The Legal Dilemmas and Analysis of Web3 Practitioners

The Web3 industry seems to have a unique charm; once many practitioners enter this field, it's hard to return to traditional industries. Some describe the state of Web3 workers as "high salary, remote, comfortable yet dangerous," which is quite an accurate description.

Compared to traditional industries, Web3-related positions indeed offer higher salary levels. Since project teams are usually based overseas, domestic employees often adopt a distributed work model, with no need to clock in for work. This high-paying and flexible work status is highly attractive to many.

However, after entering the Web3 circle, many people began to realize that there are relevant regulations in the country, such as the 94 announcement and the 924 notice. This has led them to question the legality of their work. As a result, many Web3 practitioners actively participate in Web3 activities online, but in real life, they are quite secretive about their profession.

Some Web3 practitioners will directly consult lawyers to inquire about whether their work has legal risks in the country. Many people are confused: since the 94 announcement and the 924 notice are not laws, and there are currently no clear legal provisions that certain behaviors constitute a crime, does this mean that engaging in certain Web3-related work is not an issue?

This way of thinking actually represents the views of many people. However, it is actually a misconception. Due to space limitations, today we will mainly discuss one question: In Web3 criminal cases, is the basis for convicting the parties really only the 94 announcement and the 924 notice?

To understand this issue, we need to start with the characteristics of the law. The law has stability; once it is enacted and published, it must maintain seriousness and authority, and cannot be modified arbitrarily. This leads to a significant lag in the law's response to emerging social issues. For example, the current Criminal Law in our country is still based on the 1997 version, and although 12 amendments have been introduced since then, it still cannot comprehensively cover various emerging industries.

Taking the NFT digital collectible industry as an example, it has been four years since it emerged in the domestic market in 2022, but relevant legal regulations are still lacking. However, in recent years, there have been multiple criminal cases involving NFT digital collectibles, some of which have been withdrawn or not prosecuted, but there are also cases that have eventually gone to court for trial, and the judgments are not lenient.

Therefore, the lack of clear legal provisions in a certain industry does not mean that related businesses are free from legal risks. At the same time, this does not mean that in emerging fields such as Web3, law enforcement agencies can arbitrarily accuse parties of criminal offenses.

To determine whether an act constitutes a crime, criminal law has always looked at the essence through the phenomenon. Taking the example of an exchange being convicted of operating a casino, the reason its perpetual contract business was deemed gambling is that, in addition to ordinary perpetual contracts, it also launched high-leverage contracts with 1000 times leverage, significantly increasing the speculative nature of trading. Furthermore, the exchange also engaged in betting against users. Therefore, this business model was recognized by the court as "betting on size, gambling on wins and losses," which is essentially the same as gambling.

This does not mean that the perpetual contract business of all exchanges will be classified as gambling. Perpetual contracts are essentially a type of financial derivative and should not be simply equated with gambling behavior of betting small to win big. The classification of certain exchanges' perpetual contracts as gambling is mainly related to their own business models.

For Web3 projects or practitioners, when assessing legal risks, we need to analyze specific issues in a specific manner. In the gray areas of the law, the determination of guilt or innocence is often not black and white.

Web3 practitioners should not adopt an ostrich mentality. When consulting a lawyer, one should be clear about their purpose: whether it is merely to argue that existing regulations are not laws, or if they genuinely want to understand the criminal risk boundaries involved in their own actions. Understanding the degree and scope of judicial authorities' crackdown on related behaviors, as well as which actions carry relatively high risks in judicial practice, are all important considerations.

Due to domestic policy restrictions, certain businesses in Web3 are indeed considered red lines in the country, such as issuing virtual currencies, business models involving gambling or pyramid schemes, etc. The purpose of this article is not to completely deny the legitimacy of all Web3 projects, but to point out that some businesses may exist in a gray area between crime and non-crime. Everyone's risk tolerance is different, and it is recommended to make decisions that best suit oneself after fully understanding the relevant legal risks and boundaries, and being able to foresee the worst outcomes, in order to avoid possible regrets in the future.