Special Disclaimer: This article is an original work by Attorney Shao Shiwei. It reflects solely the personal views of the author and does not constitute legal advice or a legal opinion on any specific matter. For article reprints, legal consultations, or business exchanges, please add: sswls66
These doubts actually reflect widespread gaps in legal awareness among Web3 practitioners. Through this case study, this article systematically analyzes the three major legal risks currently facing technical roles in the Web3 sector and provides practical recommendations.
Blind Spot in Legal Risk #1: Are Technical Roles Also at Risk?
Many technical professionals believe, “I simply deliver code as required; how it is used is the client’s concern.” The logic underlying this statement actually stems from a misunderstanding of the principle oftechnological neutralitymisunderstanding of the principle.
Within the crypto community, people often cite theTornado Cashfavorable judgmentin mixer cases to argue that “”。
technology is not culpable.” Tornado Cash is a decentralized privacy protocol built on Ethereum, primarily used to obfuscate transaction paths and enhance user anonymity on the blockchain. Users can employ it to “shuffle and reassemble” crypto assets, achieving transfers that are difficult to trace. While widely used for personal privacy protection, it has also been exploited by bad actors for money laundering. Although the tool was sanctioned by the U.S. Department of the Treasury in 2022, the United States ultimately lifted its economic sanctions against Tornado Cash in March 2025. This development has reignited discussions on the “boundaries of technological liability.”
However, law enforcement authorities in different countries do not share a uniform understanding or judicial standard regarding “technological neutrality.”
Under current judicial practice in China, criminal liability does not depend on whether you personally committed the unlawful or criminal act, but rather on whether the “technical services” you provided played a role of “substantial assistance” to the upstream crime.
In other words, if your technical work objectively has the effect of “lowering the threshold” for criminal activities—for example, by providing anonymous transfers, coin-mixing functions, or means to evade know-your-customer (KYC) requirements—it will no longer be considered “neutral,” but rather “assistance.”
Blind Spot No. 2 in Legal Risk: “I’m Just an Employee of a Small Platform and Won’t Be Targeted”
The wallet company involved in this case is incorporated in the Philippines, with its mid- and senior-level personnel located overseas, yet its business focus is primarily on mainland China. It employs domestic technical staff and customer service representatives through a “remote collaboration” model, resulting in a loosely structured overall operation that typifies the “decentralized employment” model common in Web3 projects.
This “distributed office + cross-border collaboration” architecture is extremely common among crypto-related projects and easily gives rise to compliance risks.
According to available information, law enforcement authorities determined that the platform was suspected of illegality based on several key indicators:
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The wallet system features “multi-tier fund aggregation + anonymous coin mixing,” with fund flow patterns highly consistent with gambling-related activities;
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The technical documentation contains highly sensitive keywords such as “mixing optimization” and “anti-tracking,” suggesting attempts to evade regulatory oversight;
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The platform as a whole lacks due diligence records for high-risk merchants and has not established effective risk control mechanisms.
Although technical employees did not directly handle funds and were unaware of merchant backgrounds, they may still be held legally accountable if the system tools they developed objectively serve to “lower the threshold for crime” or “weaken the effectiveness of regulatory oversight.” This line of reasoning is frequently applied in current criminal cases involving “technical participation.”
Compared withBinance, OKX, and other leading virtual asset trading platforms, smaller Web3 projects lacking compliance mechanisms are more likely to be “prioritized for breakthrough” by investigating authorities, for very practical reasons:
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Leading platforms have large user bases and complex offshore corporate structures, making cross-border investigations difficult, time-consuming, and costly in terms of coordination; whereas smaller platforms often have personnel located within mainland China, rendering arrest operations more “efficient.”
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Large platforms have generally established compliance defenses such as KYC real-name authentication,AMLanti-money laundering measures, and other compliance controls, forming a dual moat of “technology + law”; whereas smaller platforms often lack such mechanisms.
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Mainstream platforms are mostly equipped with law enforcement liaison systems (such as API integration and dedicated data channels for law enforcement), demonstrating a high degree of cooperation during investigations; smaller platforms, due to insufficient compliance capabilities and the absence of response mechanisms, are more likely to become targets of enforcement actions.
As for the“profit-driven law enforcement”concerns raised by the inquirer, there is indeed a policy background. For example, the Law of the People's Republic of China on Promoting the Private Economy, which came into effect on May 20, 2025, contains multiple provisions specifically protecting the rights of private economy organizations and their operators, stipulating that no entity or individual may infringe upon such rights;it firmly prohibits the abuse of authority to conduct cross-regional law enforcement for the purpose of obtaining economic benefits or other improper aims.
However, it is worth noting that the core beneficiaries of such policy protections are entities operating in compliance with the law. For crypto projects that already operate in legal gray areas, under the regulatory red lines established by instruments such as the “September 4 Announcement” and the “September 24 Notice,” their scope for seeking policy exemptions or asserting rights is quite limited due to the lack of compliance endorsement.
Blind Spot No. 3 in Legal Risk: Hidden Legal Dangers Beneath High-Paying Remote Work
The technical personnel involved in this case accepted the position because they were attracted by the offer of “remote work + a monthly salary of RMB 40,000.” With no requirement to clock in, no fixed working hours, and the ability to work from home, the role offered a high degree of freedom; compared to traditional Web2 positions, such conditions are nearly a “dream job” for many programmers,especially young people.
However, he did not perceive at the timeseveral obvious high-risk indicators:
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The project entity’s place of registration was ambiguous, and salary payments were made viaUSDTtransfers in virtual currencies;
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There was no written employment contract, and all arrangements were communicated solely through Telegram groups;
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There were no compliance audits, KYC procedures, or anti-money laundering systems, nor were there any publicly available project materials;
These outward signs had long revealed the common characteristics of “high-risk platforms.”
Nevertheless, many technical personnel, lacking sufficient awareness of risk prevention and control, rarely take the initiative to review a platform’s compliance when faced with the enticing allure of “freedom plus high compensation.” It is often only after an incident occurs that they realize they have already stepped into a gray area.
How Can Web3 Technical Personnel Ensure Compliance and Protect Themselves? Legal Advice ➡️
In the gray area of legal regulation that characterizes Web3, the first step for technical personnel seeking to protect themselves is to establish basic awareness of legal risks and adopt a mindset focused on compliance and risk prevention and control.
Before engaging with or joining any Web3 project, it is essential to assess and conduct self-examination based on the following key points:
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Whether the project is registered in a clear and regulated jurisdiction;
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Whether there has been third-party code audits or security audits conducted by professional institutions;
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Whether it has anti-money laundering (AML) and user identification systems such as KYC;
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Whether basic information such as the project leader, team background, and funding sources are publicly disclosed.
After joining, be sure to keep your distance from high-risk functional modules, especially those involving:
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Mixers, anonymous transfers, privacy coins;
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Bypassing or evading mechanisms such as KYC and blacklisting;
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Development of tools that assist users in hiding the source of funds or bypassing censorship.
If you encounter suspicious instructions or pressure from the project party, be sure to retain relevant communication records (such as Telegram chat screenshots, meeting minutes, etc.) to leave key evidence for future self-defense.
When signing technical cooperation agreements or outsourcing contracts, it is recommended that technical personnel clearly stipulate:
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Does not directly interact with users’ fund accounts;
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Does not process users’ personal identity data or sensitive information;
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Does not participate in marketing activities involving referral-based promotion, distribution schemes, or token sales.
Drawing clear lines around these “legal red flags” not only helps avoid pitfalls, but also clarifies the boundaries of liability after the fact.
If you still have questions about the legality or compliance of a project, we recommend engaging a professional legal team early on to conduct a “project compliance review.” This can help identify potential legal risks in a timely manner and assist technical personnel in assessing the potential criminal liability boundaries associated with their roles, thereby preventing problems before they arise.
Lawyers’ reminder: Technical tools are not inherently unlawful, but their actual use may give rise to liability.
Web3 practitioners should clearly recognize that:
In addressing issues at the intersection of technology and law, Chinese law enforcement authorities tend to evaluate whether conduct harms public interests and social order by examining the actual use of the technical tools and their impact on society.
In recent years, our team has handled multiple major, novel cases in the Web3 industry and has participated in preliminary compliance and risk reviews for various projects. As a result, we are able to provide more targeted, customized legal reviews and compliance advice to clients.If you are a technical practitioner or project operator in the Web3 space, or if you have questions about project compliance, we welcome you to reach out for a discussion.
We hope that every practitioner navigating the wave of new technologies can proceed with greater stability and clarity.
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