How Web3 Project Developers Can Avoid Legal Risks

In the Web3 field, the compliance of a project not only relates to the long-term development of the enterprise but also directly affects the legal risks for technical personnel. As a developer, identifying potential legal hazards at the early stages of a project has become an essential skill. This article will provide practical insights to help developers establish a basic risk identification framework.

Four Types of High-Frequency Illegal Risk Patterns

1. Gambling-related projects

Typical features: Recharge entrance + Random gameplay + Withdrawable path

Key Judgement Point:

• Is there a virtual currency recharge?
• Are there any uncertain gameplay options such as lotteries or betting?
• Can the project tokens be exchanged for mainstream currencies and withdrawn?

This closed loop of "deposit-bet-withdraw" is easily seen as gambling behavior. Even if the developers are only responsible for the front end or wallet integration, they may face risks for participating in the construction of a gambling system.

2. Pyramid selling projects

Typical features: user payment + invitation commission + multi-level rebate chain

Key judgment points:

• Is there a fee to participate?
• Is there an invitation reward mechanism?
• Is there a multi-level rebate structure?
• Is profitability primarily dependent on personnel development rather than actual products?

If developers are responsible for building core functions such as the rebate algorithm and hierarchical database, they may be held accountable for providing key technical support, even if they did not directly participate in the promotion.

3. Involved in illegal fundraising projects

Typical characteristics: public fundraising + promised returns + no financial qualifications

Key judgment points:

• Is it fundraising for the public?
• Is there a commitment to fixed income or returns?
• Does it have a legal financial license?

Common high-risk patterns include: unauthorized token issuance financing, promises of principal protection and high returns, fictitious financial products, etc. If developers are deeply involved in core modules such as token issuance and point redemption, they may be regarded as accomplices even if they do not participate in operations.

4. Involved in illegal business projects

Typical features: Cryptocurrency trading + OTC exchange + Fiat deposit and withdrawal channels

Key Judgment Point:

• Do you provide exchange services between virtual currencies and fiat currencies?
• Is there an over-the-counter (OTC) trading module?
• Is cross-border remittance achieved through virtual currency

Even if the platform does not directly hold customer funds, as long as a matching system is established, the technical party may also be held accountable for "organizing and implementing illegal operations."

How to Identify High-Risk Projects

As a developer, before participating in any Web3 project, you should conduct the following three self-checks:

1. Analysis mode: Are there any high-risk structures related to gambling, pyramid schemes, illegal fundraising, or illegal operations?

2. Organize the logic: Are the sources of tokens, user fund flows, and exit mechanisms compliant?

3. Retain evidence: Clearly state in the agreement that you only provide technical services and document relevant compliance discussions.

Conclusion

In the Web3 ecosystem, developers with the ability to identify legal risks will be more competitive. Compliance awareness beyond technology is becoming an indispensable hard skill for contemporary developers. Only Builders who are proficient in both technology and law can establish themselves in this rapidly evolving field for the long term.