Operating crypto communities is both easy and challenging.
Recently,a case published by the Hong Kong Securities and Futures Commissionresulted in the sentencing of Mr. Huang for sharing securities investment information and advice in a Telegram group without holding the necessary license. In response, lawyers at Mankun Law Firm issued a rapid commentary, noting that crypto communities must also remain vigilant regarding such compliance issues.
Prior to this, the latest data from TGStat showed that six of the top ten Telegram channels globally are Web3 communities, including Hamster Kombat Announcement, TapSwap, and Notcoin.
In China, although mainland users are theoretically unable to participate in overseas crypto communities, various types of Web3 communities exist domestically. On social media platforms such as WeChat, Xiaohongshu (Little Red Book), Zhihu, and Weibo, one can frequently observe shares and discussions related to Web3 content.
However, for community managers, operations are both easy and challenging. The easy part is that simply distributing funds or sharing money-making insights can quickly attract a wave of users; the challenging part lies in the fact that, whether in terms ofoperational modelsorcommunity guidelines, it is often necessary to pay attention to compliance matters and avoid legal disputes.
Therefore, lawyers at Mankun Law Firm hope to discuss the key points of compliant operations for Web3 communities through this article, helping community operators build more compliant operational models.
Web3 Community Operations
When operating a Web3 community, operators often need to consider operational methods based on multiple complex stages, ultimately building a private domain traffic pool and achieving profitability. Several core stages frequently involve compliance considerations. For example:
(1) Community Platform
Web3 communities are typically built on Telegram or Discord. The former is easier to operate due to its low barrier to entry and abundant tools. However, the community environment is mixed, often containing scams and advertisements. The latter has a higher barrier to entry and is more suitable for niche enthusiasts, such as those interested in blockchain games and NFTs. Meanwhile, there are also community-developed dApps in the crypto space, such asDeBoxand friend.tech. However, these platforms have relatively smaller user bases and higher barriers to entry.
In China, Web3 communities are usually built and operated through common social platforms such as WeChat, QQ, Zhihu, Xiaohongshu, and Weibo. WeChat and QQ groups typically have invitation and verification mechanisms. Other platforms rely on their social media attributes, where users follow similar topics and participate, automatically forming communities under specific topics.
It is worth noting that Web3 communities offering investment advice or trade signals often choose platforms with entry restrictions or verification mechanisms, charging a fee for access. Some communities charge entry fees in RMB, while others acceptUSDTcrypto assets such as USDT for entry fees.
(2) Profit Model
Sustainable community operations depend on covering costs or generating profit, as relying solely on passion is limited to a few pioneers. Therefore, the continuity of Web3 communities depends on the choice of profit model. Common models include:
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Collaboration with Project Teams
As natural sources ofprivate domain traffic, some Web3 communities choose to collaborate with crypto project teams. They charge fees or exchange resources by helping projects with education, promotion, or joint activities.
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Providing Paid Courses
Some Web3 communities also provide users with paid crypto-related guidance and courses. Common content includes paid curation of information, crypto investment advice, and analysis of tokens/projects.
(3) Community Interaction
As users continuously join the community, Web3 community operators need to consider how to manage interactions within the community. On one hand, during daily interactions, operators need to consider what content will attract user participation, enhance community activity, and guide the community's direction.
On the other hand, operators need to monitor for scams and advertisements within the community. For instance, in many communities for projects that have not yet launched tokens, phishing links often appear, inducing users to click under the guise of project airdrops. If such links are not managed promptly, they can cause financial losses to users, ultimately requiring community managers to bear liability and provide compensation.
How to Operate Web3 Communities in Compliance?
Based on the various stages of Web3 community operations, lawyers at Mankun Law Firm believe that operators/managers should pay particular attention to the following compliance points:
(1) Platform Establishment
The establishment of a Web3 community first requires consideration of platform selection. Policies and regulations in some countries impose strict restrictions on the crypto industry. Operators need to comprehensively consider regulatory policies, user profiles, and platform rules, paying attention to compliance issues such as user admission and geographic filtering, thereby determining the target audience and the platform for establishment.
Secondly, community operators must consider the payment model: accepting RMB or crypto assets? Under relevant Chinese regulations, paid community models are generally considered to form a service contract between the operator and the user: the user pays, and the operator provides valuable information and guidance. In the event of a dispute, courts often adjudicate based on the relevant provisions of service contracts, combined with the basic facts of the case. However, settling payments in crypto assets may present certain difficulties in judicial practice. The main reason is that, under Chinese regulation, crypto assets do not have the same legal status as fiat currency and lack legal tender status.
Furthermore, when collecting fees, operators must perform Know Your Customer (KYC) procedures. Currently, anti-money laundering (AML) regulation in China is becoming increasingly strict. Whether receiving RMB or crypto assets, if an operator receives illicit funds or "black" USDT, their bank accounts or exchange accounts may be frozen, and they may even face criminal risks involving charges such as concealing crime-related income or aiding information network criminal activities.
(2) Profit Model
Regarding the profit model, if a community generates revenue through collaboration with projects, it must consider project vetting and promotional methods.
Especially concerning promotional methods, some community projects employ multi-level referral schemes. This means that community operators publish project promotional information and receive rewards when User A participates; when User A refers new users, the community operator also receives rewards from A's referrals, creating a layered promotional structure.
According to the Criminal Law of China, if a referral rebate model reaches three levels or more, it may involve the crime of organizing or leading pyramid selling activities.There are relevant cases in judicial practice. For example, in Case No. (2023) Shaan 01 Xing Zhong 368, the defendant promoted crypto asset projects through WeChat groups and other methods, inducing others to purchase crypto assets. They organized 14 levels in a specific order, using the number of recruited participants as the basis for rebates, and inducing participants to continue recruiting others. This was determined to constitute the crime of organizing or leading pyramid selling activities.
Therefore, when collaborating with project teams, community operators should pay attention to the structure of referral commission levels. Cooperation models with commission levels exceeding three tiers may be deemed pyramid selling, bringing criminal risks to community operators.
(3) Community Content
Community operators have a certain obligation to review statements posted within the community. However, given the large number of users with diverse identities and backgrounds, individually verifying the real identity of each community user is clearly difficult. Therefore, in daily community management, community operators should fulfill the following duties:
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Timely review: Implement shift schedules to review text content within the group, and immediately delete any abnormal content;
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Set thresholds: Overseas community platforms often provide tools to set up mechanisms for reviewing and deleting abnormal keywords or links;
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Multiple reminders: Provide multiple, continuous reminders about potential content risks through group announcements and other means.
For example, USDT merchants frequently appear in Web3 communities. If the operator fails to fulfill review obligations or does not avoid topics related to USDT merchants and trading virtual currencies, once a dispute arises between community users and USDT merchants regarding crypto asset transactions, or if criminal offenses are suspected, the community operator may also be implicated.
Conclusion
Whether overseas or domestically, Web3 communities are flourishing. However, not every Web3 community can maintain effective compliance control. As regulatory policies regarding Web3 become clearer across various countries and regions, who can predict when Web3 communities might become the next target of enforcement? At the very least, the Hong Kong Securities and Futures Commission has already begun cracking down on communities providing unlicensed securities investment advice.
Special Disclaimer:
This article is an original work of Mankun Law Firm. It represents only the personal views of the author and does not constitute legal consultation or legal advice on specific matters.
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