Criminal Law Risks of KOL Promotion from the Perspective of Digital Collectibles

Only by maintaining reverence and advancing with compliance can one remain invincible when the tide recedes.

Introduction

In public perception, KOLs are opinion leaders and industry pioneers, often regarded as “professional technical experts” who primarily express personal views. However, why are KOLs in Web3-related fields and derivative industries frequently subject to criminal convictions? From what perspectives can lawyers provide recommendations to KOLs for mitigating criminal risks? Given that the author has previously defended a defendant who was a KOL in a digital collectibles fraud case, this article will, starting fromthe defense experience in the digital collectibles industry, jointly explore the boundaries of “suspected criminal offenses” for KOLs in Web3-related fields from a legal perspective.

This article reflects only the author’s personal views and does not constitute legal advice or recommendations, nor does it constitute a determination as to whether any KOL’s conduct constitutes a criminal offense. Whether certain acts are deemed criminal offenses is highly case-specific and requires adjudication by judicial authorities in accordance with law based on all evidence.

Definition of KOL

In a legal context, KOL (Key Opinion Leader) is not a strict legal concept but refers to individuals or entities that possess certain influence, appeal, and a follower base in specific fields. In the digital collectibles industry, common types of KOLs typically include:

Seasoned collectors:Those who earn the trust of followers through their unique insight and extensive collecting experience.
Industry analysts:Those who interpret projects and analyze market trends through articles, videos, and other mediums.
Community leaders:Operating large-scale communities, capable of rapidly generating popularity and attention.

Its core characteristic lies in"influence", which can directly or indirectly affect followers' investment decisions and purchasing behavior. For project sponsors (platforms), this influence translates into a need for KOLs to endorse and promote their projects.

Why does the digital collectibles industry need KOLs?

The characteristics of the digital collectibles industry align naturally with the role of KOLs:

1. High information asymmetry:Project sponsors possess all information, while ordinary investors face complex blockchain technology, ambiguous artistic value, and uncertain rights, making it difficult to independently assess authenticity and value. KOLs act as "information filters" and "value discoverers."

2. Scarcity of trust:In a decentralized and anonymous environment, the cost of establishing trust is extremely high. KOLs leverage their long-accumulated reputation to provide "credit endorsement" for projects; a single statement of "I am bullish" from a KOL is more effective than extensive promotional efforts by the project sponsor.

3. Community-driven nature:The popularity of digital collectibles heavily relies on community consensus and FOMO (fear of missing out). KOLs are key nodes in creating and amplifying such sentiment, capable of rapidly driving traffic to projects and facilitating a "cold start."

4. Exceptionally high marketing efficiency:Compared with traditional advertising, the targeted dissemination and whitelist access privileges associated with Key Opinion Leaders (KOLs) yield higher conversion rates, serving as an effective instrument for project sponsors to rapidly acquire users.

Common Scope of Work for KOLs

Although the tasks performed by KOLs appear diverse, their core activities revolve around“marketing” and “promotion”Expand:

Content Creation and Publication:Producing videos, authoring articles, and posting updates on social media platforms to analyze, evaluate, and recommend specific digital collectible projects.
Live-Stream Commerce and Investment Solicitation:Showcasing digital collectibles during live streams, publicly disclosing personal purchase records, and explicitly encouraging followers to “buy” and “hold.”
Community Operations and Management:Disseminating project-related information within communities, addressing inquiries, fostering engagement, and maintaining community vitality.
Co-branded promotion:Accepting advertising commissions from project sponsors and publishing promotional copy on their social media accounts.
Organizing "whitelist" campaigns:Securing priority purchase eligibility (whitelist status) for followers through organized campaigns, thereby enhancing follower engagement and loyalty.

Legal rationale for classifying KOLs as criminal accomplices

Why do judicial practices classify KOLs who merely engage in promotion as accomplices to fraud? The core legal rationale lies in the theory of "joint crime."

Under the Criminal Law, joint crime refers totwo or more persons jointly and intentionally committing a crimeOnce a KOL crosses the mere"information dissemination"boundary and forms with the project sponsor a"joint criminal intent", or engaged in"aiding conduct", may constitute an accomplice.

The primary grounds for conviction include:

1. Subjective "knowledge" or "constructive knowledge": This is the key to conviction.

Knowledge:There is evidence proving that the KOL explicitly knew that the project promoters were engaged in "pie-in-the-sky" or "air projects" (lacking any support from actual value), and that the model was a"pass-the-parcel"of the scam, yet still promoted it. For example, they had private communications with the project team and were aware of the inner workings of the Ponzi scheme.
Constructive knowledge:Although the KOL claims ignorance, based on their professional expertise, industry experience, and common social sense, they should have been able to determine that the project posed significant risks or was even a fraud. For example, the project's business model is clearly illogical, promises abnormally high returns, or involves false packaging of the technical team. Courts tend to find that a KOL with professional capabilities "should" have been able to identify these red flags.

2. Objective "conduct": Their promotional activities directly provided substantial assistance to the fraudulent activities or produced substantial results.

Take fraud as an example. The chain of causation for fraud is: “the perpetrator engages in fabricating facts or concealing the truth (reaching the threshold of seriousness under criminal law) → the victim falls into a mistaken belief (with a causal link between the two) → the victim delivers property based on such mistaken belief → the perpetrator illegally appropriates the property.” If a KOL’s conduct causes numerous victims to believe in and invest in a scheme, judicial practice will often characterize such conduct as“accomplice liability”。

Expanding the scope of the project sponsor’s criminal impact:Precisely targeting and disseminating the scheme to a large number of potential victims.
Helping the project sponsor enhance the deceptive nature of the scheme:Leveraging the KOL’s reputation to lower followers’ guard and induce them to believe the project’s false representations.
Enabling the project sponsor to successfully obtain illicit funds:The KOL’s traffic-driving activities directly resulted in substantial investor capital inflows, establishing a causal relationship with the harmful consequences.

3. Existence of an interest tie with the project sponsor: If a KOL’s compensation is directly linked to sales volume or the number of new users recruited, or is settled through arrangements such as “revenue-sharing” or “fixed monthly salaries,” this forms a “community of interest.” Such arrangements strengthen courts’ determination of “joint criminal liability.”

How can KOLs protect themselves?

Before discussing risk mitigation for KOLs, we first identify which behaviors are highly likely to be deemed criminally suspect. The following behaviors carry legal risks not only in the KOL industry but also in other promotional and marketing contexts, particularly where they involve “fraudulent projects,” “front-running schemes,” or “guarantees of principal protection.”

(1) Identification of High-Risk Conduct by Key Opinion Leaders (KOLs)

Participation in False Advertising:Packaging and promoting a project while knowing that its technology, team, application scenarios, qualifications, licenses, or other aspects are false.
Promising or Implying Principal Protection, Interest Payments, or High Returns:Making return promises by using phrases such as “guaranteed profits with no loss” or “principal protected.”
Promoting Projects Involving “Money Games” or “Ponzi Scheme” Models:Promoting models in which dividends to earlier participants are paid with funds from later participants, under which a break in the project’s capital chain is inevitable.
“Shilling to Pump” Followed by “Dumping to Exit”:Purchasing at low prices in advance, then urging followers to buy at high prices, and subsequently selling off to realize profits; in some cases, having knowledge of or collaborating with the project sponsors to establish “insider trading accounts” (“rat nests”) to seek excessive gains.
Charging Excessive Promotion Fees Without Conducting Any Due Diligence on the Project:Such a “pay-to-play” attitude may give rise to suspicion of constructive knowledge (“should have known”) of project issues while failing to take action after an incident occurs.

(2) Risk Prevention Recommendations

In a field where opportunities and risks coexist, compliance awareness is an essential "safety belt." KOLs should adhere to the following:

1. Uphold baseline standards and mitigate risks

Conduct necessary due diligence on the project sponsor before accepting any promotional engagement.Verify the team’s genuine background and track record, the feasibility and innovativeness of the technical solution, the legality and sustainability of the business model, and the authenticity of application scenarios. Be vigilant against projects that make exaggerated claims without clear technical logic.
Require the project sponsor to provide official documents, including corporate qualifications, Value-Added Telecommunications Business Operating Licenses(ICP, EDI), Online Culture Operation Permits, blockchain information service filing records, cybersecurity assessment reports, white papers, and legal opinions. Decline engagements if such documents cannot be provided or if responses are evasive.

2. Ensure content compliance and communicate responsibly

Strictly prohibit the use ofpromissory or inducive phrases such as "guaranteed profits with no risk," "lowest point," or "highest point,"and avoid using highly inflammatory language to manipulate market sentiment.
Clearly disclose statements such as"Investment involves risks; proceed with caution" and "This article is a commercial promotion and does not constitute investment advice."and other risk disclosures.
Objectively state the facts of the project, clearly distinguishing“facts” from “personal opinions”, and use cautious wording.

3. Conflict avoidance; boundaries in cooperation

Prioritize fixed-fee advertising cooperation models, so that revenue is tied to the promotional activities themselves, rather than being directly linked to the project’s sales performance, token prices, or digital collectible prices. The latter’s“performance-based commission” or “revenue-sharing”models may, in judicial practice, be deemed as forming a community of interest with the project operator, thereby increasing the risk of being characterized as joint criminal liability.
Standardize cooperation models,maintain a certain distance from the project in the course of cooperation, clarify your status as an “independent promoter,” and avoid holding yourself out as, or being mistaken for, a partner, advisor, or other core member of the project operator.
When you have doubts about a project, follow“Better to miss an opportunity than to commit a violation”principle; even if the potential benefits are substantial, such opportunities should be declined.

4. Preserve Evidence and Improve Procedures

All communications with project sponsors (including chat logs, emails, etc.), contracts, payment vouchers, and materials provided by project sponsors (such as promotional materials and qualification documents) shall be preserved in full and retained for the long term. This not only demonstrates fulfillment of basic due diligence obligations but also serves as strong evidence in one’s defense in the event of litigation.

Conclusion

As trendsetters of the era, KOLs, while enjoying the benefits brought by their influence, must always bear in mind:The law sets the baseline for conduct; the greater the influence, the heavier the responsibility.A single imprudent promotion may not only exhaust the reputation you have built over many years, but may also drag you into the abyss of criminal liability. Only by maintaining reverence for the law and proceeding in compliance can you remain invincible when the tide recedes.