Analysis of Cross-Border Legal Risks for Web3 Industry Practitioners

With the development of blockchain technology, public chain networks such as Ethereum, as a global public infrastructure, are gradually demonstrating their enormous potential as the next generation of the value internet. However, their decentralized nature has also brought regulatory challenges, with crimes such as fraud, theft, and money laundering exhibiting characteristics of internationalization and concealment. Traditional cross-border criminal jurisdiction and law enforcement systems have struggled to effectively respond to these new types of crimes.

This situation is driving significant reforms in traditional cross-border criminal jurisdiction and law enforcement systems in various countries. This article will explore the legal risks of Web3 practitioners "physically going abroad" based on relevant Chinese legal provisions.

Basic Concepts of Cross-Border Criminal Jurisdiction and Law Enforcement

Before discussing cross-border criminal jurisdiction and law enforcement, it is necessary to clarify the core concept of sovereignty. Sovereignty is the cornerstone of the modern international legal system, meaning that a state possesses the highest and final authority within its territorial boundaries. At the same time, the principle of sovereign equality requires that countries respect each other's sovereignty and refrain from interfering in the internal affairs of other states.

Based on this, the exercise of jurisdiction can be divided into internal and external aspects. The internal exercise of jurisdiction is a direct manifestation of national sovereignty, while the external exercise is subject to strict limitations to avoid infringing on the sovereignty of other countries. Cross-border criminal jurisdiction and law enforcement, as a form of "law enforcement jurisdiction" exercised externally, are necessarily subject to strict constraints.

In recent years, some developed Western countries have arbitrarily expanded their jurisdiction using economic advantages, implementing long-arm jurisdiction over overseas enterprises and individuals, which is essentially an abuse of cross-border criminal jurisdiction and law enforcement.

Cross-Border Criminal Jurisdiction and Law Enforcement Practices in China

Chinese judicial authorities must first determine jurisdiction over the relevant criminal suspects and their actions when conducting cross-border criminal jurisdiction and law enforcement, and then request assistance from foreign countries through criminal judicial assistance procedures.

Determination of Jurisdiction

China's cross-border criminal jurisdiction is mainly based on three grounds:

1. Personal jurisdiction over Chinese citizens
2. Protection jurisdiction for foreign citizens
3. Universal jurisdiction based on international treaties or other international legal obligations

For Chinese citizens committing crimes abroad, jurisdiction is generally determined based on the principle of nationality jurisdiction. Article 7 of the Criminal Law stipulates that Chinese citizens who commit crimes abroad are subject to Chinese criminal law, but if the maximum penalty is less than three years of fixed-term imprisonment, prosecution may not be pursued.

For crimes committed by foreign citizens abroad that endanger China or Chinese citizens, Article 8 of the Criminal Law states that if the minimum penalty is more than three years of fixed-term imprisonment, Chinese law may apply, except where the law of the place of the crime does not impose punishment.

In addition to determining jurisdiction, it is also necessary to examine whether the crime meets the "dual criminality principle", meaning that the relevant acts constitute a crime in both the requesting country and the requested country. This is a fundamental principle of international criminal judicial assistance and has been widely applied in procedures such as investigation and evidence collection, service of legal documents, enforcement measures, extradition, and case transfer.

Submission of requests for criminal justice assistance and case advancement

Criminal judicial assistance is the basis for cross-border jurisdiction and law enforcement. China's "Law on International Criminal Judicial Assistance" provides clear regulations on this, covering various aspects such as serving documents, investigating and collecting evidence, arranging for witnesses to testify, seizing and freezing property involved in the case, and confiscating and returning illegal gains.

The subject making the request for judicial assistance depends on whether there is an assistance treaty between China and the requested country. If there is a treaty, it is proposed by the Ministry of Justice and other relevant departments within their authority; if there is no treaty, it is resolved through diplomatic channels. It is worth noting that China has signed criminal judicial assistance agreements with some Western powers and has had multiple cooperative practices.

Recent Analysis of Cross-Border Cryptocurrency Asset Fraud Cases

Taking a cross-border cryptocurrency fraud case publicly announced by the Jing'an District Procuratorate in Shanghai as an example, the criminal gang lured victims into investing in cryptocurrency by posing as "senior mentors" and other identities. The Shanghai police discovered through investigation that this was a cross-border telecom network fraud group that carried out scams under the guise of multiple "gambling" websites or investment platforms.

In this case, the investigating agency did not apply for criminal judicial assistance from foreign countries, but instead apprehended 59 suspects who had returned to China through domestic monitoring. This reflects that although China has signed judicial mutual assistance treaties with multiple countries, the actual utilization rate is low, possibly affected by inefficiencies and complicated procedures.

Conclusion

It is important to emphasize that Web3 practitioners are not "born criminals," and businesses related to crypto assets do not necessarily constitute a crime under Chinese law. Some misunderstandings in society regarding Web3 practitioners partly stem from the relatively cautious attitude of related policies towards blockchain technology, as well as some "profit-driven law enforcement" actions.

However, if Chinese citizens deliberately use crypto assets as a guise to commit crimes against domestic citizens abroad, even if they "physically leave the country", they will still be subject to sanctions under Chinese criminal law. Web3 practitioners should strictly abide by the law, operate in compliance, and avoid crossing legal boundaries.