Legal Risk Awareness for Web3 Practitioners: Insights from a Cross-Province Arrest Case

Recently, a technical employee of a digital wallet company was captured by the police across provinces. The reason was that some partner merchants of the wallet platform were suspected of operating an online casino. This employee, as a technical backend maintenance staff member, was taken away for investigation on suspicion of "aiding and abetting information network criminal activities."

This case has prompted Web3 practitioners to reflect on legal risks and has exposed three common misconceptions:

Misconception 1: Technical positions are risk-free?

Many technicians believe that "I only write code, how it is used is the client's business." However, in current judicial practice, the key lies in whether the "technical services" you provide have played a "substantial role" in upstream criminal activities. If your technical work objectively lowers the threshold for criminal activities, such as providing anonymous transfers, mixing functions, or means of evading identity recognition, it will no longer be considered "neutral" and may be deemed as "aiding."

Misconception 2: Small platforms won't be targeted?

Compared to leading virtual asset trading platforms, small Web3 projects lacking compliance mechanisms are more likely to become targets of law enforcement agencies. Reasons include:

1. Small platforms often have personnel stationed domestically, making capture operations more efficient;
2. Lack of KYC real-name authentication, anti-money laundering and other compliance defenses;
3. There is no law enforcement docking system, making it difficult to demonstrate a high level of cooperation during investigations.

Misconception Three: Potential Risks of High-Paying Remote Jobs

Many technicians are attracted by "remote work + high salary," but overlook some obvious risk signals:

• The project party's registered location is vague, and salaries are settled in virtual currency.
• No written labor contract, only communication through instant messaging tools;
• Lack of compliance audits, user identification processes, or anti-money laundering systems.

How can Web3 technicians protect themselves?

1. Conduct a prudent assessment before joining:

   • Is the project registered in a clear, regulated jurisdiction?
   • Is there a third-party code audit or security audit?
   • Does it have systems for user identity verification, anti-money laundering, etc.
   • Is the basic information such as the project leader and team background publicly available?

2. Stay away from high-risk features:

   • Mixing coins, anonymous transfers, privacy coins related
   • Bypass identity verification, blacklist shielding, and other mechanisms
   • Development of tools to assist in hiding the source of funds

3. Clearly stipulated in the contract:

   • Do not directly access user fund accounts
   • Do not process users' personal identity data
   • Not participating in marketing promotion activities

4. Keep communication records to leave evidence for self-verification.

5. Seek a professional legal team for a "project compliance check" if necessary.

Web3 practitioners should recognize that law enforcement often assesses whether actions constitute harm based on the actual uses of technical tools and their social impact. Establishing a basic awareness of legal risks and a compliance prevention mindset is crucial for robust development in this emerging field.