Author: Lawyer Liu Honglin

In recent years, cryptocurrencies have been used more and more widely around the world, especially in cross-border payments, digital asset investments, etc., which has become the choice of many users. However, in the mainland, the regulation of cryptocurrency trading is very clear - whether it is over-the-counter trading (OTC) or providing relevant information matching services, there are legal risks.

The reason why this article is straightforward is that recently, lawyers of Mankun discovered that many individuals or merchants have posted USDT trading advertisements on WeChat Moments, trying to attract customers to trade, but such behaviors not only involve illegal financial activities, but may even constitute criminal offenses.

Security attorney Mankun in this article will analyze in detail the legal responsibilities that may be involved in publishing USDT trading advertisements in Moments, and discuss potential legal risks based on actual cases.

Moments Common forms of USDT trading advertisements

On social media, especially WeChat Moments, common USDT trading advertisements mainly include the following categories:

1. Simple buying and selling information: such as "high price U", "selling USDT at low points", "spot instant" and so on, attracting customers to conduct private transactions.

2. OTC transaction matching and intermediary: Some advertisements provide USDT purchasing and sales services, and even claim to be "stable channels", "large amounts of worry-free", and "safety and privacy", which essentially acts as an over-the-counter transaction intermediary.

3. Promotions related to virtual currency investment: such as "USDT Financial Management Project", "High Yield Arbitrage", etc., using virtual currency as an investment carrier to attract funds, may actually involve capital trading or fraud.

4. Cross-border payments, fund transfers: Some advertisements emphasize "USDT to RMB channel", "support international settlement", "cross-border transfer without handling fees", etc., which may involve illegal cross-border capital flows and money laundering risks.

On the surface, these advertisements are not much different from ordinary marketing promotion, but under the current regulatory system, such behaviors are likely to cross the legal red line.

Posted by Moments USDT trading advertisements may involve legal liability

1. Violating financial regulatory regulations constitutes the crime of illegal business operations

According to the "Notice on Further Preventing and Disposing of the Risk of Speculation in Virtual Currency Transactions" issued by the People's Bank of China and ten other departments in September 2021, no institution or individual may engage in transaction matching, payment settlement, token exchange and other businesses involving virtual currencies. Therefore, long-term release of USDT trading advertisements, attracting customers to trade and profit from it may be considered as illegal business operations (Article 225 of the Criminal Law).

The Chongqing No. 1 Intermediate People's Court made a final ruling on a case involving the illegal operation of virtual currency, believing that OTC is illegally engaged in fund payment and settlement business and constitutes the crime of illegal operation. Although this case is somewhat controversial in the eyes of Mankun lawyers, this is indeed a clear signal released in the current judicial practice. (Previous article by Mankun: "Virtual currency OTC merchants do not touch foreign exchange, but are still suspected of illegal operation? | Web3 Criminal Risk Prevention Guidelines (III)").

2. It may involve the crime of helping information cybercriminal activities

As the widespread use of virtual currencies in illegal activities such as telecommunications fraud and online gambling, regulators have been increasingly cracking down on related transactions. If someone publishes USDT trading advertisements on WeChat Moments and promotes the flow of certain illegal funds, even if the trader is not aware of it, he may still be investigated for helping information cybercrime activities (Article 287 Bis. The key point of this crime is whether the trader "knows or should know" the source of funds. In reality, even if the advertiser does not directly participate in crimes such as fraud and gambling, due to the anonymity and convenience of USDT transactions, it is easy to become a tool for transferring illegal funds, resulting in the transaction matcher facing legal risks.

In July 2023, the Public Security Bureau of Qinshui County, Shanxi cracked a USDT money laundering case involving a total amount of more than 380 million yuan. The gang used upstream and downstream WeChat groups to attract users and launder money for information cyber criminals, involving Guangxi, Jiangxi, Henan, Anhui and other places. Although the advertiser involved in the case did not directly participate in money laundering, he was found to be a crime of helping the credit because he provided convenience and transaction information.

3. It may be regarded as 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 essentially a disguised capital plate operation. Once such behaviors break the capital chain and the victim reports, the advertiser may be held legally responsible for illegally absorbing public deposits or financial fraud.

From February 2020 to April 2021, Zhao and others publicly sold to the unspecified public, promoting the "MCKA" Magic Cafe APP developed by the company, promising to guarantee high interest rates, allowing the fund-raising participants to transfer funds to the account registered by Huobi.com, and then purchase the virtual currency "USDT" through Huobi.com, and then transfer the purchased virtual currency to the account registered by the "MCKA" Magic Cafe APP to form a fund pool, thereby controlling the funds of the fund-raising participants. Many people were found to constitute the crime of illegally absorbing public deposits and were sentenced to 2 to 4 years in prison.

Compliance suggestions: How to reduce legal risks?

In the current regulatory environment, any USDT involved The promotion and promotion of transactions are at high legal risks. The following are some compliance suggestions to help individuals and institutions reduce potential legal responsibilities: 1. Stay away from over-the-counter trading (OTC) and intermediary roles, and avoid posting USDT trading advertisements on WeChat Moments

Even if information like "Cake U at a high price" and "Exit U at a low point" may be recognized by regulators as providing virtual currency transaction matching services, and then be held accountable. Even if you help friends forward, you may face investigation for assisting with illegal transactions.

OTC Transactions are the key target of supervision, and many intermediaries engaged in over-the-counter transactions are held accountable for suspected illegal business operations. If they participate in the matchmaking transactions and earn handling fees, they may face criminal risks even if they are private transactions.

2. Avoid providing funding channels and collection and payment services

Many USDT transactions involve third-party accounts (commonly known as "card dealers"). If someone helps collect or pay funds on their behalf, and the funds eventually flow into illegal activities such as fraud and money laundering, even if they are unaware of it, they may face serious legal consequences and may even be included in the bank's "blacklist".

3. Stay away from "arbitrage" and "financial projects" publicity

Any USDT investment projects that promote "stable profits but no losses" or "stable high returns" are likely to be a capital market scam. Once the project crashes, the publisher of the ad may become the target of victims’ accountability and may even be identified as a financial fraud accomplice.

4. For enterprises that do have cross-border payments or digital asset investment needs, it is recommended to use the compliance path

For enterprises that have cross-border payments and digital asset management needs, they can consider setting up compliant companies in Hong Kong, Singapore and other places, apply for relevant financial licenses, and use regulated channels to conduct business operations. This not only avoids regulatory risks, but also ensures transaction security and compliance.

Secretary of the USDT trading advertisement released on WeChat Moments seems to be a simple marketing promotion, but in fact it involves multiple legal risks such as illegal operation, assisted crime, and financial fraud. If you are not careful, you may touch the criminal red line. At present, in the mainland, whether individuals or institutions, the safest way is to stay away from over-the-counter trading and not participate in any USDT transaction matching or publicity activities to ensure that your behavior complies with the law.

If you have published 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 damaged. Under the current regulatory environment, maintaining compliance is the safest choice, and any act of playing the edge may bring unforeseen legal risks.