A recent case involving a digital wallet company’s technical employee detained for alleged involvement in online gambling activities highlights three critical legal blind spots for Web3 professionals.
1. **Misconception of Technical Neutrality**: Many developers believe coding alone absolves them of responsibility. However, Chinese judicial practice evaluates whether technical work provides ‘substantial assistance’ to criminal activities, such as enabling anonymous transactions or bypassing KYC protocols.
2. **False Security in Small Platforms**: While major exchanges like Binance maintain compliance systems, smaller Web3 projects with decentralized operations often lack anti-money laundering measures, making them primary enforcement targets due to easier investigative access to domestic staff.
3. **High-Risk Remote Work Models**: Attractive remote positions paying in cryptocurrency frequently exhibit red flags including offshore registration, Telegram-based communications, and absence of formal contracts or compliance documentation.
**Compliance Recommendations**:
– Verify project registration in regulated jurisdictions
– Insist on third-party code audits and KYC/AML systems
– Document suspicious instructions and avoid high-risk modules (mixers, anonymity tools)
– Include liability clauses in contracts regarding fund/personal data handling
Legal experts emphasize that while technology itself isn’t criminal, its application may incur liability under China’s focus on actual societal impact. Proactive compliance reviews are advised for Web3 professionals navigating this evolving landscape.
