Written by: Liu Honglin
With the overall economic downturn, layoffs at major Internet companies are no longer news. Job opportunities in the traditional Internet industry are also decreasing. More and more traditional Internet practitioners are beginning to consider changing tracks and working in Web3.
* Job postings for some Web3 projects
When they search for relevant information, similar recruitment information emerges in an endless stream. Generally speaking, these positions have good salaries and flexible working hours, and they do seem to be good choices for employment. However, attorney Mankiw would like to remind new workers who are not familiar with Web3 that there are many tracks in the Web3 industry, and they need to be cautious when choosing to enter the industry. There are some tracks and companies that domestic practitioners must not touch.
A red line: the issuance and fundraising of virtual currencies
Since the People's Bank of China and seven other departments jointly issued the "Notice on Preventing the Risks of Token Issuance and Financing" in September 2017, the issuance and fundraising of virtual currencies in China has been clearly defined as "unauthorized illegal public financing." In September 2021, the People's Bank of China, the Supreme People's Court and ten other departments jointly issued the "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" to further supplement and strengthen this view. Since 2017, there have been more than a hundred actual criminal cases of varying sizes in China, with related charges involving "illegal absorption of public deposits" or "fund-raising fraud."
The most famous one is of course the Light Cone Coin issued by Tianyi Jiahe from 2017 to 2018. At the time of issuance, tens of thousands of people held the coin. In the end, the relevant personnel were jailed and convicted of fund-raising fraud. Earlier, there was the Dasheng Coin issued by Guozheng Company in China from 2016 to 2017, which was also convicted of fund-raising fraud.
Therefore, for new practitioners who are new to Web3, the first thing to be aware of is this red line. The entire cryptocurrency community has already reached a consensus on this. Formal new coin issuance projects will also specifically exclude Chinese users and the RMB as legal currency during ICO (Initial Coin Offering, the first token issuance, which originated from the IPO of the securities industry). When domestic practitioners choose a job and find that the employer's business may involve the issuance of domestic virtual currencies, they should have sufficient legal awareness and make reasonable choices.
High risk: Exchange business
According to the Notice on Further Preventing and Dealing with the Risks of Speculation in Virtual Currency Transactions jointly issued by the People's Bank of China, the Supreme People's Court and ten other departments in September 2021, the business of virtual currency exchanges was officially declared as illegal financial activities, including the exchange of legal currency for virtual currency, and the exchange of virtual currencies. It was also around the time of this regulation that exchanges in China were shut down one after another.
At that time, the central bank's regulatory authorities specifically interviewed the exchanges that were still operating in China at the time, including Huobi, Binance, OKX, etc. These platforms each reported their plans to shut down their domestic businesses and eventually migrated all of them. Only a very small number of small exchanges that were scams and did not comply with legal changes, such as the so-called Aston Exchange and ICC Investment Platform, were eventually convicted of fraud.
Now, although all major exchanges are licensed to operate overseas and have completed exchange compliance, there are still many developing exchanges that do not have such compliance awareness. When new practitioners notice that their employer's business involves exchange business in China, they should be vigilant and aware of the legal risks involved.
Be extremely vigilant: Cryptocurrency mining
Unlike the above two risks, the act of using mining machines for mining does not involve various criminal risks in my country's financial supervision. However, in China, mining itself is suspected of violating the (Energy Conservation Law) and may face fines and forced closures from relevant agencies.
In fact, many of the former mining farms in China have long been closed down under legal control. In the early days, there was a lot of hydropower in Sichuan, so the electricity price was cheap. At one time, quite a number of large-scale mining farms were established, and some people even acquired small hydropower stations to power their own mining farms. Now, all of this has become a thing of the past. Therefore, there are no large-scale virtual currency mining farms in China, but some criminals have set their sights on this concept. At present, there have been many cases of pyramid schemes with the concept of mining machines as the core in China. Therefore, when new Web3 practitioners notice that their employers are conducting mining business in China, they should be alert in time, find out the employers' real business, and avoid being involved in unnecessary disasters.
Be careful to identify: Don’t get involved in “money laundering” crimes
Unlike the first three points where you can draw a conclusion with just a little attention, it may be difficult for new Web3 practitioners to make an accurate judgment before joining the company whether the employer's business involves "money laundering" crimes. But precisely because of this, they must be more careful in identifying.
Currently, in countries around the world, many Web3 businesses involve blockchain technology with excellent decentralization effects, and there are endless cases of "money laundering" crimes using Web3. In 2023, Binance, the world's largest virtual currency exchange, had more than 60,000 cases with judicial institutions in various countries, most of which were related to the flow of criminal proceeds and "money laundering" crimes. Whether before or after actual employment, when you have questions about related businesses, it is the right choice to ask people who can provide accurate opinions in a timely manner.
As early as the beginning of 2023, Mankun Law Firm wrote about the common ways of using virtual currency to launder money (Common ways of using virtual currency to launder money and criminal legal risks). The article pointed out the process of virtual currency money laundering. It is recommended that new Web3 practitioners should be vigilant once they find that their business model conforms to this type of routine. It is better to be safe than sorry.
Attorney Mankiw's Summary
When new Web3 practitioners apply for various Web3 positions, in addition to being concerned about salary and rest days like traditional workers, they should also pay attention to the actual business areas of the employer. Of course, the Web3 field is changing with each passing day, and new tracks and gameplay are often designed. If you are not a senior participant, it may be difficult to make a judgment. When you cannot judge whether the relevant job position is reliable, it is the awareness of every Web3 worker to consult people who understand the industry in time to protect yourself.