Author: Liu Honglin

Yesterday in Mankiw’s Shenzhen office, I met a project party that made Lawyer Honglin couldn’t help but complain.

The person claimed to be the core figure behind a certain exchange, saying that they were now going to "focus on RWA" and had already attracted a lot of resources and financial support. The only thing they needed was the cooperation of a law firm. On the recommendation of a friend in the Web3 circle, they wanted to find lawyer Mankiw to help them issue some compliance documents and go through the process so that the project could be launched immediately.

At first, the atmosphere was quite "business-like". He talked endlessly about their team background, the global situation, and their understanding of the future vision... My colleague was almost confused by what he said. I didn't rush to interrupt until I asked a few basic questions.

I first asked him, what exactly are the so-called RWA underlying assets? Do they really exist? Is there any clear ownership certificate, title confirmation materials, or custody agreement? The other party hesitated and said "the partner is responsible", "we are discussing acquisition", "the process is still going on".

I then asked, who are you going to issue this token to? Are you planning to promote it in mainland China? As soon as the other party heard this, they began to emphasize that they are a "global platform", but it is clear that their exchange is active in various communities and offline promotion activities in the mainland, and the project assets are mainly traditional bosses in the mainland. In this case, if you say that it does not involve the mainland, I can only say that you don’t understand, but you are pretending not to understand.

Finally, I asked about the funding path. How do you plan to get the money you have raised? Do you have a segregated account? Will it be received overseas, or will some of the funds come directly from domestic users? The other party was obviously panicked at this time, saying "there will be operators to handle it", "users purchase assets with u", "there will be technical solutions to avoid it later", but after talking for a long time, he didn't make it clear about the cross-border path of funds.

I asked him seriously, but he avoided the question and shook his head, saying that he didn't understand Web3 or finance. In this situation, I was completely uninterested in saying anything more, so I could only end the meeting and send him away.

RWA is the new cover for scammers

This is not the first time I have encountered a team that uses the "RWA" banner to commit fraud.

Whether on TikTok or Xiaohongshu, or in Shanghai, Shenzhen or Hong Kong, you can always see a large number of people calling themselves "RWA project consultants", "asset chain operators" and "chain reform experts". They set up a WeChat group, print a business card and start talking about structural design, financing planning and compliance paths.

Most of the customers are of two types: one is the owners of small and medium-sized enterprises who are facing tight cash flow and have believed the idea that "financing can be obtained by putting assets on the chain"; the other is investors or entrepreneurs in the transition period who want to catch the trend but have not yet caught up with the RWA train.

This type of scammers love to create hype. Every other day, you can see the "RWA Ecosystem Conference" and "Chain Reform Financing Salon". The stage is full of enthusiasm, saying that blockchain 3.0 is being implemented in the real industry, but there are actually two types of people sitting in the audience: those who want to issue coins and those who want to pull the market. The "consulting services" they talk about are essentially matchmaking intermediaries, matching funds and projects, and raising the price at the same time. They don't care whether you are breaking the law or not, as long as you can get the deal.

The routine is not complicated. First, they tell a global narrative, saying that the United States is also doing RWA, and Hong Kong legislation is also for this purpose; then they take out a fancy PPT, saying "anchoring 500 million assets, official approval has been obtained, and cooperating with many universities"; then they find a few intermediary institutions and service providers willing to cooperate, prepare some materials, issue a "legal opinion", and even directly claim that "it will be online soon at a certain big law firm."

Where are the real underlying assets? How does the capital flow? Is there any illegal public fundraising in mainland China?

No one dared to answer because they would be exposed if they asked.

Friendly reminder from attorney Mankiw

Many people think that what scammers fear most is tightened policies and media exposure, but that is not the case. What they fear most is that you have a little knowledge of legal knowledge and dare to be the kid who exposes the emperor's new clothes.

I met that guy in the office, but I didn't ask him any complicated legal questions, just common business knowledge.

The first question I asked him was where the underlying assets were and whether they really existed. Are there any official documents on property rights, title confirmation, and custody? He started to play Tai Chi, saying "the assets are the responsibility of the partner", "we are discussing acquisition", "the process is still going on", but he could not produce any decent materials. To put it bluntly, he just wanted to raise funds and make money, and he didn't care about how to implement it later.

The second question, I asked them who they were going to issue this token to, and whether they were going to promote it in mainland China. He quickly said it was a "global platform", but the entire set of materials was clearly in Chinese, and the promotion path was WeChat groups + communities + KOLs, and even the white paper directly stated "serving Chinese investors". If you say it is not for mainland China, then you are lying.

The third question was, how do you deal with the money you have raised? Have you set up a segregated account? Are the funds concentrated overseas, or will some of them be circulated domestically? I further asked, how do you plan to cross borders? This person was obviously panicked, saying "we can circumvent it technically" and "there will be operators in the middle", but he could not explain the details. It can be heard that he did not think about it, but he simply did not think about how to transfer the money safely without breaking the law.

Many RWA projects rely on these gray areas to fish in troubled waters. If you ask about assets, they will talk about vision; if you ask about the funding path, they will talk about global strategy. In fact, what they want is not legal services, but an endorser, a "legal shell" willing to stamp.

Therefore, Lawyer Honglin hopes to use this article to remind all friends of three points, which can help you effectively avoid 99% of scammers.

First, please make sure you understand the authenticity of the underlying assets and the path to confirm ownership. Is it an existing asset or an expected asset? Is it self-owned or custodial? Is there a property ownership certificate? Are there any audit materials? These all determine whether the token you get is air.

Second, make sure the sales target and financing method are clear about whether they cross the red line. The definition of illegal fundraising in mainland China is not lenient. No matter how "decentralized" you say it is, as long as there is offline promotion through WeChat targeting mainland residents, you cannot escape the judgment logic of "raising funds from an unspecified group of people."

Third, it is important to understand how the funds come in, how they go out, and who is in control. Is there a segregated account? Is there a trust? Is the purpose of the funds clearly stated? How does the funds enter the country from abroad? Is it legal and compliant?

As a law firm focusing on legal services for the Web3.0 industry, we always adhere to one direction: to ensure that Web3.0 occurs legally in China. We have our love and belief in this industry, but we also have our standards and bottom line.

Mankiw Law Firm does not take illegal cases, nor will it "dangle" illegal projects. We would rather do less business than be the scapegoat for others. If you really want to do something about a project, welcome to talk to us; if you just want us to cooperate with the work and say "don't ask so many questions" right from the start, we probably don't want to hear your nonsense.