income + dynamic rebate”. If programmers are responsible for the core functional modules such as income calculation, hierarchical rebate, computing power allocation, etc., although they play a technical implementation role in the project, from the perspective of judicial organs, if the system directly supports key links such as attracting new funds and rebate expansion, it may be identified as providing technical support for the pyramid scheme structure, and thus face the risk of being held accountable.
5. “DAO Community” or “Blockchain Autonomous Organization” Project: Assist in developing a hierarchy and fission reward mechanism
Some projects use "decentralization" and "community governance" to package investment structures, but actually set rules such as "node rebates", "airdrop rewards", and "recommended upgrades" in the background. If programmers develop such reward systems and hierarchical binding logic, even if they do not hold tokens or enter the management group, they may be regarded by judicial authorities as participants who "assist in expanding the user structure" and included in the scope of investigation.
In summary, the focus of judicial authorities in determining the criminal liability of technical personnel is not whether they have made profits from promotion, but whether they are aware of the characteristics of pyramid schemes and provide key technical support. Programmers, contract developers, and outsourcing teams should do a good job of risk identification and boundary demarcation at the beginning of cooperation to avoid "inadvertently" falling into the path of accomplice identification.
4 Conclusion
In the judicial handling of cases involving Web3 projects, technical roles such as programmers, contract developers, and outsourced technology parties often become the focus of verification during the case handling process because they are responsible for the development and deployment of system functions.
This article combines multiple public cases, from blockchain games, coin issuance platforms to computing power projects, to sort out the common types of cases and business scenarios involving technical personnel, and presents the basic judgment logic of judicial authorities in identifying technical accomplices - whether the technical personnel support the project's pyramid scheme structure through technical means, and whether they have the corresponding subjective intent and objective behavior.
In the "next part" of this article, we will further analyze how judicial authorities determine the boundaries of "technical involvement" when convicting a crime, and how technical personnel, when facing the risk of criminal liability, combine their own roles with the chain of evidence to strive for defense space for innocence, lighter crimes, or even non-prosecution.
