Financial Bloggers Investigated for Recommending Investments, Revealing the Legal Red Lines Behind Them! Article Authors: Zhao Xuan, Liu Chang Introduction: When “Traffic” Collides with the Hard Wall of “Franchise” Traffic is the wealth code of the internet, but once it crosses into finance, it steps on the legal red line of franchise.

Recently, according to an article on Sina Finance, a financial blogger with millions of followers was investigated for sharing financial advice? In the face of transparent supervision, “operating financial business without a license” is the final verdict.

Perhaps some Web3 bloggers are still thinking: “I promote overseas exchanges and send encrypted links, can’t the country control that?” The answer is: it can be controlled, and it’s even stricter. The financial franchise right is an iron law.

Let’s first look at two domestic cases to see the real consequences of unlicensed “financial endorsements” –

Case 1: [Crime of Illegal Business Operation] Case of Internet Celebrity Wu Moumou Case: The defendant did not have securities investment consulting qualifications, but relied on his influence to establish a paid “circle” on social platforms to provide paid stock recommendation advice. This investment advisory behavior disguised as “knowledge payment” allowed him to illegally profit more than 12.00 million yuan.

Result: The court found that he constituted illegal operation of securities business. He was sentenced to two years and four months in prison and fined 13.00 million yuan. The money earned is not enough to pay back.

Case 2: [Crime of Illegal Business Operation] Case of Financial Blogger Xu Moumou Case: Compared with Wu Moumou, Xu Moumou is closer to the Web3 endorsement model. He knew that the so-called “over-the-counter sub-account system” was illegal, but still directed fans to open accounts and trade options. His income was not membership fees, but a transaction commission of 20.00 yuan per order, involving a flow of funds of more than 16.00 million yuan.

Result: Similarly, he was convicted of the crime of illegal business operation.

A simple comparison can reveal the risks:

First: If someone does not have a license and charges for recommending legitimate stocks and funds, this is already an illegal operation, which will violate the “Criminal Law” and face severe penalties.

Second: In the Web3 field, many businesses themselves are suspected of “illegal fundraising” or “illegal securities activities” in China and are strictly prohibited. If, on this basis, operations such as “contract endorsement” and “cross-border commission rebates” are carried out, it is not just a matter of “no license”, but directly stepping on the red line explicitly prohibited by law.

The conclusion is clear: the latter behavior is more serious in nature, and the legal risks faced are naturally greater. In simple terms: it is illegal to recommend legitimate things without a license, so operating in prohibited areas is compounding the error, and the consequences are more serious.

Deconstructing the Chaos: The “Rampage” of Web3 Contract Endorsement and Commission Rebates

The current Web3 industry is still in its early stages of development, and most platforms are in a period of expansion, launching various incentives and gameplay to attract users. However, these gameplay methods often face different legal recognitions in different legal jurisdictions, and risks also emerge.

From the perspective of Chinese mainland law, there are currently three common but extremely risky models:

1. “Flow Copy Trading” Model – Operating Other People’s Assets Without a License

Some traders are not satisfied with analyzing market conditions, but directly use the exchange’s copy trading system to attract fans to follow with one click, and the trader draws 10%~30% of the profits. Under this model, the amount of endorsement often reaches tens of millions to hundreds of millions. In the eyes of traders, this is “making a fortune with the brothers” and making some money along the way; but from a regulatory perspective, this is already an illegal act of operating other people’s funds, suspected of illegal business operation.

1. “Domestic New User Acquisition with Commission Rebates” Model – Illegal Solicitation and Risk Upgrade

Many anchors attach exclusive registration links or commission rebate codes when analyzing market conditions in the live broadcast room, and even directly display their domestic social media accounts to gain trust. This type of behavior has a clear orientation towards users in mainland China, and may constitute “illegally carrying out business solicitation in mainland China” in law, and the act of using domestic accounts will significantly increase the risk of being held legally responsible.

1. Intensification of Interest Bundling – From “Earning Commissions” to “Eating Customer Losses”

This is the most dangerous mode of operation. In the past, some KOLs mainly profited through transaction fees, although this itself is also suspected of being illegal, but it has not directly used users’ losses as a profit target. Now, some small platforms have reached a “customer loss sharing” agreement with KOLs – that is, the more users lose, the higher the revenue the blogger gets from it. When you think the blogger is teaching investment skills or helping you make money, the real motive behind it may be coveting your principal.

In-depth Analysis: The “Triple Criminal Red Line” of Web3 Business Expansion

As a lawyer who has handled a large number of related cases, I want to clearly point out that when you share a copy trading link or a commission rebate link, you may have actually stepped into several clear criminal law red lines. The following are some of the most likely crimes involved and their identification logic:

1. Crime of Illegal Business Operation

Many people have argued that “virtual currency is not money, but just a commodity”, but this statement has been seriously challenged after the “924 Notice” was issued in 2021. Current judicial practice tends to: if you guide domestic personnel to participate in such activities and make it your business, and it involves large-scale fund settlement, the court is very likely to determine that you are essentially engaged in “illegal fund payment and settlement” or “illegal operation of securities and futures business”. In short, once the endorsement or commission rebate reaches a certain scale, criminal risk has already formed.

1. Crime of Aiding Information Network Criminal Activities (“Aiding Crime”)

This is one of the crimes that public security organs have focused on cracking down on in recent years. As long as the platform you promote involves money laundering, fraud and other illegal and criminal activities, or has not been licensed to carry out business in China, your promotion behavior may be identified as “providing promotion assistance for criminal activities”. Judicial organs often question when handling cases: “As an industry insider, don’t you know that the country prohibits these platforms from carrying out business in China?” In this case, it is easy to be presumed to be “knowing” and providing assistance, thereby convicting the crime.

1. Crime of Fraud (The Most Serious Red Line)

If the platform you promote or the trader you cooperate with has a “customer loss sharing” model – that is, profiting from user losses, then the nature of the entire behavior may be upgraded from violation to criminal fraud. In this model, the endorsement staff fabricate the fact that “making money for you” and conceal the truth that “making money by your losses”. In judicial practice, it is very likely to be characterized as a co-conspirator of fraud. Once the amount involved reaches a certain standard, the sentence often starts from more than ten years. In addition, this type of behavior may also involve other criminal risks such as money laundering and illegal trading of foreign exchange.

In summary: From sharing links to collecting commissions, it is by no means a simple “promotion behavior”. Under the current legal framework, this may already constitute a systematic and professional illegal and criminal link. Every participant in each link may become a link on the chain of criminal responsibility.

Mankun Compliance Guide: “Risk Aversion Manual” for Digital Financial Intermediaries

As a legal practitioner in the Web3 field, I deeply understand the practitioners’ love and investment in the industry, but I am even more unwilling to see talented creators fall into criminal risks due to a lack of understanding of legal boundaries. If you are still engaged in business in related fields, please be sure to pay attention to the following “risk avoidance guidelines”:

1. Strict Separation of Content and Commerce

Technology belongs to technology, and commerce belongs to commerce. If you are writing professional content such as industry analysis and technical interpretation, please do not include any “commission rebate codes”, “registration links” or “invitation codes” in the article. Once content and for-profit promotion appear at the same time, its nature may change from “knowledge sharing” to “illegal promotion”, thereby triggering legal risks.

1. Clarify Service Regional Restrictions

If you are operating a social media or channel for overseas users, you should state in a prominent position that “services are not provided to users in mainland China”. Although such a statement cannot completely avoid responsibility, it can be used as important evidence in legal proceedings that you have “no intention of soliciting domestically”.

1. Clarify Your Source of Profit

If your income is linked to users’ trading losses, please stop immediately – this is suspected of fraud; if it comes from commission sharing or endorsement sharing, you need to be soberly aware that you are essentially providing support for unlicensed quasi-financial activities, which itself has a high legal risk.

1. Establish a Content Compliance Bottom Line

Avoid providing specific trading advice, shouting orders, or promising returns in live broadcasts or public content. You can discuss technology trends (such as Layer 2, AI and Web3 integration), but resolutely stay away from sensitive expressions such as “principal protection, high returns, and copy trading”, which are very likely to trigger financial violations.

Legal risks often stem from negligence in daily details. In the process of the industry moving towards maturity and standardization, establishing compliance awareness in advance is not only a protection for one’s own business, but also a responsibility for the industry ecology.

Conclusion: Traffic Can Be Monetized, But Should Be Awed

Web3 is an imaginative field that represents the innovation of technology and production relations. However, no matter how technology evolves, one thing remains the same: financial business must not be operated without permission, which is the common bottom line of all jurisdictions around the world.

Today, the legal boundaries of digital intermediaries are becoming clearer and tighter. Traffic itself is not the original sin, but if it is used to guide others to participate in non-compliant financial activities, then traffic may be transformed from a communication tool into a carrier of illegality or even crime. The future of Web3 belongs to those who not only master technology, but also deeply understand the rules and can move forward steadily in it.

[Mankun Blockchain Legal Services]