Attorney Shao Shiwei | Crackdown on Virtual Currency Investment Platforms: Will Employees, Investment Research Analysts, and Sales Personnel All Be Deemed to Have Committed Fraud?

Not All Employees Are Treated as Fraudsters When a Company Encounters Legal Issues

Family members of defendants in many criminal cases easily fall into a misconception: If the company is characterized as engaging in fraud, will everyone within the company be treated as having committed fraud?

The answer is not so simple.

In cases involving virtual currency investments, common business models are not identical. Some platforms operate their own trading desks and control the backend; others specialize in traffic generation and client acquisition; while others engage in investment research, trade signal provision, and community management.

The legal evaluation corresponding to each model differs.

In other words, although both involve "virtual currency investment and wealth management," some constitute the core of a fraud scheme, while others merely represent peripheral links. Consequently, the determination of liability naturally varies for employees in different positions and at different levels.

In practice, it is necessary to further distinguish one situation:

Some platforms indeed maliciously cause user losses through backend manipulation and fake market data, while other platforms operate under high-risk investment models where user losses may simply result from market volatility and investment risks.

These two scenarios are not evaluated identically under the law. Therefore, in specific cases, further judgment is often required based on the actual operational methods of the platform.

Liability Varies Significantly Across Different Positions Within the Same Company

Generally, platform controllers, owners, technical leads, and financial personnel are more likely to be identified as core figures in the case.

For positions such as sales personnel, investment research analysts, customer service representatives, operations staff, and administrative personnel, further examination of their specific job content is required: Did they merely execute assignments and receive a fixed salary, or were they deeply involved in platform operations, client acquisition, profit-sharing settlements, or even directly linked to client losses?

Among employees, some may only receive a fixed salary for basic tasks, while others may constitute an indispensable link in the entire business chain.

Therefore, what family members need to ascertain first is not a vague question of "how serious it is," but rather a clear understanding of: What position did their family member hold within this team?

Determining the Severity of Liability Typically Depends on These Three Questions

First, What Is the Relationship Between the Company and the Platform?

Did the company operate its own platform and control the backend, or did it merely generate traffic, collaborate with, or promote another platform?

This point often directly impacts the overall characterization of the case.

Second, What Specific Responsibilities Did the Individual Hold Within the Team?

Were they an owner, technical staff, or management, or were they sales personnel, investment research analysts, customer service representatives, or administrative staff?

Different positions often carry significantly different weights of liability in the eyes of judicial authorities.

Third, How Was Their Compensation Structured?

Was it a fixed salary, commissions based on client trading volume, or even profit-sharing based on client losses?

The compensation model often directly relates to the determination of "whether there was knowledge" and "whether there was intent to defraud."

Many family members worry most about whether "all employees will receive heavy sentences if the company encounters legal issues." However, in judicial practice, it is rarely so simple; instead, these three questions must be analyzed individually.

Many Employees May Not Truly Understand the Platform's Overall Operations

This is a point that is often overlooked yet critical in many virtual currency cases.

Within some companies, division of labor is highly specialized: some explain market trends, others maintain client relationships, some handle community promotion, and others perform only technical maintenance, customer service, or administrative support. Many employees actually interact only with their small subset of tasks.

They may not truly understand whether the platform backend can be manipulated, where client funds ultimately flow, how profits are shared between the owner and the platform, or what the company's true profit model is.

In fraud cases, determining whether an individual constitutes a criminal offender does not depend solely on "whether the company has problems," but also on whether they knew of the platform's fraudulent activities, whether they were deeply involved in business operations, and whether they had a direct interest linked to client losses.

Taking investment research analysts as an example, if an analyst merely discusses K-line techniques and analyzes market trends without inducing clients to open accounts on specific platforms, this may fall within the scope of paid knowledge services. However, if the analyst knows the platform is problematic yet still calls trades in live streams, provides reverse trade signals, or posts fake profit screenshots in groups, they are directly committing fraudulent acts.

Therefore, in specific cases, comprehensive analysis is often required based on the company's business model, team structure, and the specific duties undertaken by the individual. Much room for defense is precisely hidden within these details.

Conclusion

Thus, in virtual currency cases, even those officially filed as "fraud" cases do not necessarily lack room for defense.

On one hand, such cases often involve complex business models and team divisions of labor. Many employees only interact with one segment and do not understand the platform's overall operations.

On the other hand, the virtual currency industry is highly technical and professional. In some cases, law enforcement agencies may be encountering such models for the first time and may not be fully familiar with industry operations.

Under such circumstances, business models operating in gray areas may be simplistically understood as fraud during the initial investigation. Admittedly, some platforms do maliciously cause user losses through backend manipulation and fake market data; however, for other platforms, user losses may simply be the result of market fluctuations.

These differences often hold significant importance for the characterization of the case.