Web3 programmer arrested across provinces: three legal blind spots of practitioners

Not long ago, Lawyer Shao received a consultation from a client.

TA A technical employee of a digital wallet company was arrested by the police in another province without any warning. The reason was that some of the cooperative merchants of the wallet platform were suspected of opening online casinos. As a technical backend maintenance personnel, this employee was taken away for investigation on suspicion of "assisting information network criminal activities."

Similar cases are common in the cryptocurrency/Web3 field. Faced with the sudden accusation, the parties raised two questions: "I am in a technical position. I didn't touch the money or participate in the profit sharing. How can it constitute a crime? Employees of large platforms such as Binance and OKC are fine, why should the small platform where I work be arrested? Is this profit-seeking law enforcement?" These doubts are actually the legal cognition blind spots that are common among Web3 practitioners. Through this case, this article will systematically analyze the three major legal risks currently faced by Web3 technical positions and provide practical suggestions. Legal risk blind spot 1: Technical positions also have risks? Many technical personnel think that "I just deliver code on demand, how to use it is up to Party A" - the logic behind this statement is actually a misunderstanding of the principle of "technical neutrality".

In the crypto community, some people often use the case of the mixer Tornado Cash as an example to try to prove that "technology is not guilty".

Tornado Cash is a decentralized privacy protocol based on Ethereum, which is mainly used to obfuscate transaction paths and enhance the anonymity of users on the blockchain. Users can use it to "disrupt and reorganize" encrypted assets to achieve an untraceable transfer effect. It is widely used in personal privacy protection, but it is also used by criminals for money laundering. Although the tool was sanctioned by the U.S. Treasury Department in 2022, in March 2025, the United States finally withdrew its economic sanctions on Tornado Cash. This also triggered a discussion on the "boundary of technical responsibility".

However, law enforcement officers in different countries have different understandings and judicial standards of "technical neutrality".

In the current judicial practice in my country, whether a crime is constituted does not depend on whether you have personally committed illegal or criminal acts, but on whether the "technical services" you provide have played a "substantial role" in the upstream crime.

In other words, if your technical work objectively plays a role in "lowering the threshold" for criminal activities - such as providing anonymous transfers, currency mixing functions, and means of circumventing KYC, it will no longer be "neutral" but "assistance".

The second blind spot of legal risks: "I am just an employee of a small platform and will not be targeted"

The wallet company involved is registered in the Philippines, and its middle and senior management are all overseas, but its business focus is mainly on mainland China. It employs domestic technical personnel and customer service through the "remote collaboration" model, and the overall operating structure is loose, which is a typical "decentralized employment" model of Web3 projects.

This kind of "distributed office + domestic and foreign collaboration" architecture is very common in currency projects, and it is also easy to bury compliance risks.

It is understood that the reason why law enforcement officers determined that the platform was suspected of violating the law was based on a number of key clues:

• The wallet system has the function of "multi-level collection + anonymous currency mixing", and the capital flow path is highly consistent with gambling-related behaviors;

• Highly sensitive keywords such as "currency mixing optimization" and "anti-tracking" appeared in the technical documents, which are suspected of evading supervision;

• The entire platform lacks due diligence records for high-risk merchants, and has not established an effective risk control mechanism.

Although technical staff do not directly handle funds and do not understand the background of merchants, as long as the system tools they develop have the objective effect of "lowering the threshold of crime" or "weakening the regulatory effect", they may also be held accountable according to law. This is the logic path that is frequently applied in current "technology-involved" criminal cases.

Compared with Binance, OKX and other leading virtual asset trading platforms, small Web3 projects that lack compliance mechanisms are more likely to be "prioritized" by law enforcement agencies. The reasons are very realistic:

• The leading platforms have a large number of users and complex overseas structures, making cross-border investigations difficult, time-consuming and costly; while small platforms often have personnel in the country, making arrests more "efficient";

• Large platforms have generally established compliance lines such as KYC real-name authentication and AML anti-money laundering, forming a "technology + law" double moat; while small platforms often lack such mechanisms;

• Most mainstream platforms are equipped with law enforcement docking systems (such as API linkage and law enforcement data channels), which show a high degree of cooperation in investigations; small platforms are more likely to become targets due to insufficient compliance capabilities and lack of response mechanisms.

As for the question of "profit-seeking law enforcement" mentioned by the consultant, there is indeed a policy background. For example, in the "Law of the People's Republic of China on Promoting Private Economy" implemented on May 20, 2025, many articles mention that the rights of private economic organizations and their operators must be specifically protected, and no unit or individual may infringe upon them; it is firmly prohibited to abuse power for economic interests and other purposes to implement off-site law enforcement.

However, it is worth noting that the core objects of such policy protection are physical enterprises that operate in compliance with regulations. As for the currency circle projects that were originally in the legal gray area, under the cover of regulatory red lines such as the "94 Announcement" and the "924 Notice", due to the lack of compliance endorsement, their space for seeking policy exemptions or rights protection is quite limited.

Legal risk blind spot 3: Legal dangers hidden under high salary of remote work

The reason why the technician in this case took this job was that he was attracted by the "remote work + monthly salary of 40,000 yuan" offered by the other party. No need to punch in, no limit on working hours, working from home, and high degree of freedom; compared with traditional Web2 positions, this kind of treatment is almost a "dream job" for many programmers, especially young people.

But he did not notice several obvious high-risk signals at the time:

• The project party's registered place is unclear, and the salary settlement method is USDT (virtual currency) transfer;

• There is no written labor contract, and all arrangements are communicated only through Telegram groups;

• There is no compliance audit, KYC process or anti-money laundering system, and there is no public material for the project;

These appearances have long exposed the common characteristics of "high-risk platforms".

However, many technicians do not have enough risk prevention and control concepts. Faced with the attractive "freedom + high salary" shell, few people will take the initiative to review the compliance of the platform. Once something goes wrong, they realize that they have already stepped into the gray area.

How can Web3 technicians protect themselves in compliance? Lawyer's advice ➡️

In the gray area of ​​Web3 legal supervision, if technicians want to protect themselves, the first step is to establish basic legal risk awareness and compliance prevention and control thinking.

Before contacting or joining any Web3 project, be sure to judge and self-check from the following key points:

• Whether the project is registered in a clear and regulated jurisdiction;

• Whether there is a third-party code audit or security audit by a professional organization;

• Whether there are anti-money laundering and user identity identification systems such as KYC and AML;

• Whether basic information such as the project leader, team background, and funding source is disclosed to the public.

After joining the company, you must keep a distance from high-risk functional modules, especially those involving:

• Mixer, anonymous transfer, privacy coins;

• Bypassing or circumventing KYC, blacklist shielding and other mechanisms;

• Tool development to assist users in hiding the source of funds or bypassing censorship.

If you encounter suspicious instructions or pressure from the project party, be sure to keep relevant communication records (such as Telegram chat screenshots, meeting minutes, etc.) to leave key evidence for possible self-proof in the future.

When signing a technical cooperation agreement or outsourcing contract, it is recommended that technical personnel clearly stipulate:

• Do not directly access user funds accounts;

• Do not process user personal identity data or sensitive information;

• Do not participate in marketing activities involving promotion, distribution, token sales, etc.

Drawing these "legal red lines" can not only avoid stepping on mines, but also clarify the boundaries of responsibility afterwards.

If there are still doubts about the legality and compliance of the project, it is recommended to find a professional lawyer team to do a "project compliance physical examination" as soon as possible. This can not only detect potential legal risks in a timely manner, but also help technical personnel evaluate the boundaries of criminal responsibility that their roles may bear, and prevent problems before they happen.

Lawyer's reminder: Technical tools are innocent, but actual use may be responsible

Web3 practitioners should be aware that:

When dealing with issues at the boundary between technology and law, Chinese law enforcement officers tend to judge whether an act is harmful to public interests and social order based on the actual use of technical tools and the impact they have on society.

In recent years, our team has handled many major new cases in the Web3 industry, and has also participated in early compliance and risk reviews in multiple projects. Therefore, we can provide consultants with customized legal examinations and compliance advice in a more targeted manner. If you are also a technical practitioner or project operator in the Web3 field, or have questions about project compliance, please come and chat.

I hope that every practitioner who is moving forward in the new technology wave can move forward more steadily and soberly.