A prominent legal professional has issued a stark warning to Web3 entrepreneurs and practitioners, emphasizing that offshore business structures do not provide immunity from Chinese legal jurisdiction. This caution comes following the recent conclusion of a case resulting in a life imprisonment sentence, highlighting the severe consequences of overlooking compliance requirements. The legal expert identifies “personal jurisdiction” and “territorial jurisdiction” as fundamental concepts in Chinese criminal law that Web3 industry participants frequently underestimate. Despite being basic legal principles, they represent significant blind spots in industry awareness. Multiple real cases demonstrate that Chinese judicial authorities maintain jurisdiction when: – Operators or employees retain Chinese citizenship – Individuals reside domestically or occasionally return to China while working abroad – Services remain accessible to Chinese users through VPNs or other means – Business operations involve legally contentious activities under Chinese law, even when completely excluding Chinese users Common misconceptions among Web3 entrepreneurs include believing that establishing companies in Cayman Islands, implementing holding structures in Hong Kong, or setting up foundations in Singapore automatically eliminates Chinese legal exposure. While these arrangements may hold significance in commercial disputes, they provide limited protection in criminal cases where jurisdiction principles prevail. Case analysis reveals several concerning patterns: 1. Overseas Web3 projects operated by Chinese nationals remain subject to Chinese jurisdiction, as demonstrated by the CoinXP case where authorities pursued prosecution despite jurisdictional controversies 2. Local “victims” often serve as jurisdictional anchors, even when their claims about participation and losses remain unverifiable 3. Chinese authorities have established jurisdiction based on tenuous connections, such as an employee’s temporary residence in a particular locality 4. Operations targeting exclusively foreign users still fall under Chinese jurisdiction when Chinese citizens participate or when operations involve legally questionable activities The legal expert advises Web3 projects and practitioners to maintain realistic risk assessments, particularly for financial transaction-related projects vulnerable to classification as illegal operations under Chinese regulatory policies. Jurisdictional boundaries in practice prove flexible and subject to interpretation by enforcement authorities. While legal professionals continue to challenge jurisdictional claims in individual cases, the prevailing recommendation emphasizes comprehensive compliance strategies rather than reliance on geographical separation alone. The current regulatory environment suggests sustained scrutiny of Web3 operations, necessitating careful risk evaluation and avoidance of complacency regarding offshore operations.
