Legal Popularization: Do not post USDT trading advertisements on WeChat Moments

Author: Lawyer 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 the title of the article is that recently Mankiw has discovered that many individuals or businesses have 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 responsibilities 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 friend circles

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

1. Pure buying and selling information:such as “Buy U at high prices”, “Sell USDT at low points”, “Spot arrives 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 "stable channels", "no worries about large amounts", "security and privacy", which are essentially acting as OTC intermediaries.

3. Promotion related to virtual currency investment:For example, "USDT financial management projects", "high-yield arbitrage", etc., use virtual currency as an investment vehicle to attract funds, which may actually involve capital disks or fraud.

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

On the surface, these advertisements are not much different from ordinary marketing promotions, but under the current regulatory system in China, such behavior can easily cross the legal red line.

Legal liability that may be involved in posting USDT trading advertisements in Moments

1. Violation of financial regulatory provisions and constituting the crime of illegal business operations

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 posting USDT trading advertisements for a long time, attracting customers to trade and profit from them, may be deemed as the crime of illegal business operations

The 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 Mankiw's opinion, 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 (III)").

2. Possibly involving the crime of assisting information network criminal activities

With the widespread use of virtual currency in illegal activities such as telecommunications fraud and online gambling, regulators have been stepping up their crackdown on related transactions. If someone posts a USDT transaction advertisement in WeChat Moments and facilitates the circulation of some illegal funds, even if the trader himself is not aware of it, he may still be held accountable for the crime of aiding and abetting information network criminal activities (Article 287-2 of the Criminal Law). The key point of this crime is whether the transaction party "knows 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 for it to become a tool for transferring illegal funds, causing the transaction matchmaker to face legal risks.

In July 2023, the Public Security Bureau of Qinshui County, Shanxi Province, cracked 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 found to be aiding and abetting because they provided convenience and transaction information.

3. 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 are actually disguised capital operations. Once the capital chain of such behavior is broken and the victim reports it, the advertiser may be held legally responsible for the crime of illegally absorbing public deposits or the crime of 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 fund-raising 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 fund-raising 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 are subject to high legal risks. The following 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 identified by the regulatory authorities as providing virtual currency transaction matching services, and then be held accountable. Even if you forward it for a friend, you may face investigation for

OTC transactions are the focus of regulatory crackdowns, and many intermediaries engaged in over-the-counter 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, 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, he or she may face serious legal consequences and even be included in the bank's "blacklist."

3. Stay away from "arbitrage" and "financial management projects" propaganda

Any USDT investment project that promotes "guaranteed profit" or "stable high returns" is likely to be a Ponzi scheme scam. Once the project collapses, the advertiser may become the target of the victim's accountability, and 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 that have cross-border payment and digital asset management needs, they can consider setting up compliance companies in Hong Kong, Singapore and other places, applying for relevant financial licenses, and using regulated channels for business operations. This can not only avoid domestic regulatory risks, but also ensure transaction security and compliance.

Mankiw Lawyer Summary

Posting USDT trading advertisements on WeChat Moments may seem like simple marketing, but in fact it involvesillegal operations, aiding crimes, financial fraudand other multiple legal risks. If you are not careful, you may touch the criminal red line. At present, in mainland China, the safest approach for both 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 provisions.

If you have already 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 harmed. In the current regulatory environment, maintaining compliance is the safest choice. Any behavior that skirts the law may bring unforeseen legal risks.