Are there any legal risks in casting and selling NFT?

Are there any legal risks in simply casting NFT? Regarding this question, we merged it into the legal risk of the NFT trading service platform to answer it together for everyone.

A friend in the industry left a message asking if there is any legal risk for simply casting NFT? Regarding this question, we merged it into the legal risk of the NFT trading service platform to answer it together for everyone. The act of simply casting NFTs is essentially a “neutral technical act” that has no regulatory significance. However, given that NFTs have certain financial attributes and are easy to use, they still need to pay special attention to the entanglement between information and cybercrimes. . Today’s article is written by Dr. Li Xu from the team. The style of writing is more academic. If you have any questions about understanding, you can leave a message to Sister Sa at the end of the article. We will answer you in time.

1. Crimes of NFT Platform Supplying and Helping Information Cybercriminal Activities

Under the strict legal protection of legal interests and the pre-positioned legislative guidance, limiting the criminal space of neutral help behaviors and rectifying the helping behaviors is a manifestation of the active preventive function of the criminal law, and it is also a kind of judicial interpretation of the past. confirm. In this context, the “Criminal Law Amendment (9)” added Article 287 bis to the crime of assisting information network criminal activities.

(1) Crimes of helping information cybercriminals

The crime of helping information cybercriminals mainly refers to knowing that others use information networks to commit crimes, providing technical support for their crimes such as Internet intervention, server hosting, network storage, and communication transmission, or providing advertising promotion, payment and settlement, etc. As far as the subject of the crime is concerned, the crime is a general subject, either a natural person with criminal responsibility or a unit . As far as the subjective aspect of the crime is concerned, the subjective aspect of the crime is deliberate, that is, knowing that oneself provides help for the information cybercrime committed by others. In terms of the objective aspect of the crime, the establishment of the crime requires the perpetrator to provide technical support such as Internet intervention, server hosting, network storage, communication transmission, etc., or provide advertising promotion and payment for the crime, knowing that others use the information network to commit the crime. The situation is serious because of assistance in settlement.

(2) Crime-related risks of NFT platform supply

NFT is still an emerging technology. Although the technology has a broad market prospect, judging from judicial practice at this stage, there are no cases involving NFT technology in my country. Based on this, the research and judgment on the crime-related risks of the NFT platform supply is mainly based on the technical characteristics and application fields of the technology to predict the possible future criminal risks . On the whole, the NFT platform supply may involve the crime of helping information cybercriminals, including the following:

1. The NFT platform supply may have behaviors that help fraudulent activities . At this stage, NFT technology is mainly used in the auction of artworks and luxury goods. However, based on the characteristics of NFT virtual transactions, investors have many cognitive obstacles to the authenticity of the goods on the chain and the qualifications of the NFT project party. The criminal perpetrator may also use this feature of NFT for fraudulent activities. For example, the perpetrator may use the counterfeit masterpieces as “authentic” auctions on the chain, thereby earning illegal profits. For another example, the perpetrator may sign a smart contract with others by fictionalizing facts and concealing the truth, and hide after the investor pays money. In these cases, as an NFT platform that facilitates transactions between buyers and sellers, there may be situations in which technical support is provided for fraudulent activities.

2. The NFT platform supply may have behaviors that help money laundering activities . Since the NFT was out of the circle, due to its transparent price, clear authenticity, and easy “transportation” characteristics, the premium of its lots has made the circle shocking inside and outside. Since most NFT auctions are traded through virtual currency, in various future NFT auctions, criminals may use their high premium status as a money laundering channel to convert the stolen money into virtual currency and use it to purchase NFT artworks. At this time, the NFT platform supply may provide technical, payment and settlement assistance for money laundering crimes.

3. The NFT platform may provide a financing platform for criminal activities such as cyber terrorist activities and gambling . The cheapness of NFT casting and the high premium of the lots make it possible to be favored by criminals. Perpetrators may use methods such as casting NFTs, colluding auctions, and raising bids to prepare funds for subsequent criminal activities. The perpetrator may also create criminal funds transmission channels by casting multiple NFTs on the platform, and use the illusion of commodity auctions on the chain to conceal the fact that it provides funds for criminal activities or transfers illegal funds. In this case, the NFT platform may provide technical support and payment settlement assistance for criminal financing and asset transmission.

2. The practical determination of the crime of assisting in information network criminal activities

In order to help the NFT supply platform conduct risk prevention and control of the crime of helping information cybercrime, it is extremely necessary to examine the identification mode of the crime in the practical process through empirical methods. For this reason, the author takes Zhejiang Province where information network crime activities are more frequent as the object of investigation , and analyzes the judicial determination of the crime of helping information network crime activities in judicial practice .

(1) The overall situation of the crime of helping information cybercriminals

1. The number of cases identified as the crime of helping information cybercrime activities is on the rise

As of July 5, 2021, a search has been conducted on the China Judgment Document Network with the keyword “helping information network activity crime”, and a total of 523 relevant judges in Zhejiang Province have been searched. Since 2016, the number of cases identified as “helping information network activity crimes” in Zhejiang Province has been increasing year by year, as shown in the figure:

Are there any legal risks in casting and selling NFT?

2. The type of help behavior is more concentrated

In the 100 cases convicted of “helping information network activity crimes” randomly selected by the author in 2020, knowing that others use the information network to commit crimes, provide others with payment and settlement assistance such as bank cards, public accounts, fund transfer channels, payment platforms, etc. There are a total of 82 cases in which they know that others use the information network to commit crimes and provide technical support to others (specifically, including providing WeChat unblocking services, website construction, intervention, software development and service provision, communication technical support, etc.); a total of 13 cases; There were 5 cases of knowing that others used the information network to commit crimes and providing other help (such as business solicitation, advertising, etc.).

(2) Assisting the identification of specific issues of the crime of information cybercrime activities

1. Identification of “knowingly”

The establishment of the crime of helping information network criminal activities requires the perpetrator to subjectively “knowingly” that others use the information network to commit crimes. Judging from the 100 cases convicted of “helping information network activities crime” selected by the author, in practice, the judge’s determination of “knowingly” has the following characteristics:

(1) The identification of “knowingly” is stricter

Among the 100 cases selected by the author, 98 cases were in which the judge identified “knowingly” based on the defendant’s confession. There were only 2 cases. The judge was still active based on the fact that the defendant had repeatedly frozen his account in the public security organs. Participate in objective conditions such as payment and settlement on the platform, and make a presumption of subjective knowledge. In all cases, the judge’s determination of “knowingly” is corroborated by witness testimony, transaction flow and other evidence.

(2) The degree and content of “knowingly” is relatively broad

On the one hand, “knowingly” includes both “knowingly” and “knowingly possible.” Judging from the judgments of 100 cases, the conviction of the crime of helping information cybercrime is not limited to “confirmed knowledge”. The perpetrator only knows vaguely, or can reasonably suspect that the service recipient may be based on business experience and information of the other party. In the case of using the information network to commit a crime, it can also be regarded as “knowingly”. On the other hand, “knowingly” is not limited to knowing that the act committed by the other party is a criminal act stipulated by the criminal law. Judging from the judgments of 100 cases, as long as the perpetrator understands that the other party uses the services provided by him to carry out illegal and socially harmful activities, it can meet the “knowingly” requirement of helping information cybercrime convictions. The actor’s lack of a clear understanding of whether the other party’s behavior meets the criminal constitution stipulated by the criminal law does not affect the determination of “knowingly”.

(3) The legality of network services may affect the determination of “knowingly”

In a case handled by the People’s Court of Yongkang City, Zhejiang Province, the perpetrator illegally engaged in the business of reselling simulated futures, stocks, and foreign exchange software, and the software provided by it was used in fraudulent activities. In this case, the judge did not conduct an in-depth investigation of the perpetrator’s subjective state, but presumed that he had already known the situation of “others using the information network to commit crimes.”

2. Determination of “Serious Circumstances”

Before the Supreme People’s Court and the Supreme People’s Procuratorate’s “Interpretations on Several Issues Concerning the Application of Laws in Handling Criminal Cases such as Illegal Use of Information Networks and Helping Information Network Criminal Activities” were issued, the prosecution standards with serious circumstances were confusing, and judges were unable to accurately grasp the standards, leading to practice Severe standard arbitrariness in the plot. However, after the introduction of this interpretation, the criteria for determining “serious circumstances” have become clearer . Specifically include the following situations:

(1) Providing assistance to three or more objects;

(2) The payment settlement amount is more than 200,000 yuan;

(3) Providing funds of more than 50,000 yuan through advertising, etc.;

(4) The illegal income is more than 10,000 yuan;

(5) Those who have received administrative punishments within two years for illegally using information networks, helping information network criminal activities, endangering the safety of computer information systems, and helping information network criminal activities;

(6) The crime committed by the assisted object causes serious consequences;

(7) Other serious circumstances.

Third, the risk aversion of NFT platform supply

Generally speaking, different types of network service providers should have different duty of care for crime risks. But at this stage, our country does not enumerate the types of network service providers to construct different types of network service providers as obligations. In this case, the NFT supply platform as a network service provider should tighten the regulatory system as much as possible to prevent unnecessary criminal compliance risks.

1. Fully understand your own user situation, do KYC well , conduct user real-name verification under the premise of ensuring data compliance, and save relevant user information and transaction records.

2. Self-regulate with reference to the anti-money laundering laws and regulations of domestic financial institutions and similar financial institutions .

3. Purchase an anti-money laundering monitoring system , monitor the platform business in real time, and refuse to provide services to customers with high money laundering risks.

4. Implement the subject review and information disclosure obligations , especially the entry verification and regular update obligations of the platform operator and the platform operator’s subject identity and business license information. Strengthen the provisions of the platform agreement rules regarding entry and exit platform services, product service quality assurance, product service legality regulations, consumer rights protection, etc., and specify a list of prohibited and restricted products and information on prohibited and restricted products.

5. Strengthen the review of the ownership and content of the products on the chain to prevent doubts about the ownership of the products on the chain, and the content of the products contains illegal content such as gambling website promotion, obscenity and illegal fundraising.

6. Strengthen the standardization of platform operation and ensure that the content of platform operation does not violate current laws and regulations.

Write at the end

The establishment of the crime of helping information cybercriminals has strengthened the supervision responsibility of network service providers to a certain extent. With the continuous increase in the number of cases convicted of crimes of helping information network activities in practice, the NFT platform should also take precautions, improve its own supervision system , and control the risk of crime to a minimum.

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