Four High-Risk Project Models That Web3 Developers Should Beware Of

Entrepreneurs and practitioners in the Web3 field often have a misconception: as long as the project is registered overseas and the servers are deployed abroad, it can achieve "natural compliance." However, in reality, whether a project is compliant depends on its business model, funding structure, and operational substance, rather than the superficial offshore structure. For teams that are still providing services to Chinese users within the country, it is even more important to pay special attention to the project's legal boundaries and criminal compliance risks.

This article will analyze four common high-risk project models in the Web3 field, helping developers to establish basic identification abilities from the perspectives of project structure, system functionality, and token circulation, in order to avoid these high-frequency risk project types in the early stages.

1. Crime of Operating a Casino - The Most Severe Offense

In the Web3 field, gambling-related projects are the most common type that technical developers easily stumble upon, especially prevalent in GameFi or blockchain gaming systems. Common models of gambling-related projects include:

• Gambling decentralized application ( DApp )
• Online casino platform for betting using virtual currencies like USDT.
• On-chain games featuring random gameplay such as lotteries, openings, and blind boxes.

The construction of gambling systems often relies on smart contract logic and wallet interactions, where developers play a key role in the technical implementation. Even if they are not platform operators, they may still be held liable as accomplices due to their involvement in system development.

2. Organizing and leading pyramid selling activities - The most covert crime

The concealment of this crime lies in the fact that it often appears in the forms of "new user promotion", "community incentives", "node rebates", etc. Common models of pyramid schemes include:

• Air coins or platform coin projects, obtain investment qualifications by "paying money"
• Multi-level reward structure, referral rebates, develop downlines
• Node plan/ambassador mechanism: rely on "headcount" to gain profits, not dependent on the products or services themselves.

Once the incentive structure is established on "pay-to-enter + tiered commissions + pyramid-style hierarchy", technical personnel, even if they only participate in backend system development, may be included in the scope of criminal liability due to their "indispensability".

3. Crimes Related to Illegal Fundraising - The Most Clearly Defined Crimes

Common models involving illegal fundraising in Web3 projects include:

• Issuing tokens for financing without financial regulatory approval.
• Promises of high returns, static dividends, and capital protection buyback
• Fictional financial management platforms, mining machine investment platforms
• Establish a fund pool to redeem tokens or points within the platform.

If technical developers are deeply involved in modules such as token issuance systems, mining machine rebate logic, and points exchange structures, they may be held legally accountable for constructing a closed funding loop or assisting in illegal fundraising, even if they do not directly raise funds externally.

4. Illegal Business Operations - The Hottest Crime Currently

In recent years, judicial authorities have continued to intensify their crackdown on crimes in the foreign exchange sector, with Web3 projects or "crypto-related cases" being a key area of focus for regulation. Common high-risk behaviors include:

• Provide payment settlement, over-the-counter (OTC) services, token redemption, and other functions.
• A platform that operates a trading entrance for RMB fiat currency without permission.
• Provide intermediary matching services for virtual currencies and foreign currencies.

If developers are responsible for building core components of the cryptocurrency matching system, OTC trading module, fiat deposit channels, or withdrawal paths, there are higher legal risks involved.

By understanding these four types of high-frequency criminal risk patterns, Web3 developers can establish a basic ability to identify "criminal law red lines." However, merely knowing where the red lines are is far from sufficient. How to quickly make preliminary judgments when facing new projects, assess the legal responsibilities their roles may bear, and grasp what practical experience and compliance advice are needed, requires further discussion.