Authors: Niu Xiaojing, Liu Honglin
In recent years, cryptocurrency has been used more and more widely around the world, especially in cross-border payments, digital asset investment and other fields, and has become the choice of many users. However, in mainland China, the regulatory policy for cryptocurrency transactions is very clear - whether it is over-the-counter (OTC) transactions or providing related information matching services, there are legal risks.
The reason why this is chosen as the title of the article is that recently attorney Mankiw discovered that many individuals or businesses posted USDT trading advertisements on WeChat Moments in an attempt to attract customers to trade, but such behavior not only involves illegal financial activities, but may even constitute a criminal offense.
In this article, Attorney Mankiw will analyze in detail the legal liabilities that may be involved in posting USDT trading advertisements on WeChat Moments, and explore potential legal risks based on actual cases.
Common forms of USDT trading advertisements in WeChat Moments
On social media, especially WeChat Moments, common USDT trading advertisements mainly include the following categories:
1. Simple buying and selling information: such as "buy U at a high price", "sell USDT at a low point", "spot delivery in seconds", etc., to attract customers to conduct private transactions.
2. OTC matchmaking and intermediary: Some advertisements provide USDT purchasing and selling services, and even claim to have "stable channels", "no worries about large amounts", and "security and privacy". In essence, they act as OTC intermediaries.
3. Promotion related to virtual currency investment: such as "USDT financial management project", "high-yield arbitrage", etc., using virtual currency as an investment vehicle to attract funds, which may actually involve Ponzi schemes or fraud.
4. Cross-border payment and fund transfer: Some advertisements emphasize "USDT to RMB channel", "support for international settlement", "cross-border transfer without handling fees", etc., which may involve illegal cross-border fund flows and money laundering risks.
On the surface, these advertisements are not much different from ordinary marketing promotions, but under China's current regulatory system, such behavior can easily cross the legal red line.
Legal liability for posting USDT trading advertisements in WeChat Moments
1. Violation of financial regulatory provisions, constituting the crime of illegal business operation
According to the "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" issued by the People's Bank of China and ten other departments in September 2021, no institution or individual may engage in business such as transaction matching, payment settlement, and token exchange involving virtual currencies. Therefore, the behavior of publishing USDT trading advertisements for a long time, attracting customers to trade and profit from them may be considered as illegal business operations (Article 225 of the Criminal Law).
Chongqing First Intermediate People's Court made a final ruling on a case involving illegal operation of virtual currency, holding that OTC was illegally engaged in fund payment and settlement business, constituting the crime of illegal operation. Although such a judgment is somewhat controversial in the opinion of lawyer Mankiw, it is indeed a clear signal released in the current judicial practice. (Previous Mankiw article: "Virtual currency OTC merchants do not touch foreign exchange, but are still suspected of illegal operation? | Web3 Entrepreneurship Criminal Risk Prevention Guide (Part 3)").
2. May involve the crime of assisting information network criminal activities
With the widespread use of virtual currencies in illegal activities such as telecommunications fraud and online gambling, regulators are stepping up their crackdown on related transactions. If someone posts a USDT transaction advertisement in WeChat Moments and facilitates the flow of certain illegal funds, even if the trader himself is not aware of it, he may still be held responsible for assisting information network criminal activities (Article 287-2 of the Criminal Law).
The key point of this crime is whether the transaction parties "know or should know" that there is a problem with the source of funds. In reality, even if the advertiser does not directly participate in crimes such as fraud and gambling, the anonymity and convenience of USDT transactions make it easy to become a tool for transferring illegal funds, causing the transaction matchmaker to face legal risks.
In July 2023, the Qinshui County Public Security Bureau in Shanxi Province uncovered a USDT money laundering case involving more than 380 million yuan. The gang used upstream and downstream WeChat groups to attract users and launder money for information network criminals, involving Guangxi, Jiangxi, Henan, Anhui and other places. Although the advertisers involved in the case did not directly participate in money laundering, they were convicted of aiding and abetting because they provided convenience and transaction information.
3. May be considered financial fraud or illegal fundraising
Some USDT trading advertisements attract investors in the form of "arbitrage" and "financial management projects", claiming "high returns and low risks", which is actually a disguised Ponzi scheme. Once the capital chain of such behavior is broken and the victims report it, the publisher of the advertisement may be held legally responsible for the crime of illegally absorbing public deposits or financial fraud.
From February 2020 to April 2021, Zhao and others publicly sold and promoted the "MCKA" Magic Cafe APP developed by the company to the general public, promising to guarantee the principal and pay high interest, asking the participants to transfer the funds to the account registered on Huobi.com, and then purchase the virtual currency "USDT" through Huobi.com, and then transfer the purchased virtual currency to the account registered on the "MCKA" Magic Cafe APP to form a fund pool, thereby controlling the funds of the participants. Many people were found guilty of illegally absorbing public deposits and sentenced to 2 to 4 years in prison.
Compliance advice: How to reduce legal risks?
Under the current regulatory environment, any publicity and promotion activities involving USDT transactions carry high legal risks. Here are some compliance recommendations to help individuals and institutions reduce potential legal liabilities:
1. Stay away from over-the-counter (OTC) transactions and intermediary roles, and avoid posting USDT transaction advertisements in WeChat Moments
Even if it is just information such as "buy U at a high price" or "sell U at a low point", it may be considered by regulators as providing virtual currency transaction matchmaking services and then be held accountable. Even if it is forwarded to a friend, it may face investigation for assisting illegal transactions.
OTC transactions are the focus of regulatory crackdowns, and many intermediaries engaged in OTC transactions have been held accountable for suspected illegal business operations. If you participate in matchmaking transactions and earn commissions, even if it is a private transaction, you may face criminal risks.
2. Avoid providing funding channels or collection and payment services
Many USDT transactions involve third-party accounts (commonly known as "card merchants"). If someone helps to collect or pay funds, and the funds eventually flow to illegal activities such as fraud and money laundering, even if the person is unaware, they may face serious legal consequences and even be included in the bank's "blacklist."
3. Stay away from “arbitrage” and “financial management project” propaganda
Any USDT investment project that promotes "guaranteed profits" or "stable high returns" is most likely a Ponzi scheme scam. Once the project collapses, the advertiser may become the target of victim accountability, or even be identified as an accomplice to financial fraud.
4. For enterprises that do have cross-border payment or digital asset investment needs, it is recommended to go through the compliance path
For enterprises with cross-border payment and digital asset management needs, they can consider setting up compliant companies in Hong Kong, Singapore and other places, applying for relevant financial licenses, and using regulated channels for business operations. This will not only avoid domestic regulatory risks, but also ensure transaction security and compliance.
Attorney Mankiw's Summary
Posting USDT trading advertisements on WeChat Moments may seem like a simple marketing promotion, but in fact it involves multiple legal risks such as illegal operations, aiding crimes, and financial fraud. If you are not careful, you may cross the criminal red line. At present, in mainland China, the safest approach for individuals and institutions is to stay away from over-the-counter transactions, not participate in any USDT transaction matching or promotion activities, and ensure that their own behavior complies with legal regulations.
If you have already posted similar advertisements or engaged in related transactions, it is recommended to stop immediately and consult a professional lawyer to ensure that your legitimate rights and interests are not harmed. In the current regulatory environment, maintaining compliance is the safest option. Any behavior that skirts the law may bring unforeseen legal risks.
