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Recently,http://Gate.io officially announced that it has becomethe first crypto exchange to integrate with Polymarket, promoting features such as “VPN-free access within China” and “one-click participation in prediction markets” as key highlights.
From the perspectives of product design and traffic conversion, this may represent a typical Web3 user growth strategy; however, when examined through the lens of criminal justice and regulatory frameworks in mainland China, the combination of “prediction markets + stablecoin settlement + accessibility to users within mainland China” is not merely an “innovation narrative,” but rather a highly sensitive structure that may simultaneously trigger risks related to gambling-related crimes, aiding-and-abetting offenses, and other derivative regulatory liabilities.
Why Polymarket exhibits strong “gambling-like” characteristics in the judicial context of mainland China
Polymarket’s core business involves placing bets onpolitical elections, sporting events, and social incidentsengage in "betting transactions" on outcomes such as "yes/no," whereby users purchase shares corresponding to such outcomes and realize odds-based returns after the event has been resolved. Its transaction structure bears a high degree of similarity to traditional gambling in its core mechanism of "placing bets on event outcomes—odds-based settlement—platform commission extractionThis core mechanism exhibits a high degree of similarity.
- The subject matter of the transactions is not genuine financial assets, but rather probabilistic speculation on event outcomes;
- the source of profit is not value creation, but the losses of other participants, which aligns with the gambling characteristics of "aleatory nature" and "zero-sum game";
- the platform generates profits by extracting commissions through transaction fees, spreads, and other means. If viewed from the common "substance over form" review logic adopted by mainland Chinese law enforcement authorities, there is a heightened risk that the platform’s arrangements for generating revenue through fees, spreads, or traffic conversion may be construed as "organizing, matching, or facilitating gambling by others through network technologies and deriving profits therefrom."
It is worth noting thatthe regulatory characterization of Polymarket overseas is not uniform: in certain contexts, it is regarded as "event contracts" or quasi-financial derivative products; in other jurisdictions, it may be brought within the regulatory framework for gambling.
However, for mainland China, what truly matters is not the label applied to it overseas,but whether, within the local judicial context, it exhibits structural features characterized by "taking uncertain event outcomes as the subject matter, committing funds to speculate on odds-based returns, and the platform extracting commissions for profit."In this regard, the risk of it being understood as a gambling-like business is significantly higher than the possibility of it being accommodated as conventional financial innovation.
(Polymarket page display; for legal education purposes only)
Why “Domestic Access Without VPN” Is Not a Simple Product Optimization, but a Risk Amplifier?
If the underlying business structure is already in a highly sensitive area, the most alarming aspect of this dissemination is not the term “prediction market,” but rather—“Domestic Access Without VPN”。
From the perspective of mainland China’s criminal law and regulatory framework, this statement is likely not a product highlight, but a risk amplifier.
1. Invalidating the Defense of “Overseas Conduct”:Traditional crypto platforms require VPNs for access within mainland China. Defense counsel may (albeit somewhat tenuously) argue that “the services are directed overseas and are not provided to mainland residents.” However, Gate’s promotion of technical means enabling barrier-free domestic access and direct betting effectively extends its services into mainland China, thereby triggering the territorial jurisdiction requirements under the Criminal Law of the People’s Republic of China.
2. Subjective Intent Deemed as “Targeting Domestic Users” by Regulatory Authorities:The promotional rhetoric of “VPN-free access” essentially constitutes a deliberate effort to attract domestic users, sufficient to demonstrate the platform’s direct intent to “provide gambling services to Chinese citizens.” In judicial practice, this is likely to be construed as “knowingly providing technical support or fund settlement services for gambling activities.”
3. Stablecoin Settlement Cannot Evade the Characterization as Gambling Funds:Gate users employ USDT in exchange scenarios and use USDC for betting and settling profits within the Polymarket context. Yet Gate emphasizes a streamlined settlement experience with one-click conversion back to stablecoins, without cross-chain losses. In mainland China’s judicial practice, virtual currencies are widely recognized as property interests, fully meeting the criteria for “wagers” and “gambling funds.” Criminal liability will not be exempted merely because settlements occur on-chain.
Potential Primary Criminal Risks
It should be emphasized that criminal liability ultimately depends on the specific facts of each case, and the risk levels vary among different entities. However, based on practical experience in mainland China, the following approaches warrant particular attention.
(1) Crime of Gambling / Crime of Operating a Casino
- Platform Side (Risk of Being an Accomplice or Principal Offender): If a platform (such as Gate) integrates with Polymarket and provides services including account linkage, fund clearing, trade matching, and settlement, it is highly likely to be deemed in judicial practice as “providing technical support such as internet access, server hosting, network storage, and communication transmission for gambling websites” or “providing assistance in fund payment and settlement.” If the platform participates in profit-sharing, engages in deep-level traffic redirection, or provides exclusive access points, it is highly likely to be considered anaccompliceto the crime of operating a casino, and may even be characterized as aprincipal offender。
- due to its organizational role in promoting such activities within mainland China. User Side (Risk of Being an Accessory or Liability for Related Offenses):If users in mainland China participate with extremely high frequency and involve substantial gambling amounts, they may trigger the determination of “making a living by gambling,” thereby constituting thecrime of gambling.If users organize others to engage in betting through platform mechanisms and develop downlines through methods such as referral rebates, they directly incur liability for thecriminal liability.
(II) Crime of Illegal Business Operations
Polymarket’s “prediction trading” is essentially regarded as unapproved over-the-counter derivatives or event contracts, and it deeply involves the exchange logic between virtual currencies and fiat currencies.
- Regulatory Characterization Forecast: Referring to Attorney Deng Xiaoyu’s research, such businesses are highly likely to be characterized by regulators as a form ofillegal event contracts。
- Application of Law: If such business is identified through look-through analysis as “illegal futures” or “licensed financial business,” it violates administrative regulations such as the Regulations on the Administration of Futures Trading. Providing such services to users within the territory of China without proper market access approval will trigger Article 225 of the Criminal Law, constituting theCrime of Illegal Business Operations。
- Pitfalls in Defense Logic: Although characterizing the project as “contracts” may to some extent mitigate the characterization as “gambling,” the threshold and scope of impact for the Crime of Illegal Business Operations are equally stringent.
(III) Crime of Aiding Information Network Criminal Activities / Crime of Illegally Providing Internet Access
- Risks Related to Technical and Funding Channels: Even if direct collusion between the platform and gambling syndicates cannot be proven, the mere provision by the platform of stablecoin deposit and withdrawal services, network access, and settlement channels, coupled with a failure to implement restrictive measures despite actual or constructive knowledge that the relevant activities were suspected of being illegal, may still constitutethe crime of aiding information network criminal activities。
- Independent Criminal Liability for Promotional Traffic Direction: Pursuant to judicial interpretations, the act of publishing information and conducting promotional traffic direction for illegal or criminal activities may independently constitute a crime. In judicial precedents in mainland China, there are cases where individuals have been convicted and penalized forthe crime of illegally using information networksfor acting as agents or promoting virtual currency exchanges. Engaging in promotional activities using content related to accessing platforms such as Polymarket, which exhibit significant characteristics associated with gambling, carries an extremely high risk of criminal accusations.
Compliance Alerts for Platforms and Industry Practitioners
For Users:
- “No VPN Required” Is Not a Benefit but a Trap: Directly participating in betting on Polymarket within mainland China voluntarily exposes you to criminal risks. Consequences may range from the freezing of bank cards and total loss of funds to, in more serious cases, the initiation of criminal investigations;
- Proceeds Are Not Protected by Law: Even if you win, the proceeds may be identified as “gambling funds” and subject to confiscation, leaving you unable to assert any rights through any channel;
- Do Not Rely on Luck: Current anti-fraud and anti-money laundering monitoring systems have achieved precise identification of crypto asset transactions. “On-chain anonymity” is virtually meaningless in the face of judicial tracing.
For industry practitioners:
- Packaging gambling operations under the guise of “prediction markets” or “Web3” is, in essence, a criminal offense with only superficial changes;
- Promotional claims of “no VPN required within mainland China” actively signal that the service is directed at users within mainland China, and will constitute core evidence in criminal liability proceedings;
- Any provision of technical, financial, or traffic support for virtual asset gambling or illegal financial activities may be deemed complicity; do not cross legal boundaries.
For platforms:
For platforms, integrating popular services, boosting transaction activity, and enhancing stablecoin circulation efficiency may offer short-term product and growth benefits; however, within the regulatory and criminal practice context of mainland China,An entry point does not equate to an isolation layer; redirection does not equate to exemption from liability; and technical integration does not automatically imply neutrality.
If a platform forms a complete chain through account systems, fund pathways, redirection mechanisms, settlement facilitation, customer support, instructional guides, marketing communications, and cooperative promotions,even if the platform self-identifies as an “integrator,” “aggregator,” or “technical intermediary,” it is highly likely to be subject to a penetrative assessment based on the overall business structure in judicial practice.
Particularly when public communications contain statements with clear geographic targeting, such as “no VPN required in mainland China,” “accessible within mainland China,” or “one-click access,” the platform’s defense that it “does not provide services to users in mainland China” will be significantly constrained; moreover, such promotional content itself may serve as important evidence in subsequently establishing subjective knowledge, user targeting, and facilitation of transactions.
For such business activities, a more prudent compliance approach should be:
- Promptly verify whether the relevant functionalities, redirection paths, and disseminated content actually reach users in mainland China;
- Immediately review and address high-risk representations such as “no VPN required,” “available within mainland China,” and “one-click participation.”
- Conduct a unified cleanup of messaging across official promotional materials, collaborating key opinion leaders (KOLs), channel agents, and community assets to avoid creating an evidentiary chain suggesting that the platform tacitly permits or jointly facilitates user redirection.
- Carry out targeted risk screenings for teams in product, operations, marketing, business development, customer service, and partner organizations to prevent employees and partners from being inadvertently exposed due to lack of awareness or misjudgment.
- If relevant features or promotions produce clear effects directed at users in mainland China, timely measures should be taken, such as taking them offline, restricting access, issuing clarifying announcements, or cutting off user-redirection pathways.
For highly sensitive business lines, the true concern is never “missing out on a wave of traffic,” but rather exposing the platform, its employees, and its partners to long-term and irreversible criminal and compliance risks in pursuit of short-term growth.
Conclusion: True “risk hedging” is never about betting on odds, but about staying away from high-sensitivity structures.
Viewed solely through the lens of product innovation narratives, Gate’s integration with Polymarket can easily be framed as a “Web3 experience upgrade.”
However, from the perspective of criminal justice and regulatory logic in mainland China,
when a business simultaneously exhibits the following characteristics:
- engaging in bet-style transactions centered on the outcomes of uncertain events;
- using stablecoins to facilitate fund flows and settle returns;
- having accessibility, or even convenience, for users within mainland China;
- Dissemination and user conversion through methods such as “VPN-free access” and “one-click participation”;
it can no longer be simply understood as a “neutral technological tool” or “ordinary product innovation.”Against the backdrop of sustained high-pressure crackdowns in mainland China on cross-border gambling, crypto-related illegal financial activities, and associated funding chains, what truly warrants concern is not odds volatility, but the fact that the business structure itself has entered a highly sensitive zone.
For every domestic user, practitioner, and platform team, true “risk hedging” has never been about betting on wins or losses within such products, but rather proactively distancing oneself from business structures that may cross criminal law red lines.
After all,the safety of principal is always more important than the allure of odds.
Author
Deng Xiaoyu，Partner at Mankun Law Firm (Shenzhen). Mr. Deng specializes in criminal cases, having participated in nearly three hundred cases, with solid theoretical foundations and extensive practical experience. He is particularly adept in the field of Web3 crime, having provided criminal defense for multiple well-known digital currency exchanges, effectively safeguarding clients’ rights and interests. He was awarded the “Special Contribution Award for the 30th Anniversary of the Shenzhen Lawyers Association,” has been interviewed by numerous prominent domestic media outlets, and has been invited to lecture within the industry on several occasions.
About Mankun
Mankun Law Firm was established in 2015 and is a boutique law firm in China focusing on the new Web3.0 economy and deeply engaged in the blockchain industry. Members of the Mankun team possess unique and diverse industry backgrounds, hailing from renowned legal service institutions, state judicial organs, internet technology companies, crypto asset institutions, and blockchain industry think tanks.
Based on a profound understanding of the new economy sector, continuous attention to and research on policies and regulations, and rich practical experience, the Mankun team excels in providing comprehensive legal services from the perspectives of business models and legal practice. These services include business structure design, project financing and investment, transaction planning, operational compliance, resolution of complex civil and commercial disputes, prevention and control of criminal risks, and criminal defense for new economy enterprises in areas such as Web3.0, blockchain, AI, NFTs, digital collectibles, crypto funds, crypto payments, DeFi, real-world assets (RWA), and GameFi.
Mankun Law Firm is headquartered in Shanghai and maintains branch offices in Hong Kong (China), Silicon Valley (United States), Shenzhen, Hangzhou, Zhengzhou, Chengdu, and other locations. To meet the global compliance development needs of Web3 industry clients, Mankun has established local offices in major global crypto-finance hubs and carefully selected local professional blockchain service partners, providing clients with professional legal and compliance services that combine global reach with deep expertise in China.
