A compliance misunderstanding that Web3 entrepreneurs and practitioners tend to overlook is that as long as the project is registered overseas and the server is deployed overseas, "natural compliance" can be achieved. But in reality, the core of compliance always lies in the business model, capital structure and operational substance of the project itself, rather than the superficial overseas architecture. In other words, overseas registration can be used as a part of compliance, but it cannot be a shield to cover up high-risk business practices. In particular, for teams that are still based in China and provide services to Chinese users, they should pay special attention to the legal boundaries and criminal compliance risks of the project.

In the previous article "Can projects go overseas to avoid the jurisdiction of Chinese law? Compliance misunderstandings that Web3 entrepreneurs cannot ignore", Lawyer Shao mentioned: A compliance misunderstanding that Web3 entrepreneurs and practitioners tend to ignore is: as long as the project is registered overseas and the server is deployed overseas, it can achieve "natural compliance". But in reality, the core of compliance always lies in the business model, capital structure and operational substance of the project itself, rather than the superficial overseas architecture. In other words, overseas registration can be used as a part of compliance, but it cannot be a shield to cover up high-risk business practices. In particular, for teams that still reside in China and provide services to Chinese users, they should pay special attention to the legal boundaries and criminal compliance risks of the project. This article will further analyze: As a developer, how to quickly determine whether a Web3 project belongs to a "criminal red line project"? We will use the four most common types of practice...

Since the ten ministries and commissions issued the "924 Notice" in 2021, many Web3 project parties have expressed their willingness to "actively respond to Chinese supervision and stop services in mainland China" and move the main project overseas. However, as we all know, there are still many crypto companies that continue to provide services to mainland users. At the same time, many developers are considering transitioning from Web2 projects to Web3. Compared with practitioners who have been deeply involved in Web3 for many years, technical personnel who intend to enter the game often pay more attention to the legality of the project, hoping to decide whether to actually enter the game on the basis of clarifying legal boundaries and effectively controlling risks. Whether it is a Web3 technician who has already entered the game, or an engineer and development manager who is planning to transition from Web2, they will encounter a common problem when the project starts from 0 to 1: where should the project be located?

In recent years, the voices against “distant-sea fishing” and “profit-seeking law enforcement” have been growing louder. But the three-foot-thick ice is not formed in a day. From a practical perspective, there are many reasons for this phenomenon. For example, due to financial pressure in some regions, case handlers need to “find rice to cook” and look for cases that can create economic benefits and “enforce the law for profit”. Another important reason is that my country’s criminal jurisdiction provisions are too broad. The jurisdiction provisions that “can be managed as long as it is related” have provided “distant-sea fishing” with a legal basis to support it. At the same time, since the second half of 2024, we have also seen the judicial system taking frequent actions to effectively curb distant-sea fishing, such as the “Prosecution to Protect Enterprises” special action carried out by procuratorates in various places, and the national procuratorates’ deployment of “special judicial supervision of illegal off-site law enforcement and profit-seeking law enforcement”. But the most powerful one is the new regulations issued by the Ministry of Public Security in March 2025[1].

Employees of big platforms like Binance and OKC are fine, so why should I, who work for a small platform, be arrested? Is this profit-seeking law enforcement?

In criminal cases, it is often the breadwinners of the family who are arrested, and those left behind are often the mothers and elderly parents who know nothing about the case. In this panic and helpless moment, how can the family members find a reliable lawyer for their family members as soon as possible, and what should the family members do to better help the parties? How to push the case in a favorable direction? Just last week, our criminal team handled a case in which a party was charged with fraud and successfully obtained bail for the party. So let's take this case as an example to talk about it with you.

Hong Kong, a world-renowned free port and international financial center, has a booming crypto-economic ecosystem long before the official preferential policies were introduced. Among them, virtual asset over-the-counter trading service providers (VAOTC) operating in the form of offline stores and online groups, together with native and overseas virtual asset trading service providers (VATP), provide investors with token exchange and deposit and withdrawal services, forming a unique market landscape. However, the high anonymity and borderless nature of virtual assets under blockchain technology have also opened the door to convenient illegal and criminal activities. A large number of cryptocurrency related to crime, especially stablecoins, have quietly flowed into the Hong Kong crypto-economy, bringing many problems such as capital pollution and legal and compliance risks to operators and ordinary investors. This article takes the recent experience of mainland college students going to Hong Kong to help people run errands to exchange U as the starting point, and deeply explores the damage caused by the Southeast Asian fraud industry to the Hong Kong crypto-economic industry.

In practice, many people have such cognitive misunderstandings: Currency exchange or introduction may be illegal, but it is definitely not a criminal offense; One's own private currency exchange behavior is very concealed and will not be easily discovered by judicial authorities; Helping others to exchange currency does not make any profit, so it definitely does not constitute an administrative violation or criminal offense; Selling the only US dollars and other foreign currencies to others to earn the exchange rate difference should not be illegal; I don’t care whether my family and friends are making money through currency exchange, I just give them my bank card number for free, and I haven’t done anything illegal; The customer asked me to help introduce the channel for currency exchange, I happened to know someone, so I introduced them to each other, and I didn’t receive any money from it, so there should be no risk; So, are there any legal risks in the above behaviors? If it is illegal, how should it be defined? Is it an administrative violation or a criminal offense? Where is the boundary between currency exchange and administrative violation or criminal offense?

In recent years, the voices against "distant-sea fishing" and "profit-seeking law enforcement" have been growing louder. But the three-foot-thick ice is not formed in a day. From a practical level, there are many reasons for this phenomenon. For example, due to financial pressure in some regions, case handlers need to "find rice to cook" and look for cases that can create economic benefits and "enforce the law for profit". Another important reason is that my country's criminal jurisdiction regulations are too broad, and the jurisdiction regulations of "anything that touches it can be managed" have provided "distant-sea fishing" with a legal basis to support it.

As a lawyer, I have represented hundreds of cases, big and small, over the years. But I always believe that for the parties and their families, no criminal case is too small.

In a criminal case, does the prosecutor have to prosecute the person who has been arrested in court? But in fact, this question from a deeper perspective is actually another question: Is the combination of arrest and prosecution really reasonable? How many wrongful cases have been caused by the combination of arrest and prosecution?

Compared with traditional industries, Web3-related jobs have higher salary levels; project parties are generally overseas, so the domestic employees recruited are generally distributed offices and do not need to punch in and out. For workers, this is a high salary and freedom, which is simply the best life. However, after entering the Web3 circle, many people will learn that there are relevant regulations such as the 94 Announcement and the 924 Notice in China, which will raise a big question mark in their hearts as to whether their work content is legal in China. Therefore, many Web3 practitioners will seem to be "very stealthy". While they are surfing Web3 at high speed on the Internet, they are very secretive about their profession in public offline occasions.

"This project was indeed organized and planned by me. I want to know how you found the manipulator behind it? As far as I understand, it is impossible for you to find me. What did you rely on?" The above are the case details disclosed by the Shen County Public Security Bureau in handling the "12.04" virtual currency pyramid scheme case. During the interrogation, the criminal suspect and pyramid scheme leader Zhang asked the police officer this question in great confusion.

On February 9, 2025, the People's Court Daily published a case: "Overseas virtual currency investment is not protected by Chinese law". This case is one of the typical cases of foreign-related commercial trials released by the Jiangsu Provincial Higher People's Court. However, in sharp contrast to this legal warning are the myths of getting rich quickly that are not uncommon in the currency circle. A few days ago, Lawyer Shao just heard from a friend that his friend had 100,000 U on Binance and entrusted others to operate the contract, earning the equivalent of 30 million yuan in a month. Although this kind of thing doesn't sound uncommon in the currency circle, I still can't help but sigh that this person's luck is really enviable, tut tut. The investment threshold of the currency circle is high. For ordinary people, entrusting financial management and investment on behalf of others is almost a common way to participate in investment. As the saying goes: "Professional matters are left to professionals." So, what does this guiding case issued by the court mean to friends who speculate in coins?

What should I do if I don’t have enough foreign exchange for studying abroad? Is it safe to exchange US dollars with a private person? In order to circumvent the US$50,000 foreign exchange limit per person per year, many people will seek private foreign exchange, looking for foreign exchange scalpers, underground banks, or foreign exchange companies to achieve the purpose of foreign exchange. So, are there any legal risks in private foreign exchange? Is it illegal to help friends exchange foreign exchange? If so, where is the boundary of potential legal risks?

In recent years, with the rapid development of digital payments, virtual credit cards have become an important tool that cannot be ignored in cross-border payment scenarios such as online shopping and service subscriptions. Virtual credit card platforms that provide such services are generally registered overseas and have obtained relevant qualifications (such as MSB licenses, electronic currency licenses, cryptocurrency-related licenses, etc.), but the platform's technical team, operation and promotion, customer service personnel, etc. are located in mainland China. Although some virtual credit card platforms have been investigated by judicial authorities for illegal business operations, in the absence of explicit legal provisions, whether such commercial behavior can be characterized as illegal business operations still needs to be analyzed in combination with the platform's specific business scenarios and cannot be generalized.

On December 5, 2024, the People's Court Daily published an article entitled "Criminal Characterization of Illegal Theft of Virtual Currency". The case described in the article is not particularly complicated. It is about A stealing B's virtual currency USDT and selling it for profit. However, the court staff's analysis of the case in the article makes people feel chilling, revealing a sense of "Although I don't understand blockchain and virtual currency, I think you should be sentenced heavily!", which makes people feel a little uncomfortable. Let's discuss two viewpoints in the article.

CCTV News recently reported[1] a case in which a woman fell in love online with a man who claimed to work for a confidential unit. As a result, she was deceived into investing in virtual currency. The person involved has been arrested.

In the eyes of many people, programmers (code farmers, engineers) are high-paying jobs with lucrative incomes, which are enviable, but in the eyes of criminal lawyers, this is also a high-risk industry that is extremely prone to legal risks. Lawyer Shao has previously represented many cases in which programmers were suspected of criminal offenses: The company's business operations were suspected of copyright infringement, and the programmer was implicated as an employee; The software company provided illegal website construction services to customers, and the company's legal person was suspected of aiding and abetting; The overseas virtual currency exchange was suspected of opening a casino, and the programmer was arrested as a domestic employee; ... The Changping District People's Court of Beijing recently issued a case in which an employee used his position to obtain virtual currency for profit, constituting the crime of illegally obtaining computer information system data, and was sentenced to three and a half years in prison. This article takes this case as an example to analyze relevant legal issues.

In recent years, we can see that many legal experts, scholars, lawyers, and judicial system case handlers have discussed how to legally and compliantly handle virtual currencies. Lawyer Shao has also shared relevant views (➡️ "Without a court ruling, the public security should not handle the virtual currency involved in the case!"). Regardless of what kind of disposal process the public security organs adopt to be compliant, in practice, there is a sufficient and necessary prerequisite for the case-handling unit to deal with virtual currency: the parties (suspects/defendants in criminal cases) need to take the initiative to return the stolen money and voluntarily turn it in. The issue that this article wants to discuss is that the virtual assets involved in the case have been frozen by the public security judiciary. If the parties refuse to cooperate with the case handlers to transfer their virtual currency from the exchange or digital wallet to the wallet address controlled by the case handlers, even if there is an effective court judgment in the future, can the virtual currency involved in the case be enforced?