Cryptocurrency Self-Media KOL Lightning Protection Guide How to Stay Away from Criminal Risks?

How to Stay Safe from Criminal Risks in Cryptocurrency Self-Media

The rise of the self-media industry has led to the emergence of many new professional fields. The opinions of the blog and microblog era have long been replaced by Key Opinion Leaders (KOL) in the era of streaming media. KOL, translated literally as Key Opinion Leader, is different from the network opinion leaders ten years ago who mainly focused on social public affairs or issues. Today’s KOLs are mainly focused on various segmented and vertical fields, especially in areas such as lifestyle, entertainment, technology, and investment.

As a law firm specializing in legal services in the field of web3.0, blockchain, etc., Manning Law Firm has come into contact with numerous KOLs in the blockchain industry. However, the more we understand, the more we feel it is necessary to provide sufficient analysis and advice on the legal risks faced by KOLs, especially the criminal legal risks related to KOLs’ personal freedom and property security.

The common criminal legal risks faced by KOLs are closely related to the criminal legal risks in different segmented fields of the blockchain industry. Based on the cases handled, Lawyer Liu summarized the main criminal risks that KOLs may face: recommending digital collectibles and virtual currencies for project parties; providing matching services for buying and selling virtual currencies and serving as information intermediaries; spreading false or untrue information. At the same time, Lawyer Liu has made targeted compliance recommendations for these risks.

01. Criminal risks of recommending digital collectibles and virtual currencies

After the project party issues digital collectibles or virtual currencies, it is a common marketing method to find KOLs for promotion. Some project parties offer prices that many people find hard to refuse, while some offer normal market prices. KOLs in the blockchain industry have been involved for more than ten years, including those who are still preparing for exams or writing graduation theses. Therefore, different KOLs cannot make a unanimous judgment on the reliability of the project party’s digital collectibles or virtual currencies.

If the digital collectibles or virtual currency platforms recommended by KOLs are involved in criminal offenses, and KOLs play an obvious role in promotion and publicity in the involved projects, then KOLs are highly likely to be recognized by judicial authorities as accomplices and bear criminal responsibility. Common criminal risks in digital collectibles projects include fraud crimes and illegal business crimes; common criminal risks in virtual currency projects include fraud crimes, pyramid scheme crimes, and illegal business crimes, etc.

Of course, some KOLs may claim that they are only helping friends and have not profited much, and they do not understand the true situation of the projects they promote, and they have also provided sufficient risk warnings during the recommendation, etc., and should not bear the heavy “joint criminal responsibility” that is difficult to bear in life. However, Lawyer Liu tells all KOLs that, from the logic of law enforcement agencies, KOLs are not ordinary newcomers in the industry. Even if they have not graduated from university, KOLs with a certain fan base in the industry generally have the basic ability to distinguish whether a project is legitimate or not based on social common sense. Therefore, it is difficult for KOLs to argue against the public security authorities’ decision to file a case based on the reasons mentioned above.

Guidelines for Lightning Protection:

KOL must have keen eyes to recognize risks and resolve crises when undertaking digital collectibles and virtual currency projects: for digital collectibles projects, pay attention to whether the IP cooperation of the platform has corresponding commercial value, whether all digital collectibles are on the chain, and whether the platform has opened a secondary trading market. For platforms that have opened, try to ensure that there is no wash sales or front-running in the secondary market; for projects involving currency, KOL should discern whether the project has suspicions of “Ponzi scheme,” “pyramid scheme,” “fraud,” “gambling,” etc. If KOL cannot make a decision, you can consult a professional lawyer for advice.

02. Criminal Risk of Information Intermediaries Facilitating Virtual Currency Transactions

One type of activity that KOL often encounters is customer inquiries about reliable virtual currency sellers or buyers. Most KOLs have been immersed in the cryptocurrency circle for many years and naturally have resources from both buyers and sellers. KOLs with good intentions may provide free services to friends for matchmaking transactions, while KOLs with business acumen may charge some introduction fees, intermediary fees, or service fees, which seems to comply with the operation rules of the market economy.

However, KOL must not forget the “Notice on Further Preventing and Dealing with Risks of Virtual Currency Trading Speculation” (referred to as “9.24 Notice”) which strictly prohibits providing information intermediaries for virtual currency trading. If the amount of virtual currency involved in the case is huge and there are suspicions of fraud or other illegal activities by the seller or buyer, KOL may be suspected of being an accomplice in illegal business operations or fraud.

Guidelines for Lightning Protection:

If KOL wants to completely avoid criminal legal risks, Lawyer Liu suggests that KOLs should not engage in any virtual currency transaction intermediation at all; if it is indeed a matter of helping friends and introducing buyers and sellers, but KOL is unaware of whether the parties are engaging in virtual currency transactions and has not charged any introduction fees, KOL’s criminal risk is relatively small.

03. Criminal Risk of Disseminating False Information

The business world is like a battlefield. In peacetime, the smoke of commercial wars is invisible but never stops. The blockchain industry is no exception, even more so: a few days ago, the case of the coin circle tycoon Christian Peev being dismembered was exposed. Although it cannot be confirmed that it was caused by a commercial dispute, it can still reflect the ruthlessness of some people in the coin circle.

KOLs need traffic support to survive, and some project parties need the huge traffic of KOLs for promotion and publicity. When the two are combined, two situations may arise: first, in order to gain traffic, KOLs spread or even fabricate false information to pursue or maintain the highest peak of “internal circle news” in the industry; second, KOLs accept commissions from project parties and spread false information about competitors without verification. Regardless of which situation, if it seriously damages the commercial reputation or product reputation of the other party, it may constitute the crime of damaging commercial reputation and product reputation under the Criminal Law Article 221: “Fabricating and disseminating false facts, damaging others’ commercial reputation and product reputation, causing significant losses to others or other serious circumstances, shall be sentenced to fixed-term imprisonment of not more than two years or criminal detention, and may also be fined or solely fined.”

According to relevant judicial interpretations, if someone causes direct economic losses amounting to more than 500,000 yuan; or, even if it does not reach 500,000 yuan, but causes a company, enterprise, or other unit to suspend operations or production for more than six months, or go bankrupt, then it constitutes this crime.

Cautionary advice:

Prior to publishing or forwarding information, KOLs must ensure the authenticity and reliability of the information. Information that is difficult to verify and may have negative impacts on others should be avoided as much as possible. It is better to miss out on the traffic dividends brought by false information than to be harmed by the reckless dissemination of false information.

4. Conclusion

Lawyer Liu once had a conversation with a KOL in the industry who believed that KOLs should strive to be “the first” in order to win: if others do not have the information you have about the industry, and if you have it before others, then you can become the king of the KOL world and naturally increase your worth.

Of course, Lawyer Liu knows that not all KOLs hold this professional philosophy. We have also encountered many dedicated KOLs who conduct research diligently and earnestly work on practical matters, and their numbers are not few. The criminal legal risks discussed in this article are real cases that Lawyer Liu has encountered in the process of handling cases. There are risks in everything we do, but the key is whether the risks can be controlled. In a certain sense, risks that can be controlled are no longer risks. This is also the original intention of Lawyer Liu’s article.