Cryptocurrency exchanges charged with operating illegal gambling, how can lawyers successfully defend HR, BD, and other positions? (Includes a comprehensive legal opinion letter of ten thousand words)

Author: Attorney Shao Shiwei

In the second half of 2025, Attorney Shao’s team received multiple criminal judgment documents from courts in Hunan, Hubei, Northeast China and other regions regarding Web3 cryptocurrency exchanges being convicted of the crime of operating gambling establishments. Meanwhile, several exchange-related criminal litigation cases will continue to advance throughout 2026.

Through frequent communication and engagement with judicial authorities across various regions, we have gradually come to recognize that handling such cases differs significantly from traditional criminal cases — these cases are never purely a matter of legal application, but rather a complex synthesis incorporating law, policy, social effects, and judicial guidance.

Based on our practical experience handling multiple criminal cases involving virtual currency exchanges, this article systematically reviews the common characteristics and defense strategies of such new-type cases as they present themselves in judicial practice, and combines specific case-handling insights to provide careful reminders about criminal risks that Web3 practitioners may face. The article concludes with selections from defense opinions exceeding 10,000 words for discussion and reference among legal practitioners.

1. Complexity in Handling Exchange-Related Criminal Cases

The trial of criminal cases involving virtual currency exchanges differs substantially from traditional criminal cases.

When judges handle such cases, the factors they must balance far exceed the legal provisions themselves and the question of guilt or innocence for individual cases. They must also comprehensively consider the industry impact the judgment may trigger, its educational and deterrent significance for society, and the balance under the current backdrop of financial supervision and technological innovation. This balancing stems from the practical position occupied by case handlers.

For them, this is not an isolated, purely legal judgment. Operating within a complex judicial system, they must carefully assess the systemic professional risks accompanying each decision: Would an apparently “correct” not-guilty verdict be overturned on appeal by crossing current clear regulatory red lines? Could a decision seeking to break new ground be subject to internal oversight procedures for “correction” later due to misalignment with higher-level judicial policy direction?

Precisely because of this, representing such cases also constitutes a profound test of the defense attorney’s professional wisdom and strategic judgment.

2. Core Defense Strategy in Web3 Operating Gambling Cases: Achieving Lenient Sentencing Through Not-Guilty Arguments

Therefore, in response to this judicial reality and combined with real-world experience from multiple successful cases, our team has refined an effective core defense strategy: utilizing the ultimate standard and rigorous framework of not-guilty defense as the practical pathway to achieving optimal results for clients, including lighter sentences, suspended sentences, or even non-prosecution decisions.

The essence of this strategy lies in the fact that it does not unrealistically pursue a formal declaration of not guilt on paper, but rather constructs irrefutable not-guilty logic and evidence arguments to maximum effect, thereby uncovering major disputes in case characterization and inherent defects in the evidentiary chain, establishing a solid foundation for securing the most lenient possible treatment for the client.

We advocate not-guilty defense and systematically present disputed focal points with the fundamental objective of conveying the following core viewpoints to the court:

The nature of this case is questionable: This is by no means a traditional operating gambling case. Directly equating complex financial derivative trading such as “perpetual contracts” with “gambling” presents major and fundamental disagreements both in legal principle and in judicial practice.

The defendant’s subjective intent is insufficient: For the vast majority of employees engaged in conventional positions such as technology, operations, and customer service, they objectively lacked the possibility of foreseeing at the time of employment that their daily work would be characterized by judicial authorities as accomplice conduct in “operating gambling establishments.”

Precisely because of the “fundamental disputes over characterization” and the “inherent gap in subjective intent,” even if the court ultimately determines guilt based on various considerations, it should completely and necessarily impose reduced or lenient punishment on the defendant and fully apply non-prosecution decisions, suspended sentences, or conviction without punishment, thereby achieving true proportionality between culpability and punishment.

In short, we utilize the ultimate professionalism and rigorous logical framework of “not-guilty arguments” to seek all possible pathways for lenient defense within China’s actual judicial environment and within the realistic gap between legal requirements and policy.

3. “Combination Punch” Defense Strategy in New-Type Operating Gambling Cases

Therefore, through recent practice, we have not only formed clear defense thinking, but have also refined a complete, replicable “combination punch” approach:

Combining in-court and out-of-court defense: While conducting fierce exchanges in court, we simultaneously employ reasonable out-of-court defense strategies to guide case handlers’ attention to core case disputes.

Refined cross-examination of critical evidence: Particularly targeting judicial appraisal opinions and audit reports, we conduct in-depth cross-examination from perspectives of scientific rigor, relevance, methodology, and procedural legality, dismantling the evidentiary system of the accusations.

Reverse-deducing evidentiary gaps from the charged offense: Starting from the statutory elements of the “operating gambling establishment” crime, we conduct reverse verification of the accusatory evidence system and precisely point out chain breaks and insufficient proof in its gambling logic.

Rigidly adhering to procedural and substantive details: We do not overlook any procedural defect or evidentiary contradiction, and through accumulated details, systematically argue that “the case facts remain unclear and the evidence has not yet reached the legally required standard of certainty and sufficiency.”

Simultaneously, we recognize that for such highly specialized and controversial new-type cases, how to enable case handlers to accurately understand Web3 business logic is equally critical to determining defense effectiveness. Consequently, our communication strategy does not pit ourselves in absolute opposition to case handlers, but rather aims to establish professional, rational, and sustained dialogue channels. For no matter how sharp defense arguments are, without effective transmission and understanding, they struggle to influence the decision-maker’s conviction. Therefore, we consistently maintain positive, sufficient, and constructive communication with case handlers. Our core objective is not to require case handlers to master all financial technology details, but rather to guide them to clearly recognize three fundamental issues:

Are there unavoidable procedural defects in case handling?

Are there major disputes over case characterization in law and fact?

Is the evidence in the case sufficient to rigidly support the accusation of “operating gambling establishments”?

Once case handlers can fully perceive these three points above, their verdict will naturally incline toward more cautious and lenient directions, thereby rendering sentencing substantially lighter than traditional operating gambling cases. This precisely embodies the communication dimension of our defense strategy of seeking “lenient outcomes through not-guilty arguments.”

In summary, the defense pathway for such cases, under the foundation of adhering to the core principle of not-guilty defense, is through ultimate refined defense and professional strategic communication to ultimately achieve sentencing reduction, suspended sentences, and other results most favorable to the client in practice.

4. Criminal Risks That All Web3 Positions May Face

Moving beyond individual cases, based on multiple exchange-related criminal cases we have represented, we must also provide risk warnings to all Web3 practitioners working remotely within China — regardless of whether your position involves technical development, operations, product management, design, operations, business development, marketing, customer service, or even support positions like finance and human resources (HR), once the platform you serve comes under investigation, personnel in relevant positions may all become entangled in criminal investigation. This is neither alarmism nor anxiety-mongering, but rather an objective reality we have observed firsthand in criminal case files.

Therefore, for Web3 job seekers within China, before deciding whether to accept a recruitment offer from an exchange or project, we recommend that — after consulting professional attorneys — they carefully evaluate potential legal risks after employment, taking into account specific business models and the objective circumstances of domestic judicial practice.

5. Returning to Legal Essence: Are “Perpetual Contracts” Actually Gambling?

In most litigated cases, cryptocurrency exchanges are characterized as “operating gambling establishments,” with the contract trading module frequently treated by law enforcement as key evidence of gambling nature.

But is “perpetual contracts” actually gambling? This remains a highly controversial question.

Through handling multiple “contract-type” operating gambling cases and conducting in-depth analysis of different platforms’ business logic, we have discovered that whether the contract module of a virtual currency exchange constitutes operating gambling is not a simple question that can be answered uniformly with a definitive yes or no (similar in nature to the previous discussions by Attorney Shao regarding whether virtual currency should be characterized as “data” or “property” — the characterization puzzles regarding illegal acquisition of virtual currency: judicial differences between property attributes and data attributes), but rather requires concrete analysis of specific scenarios, necessarily combining the specific business logic, risk control measures, clearing mechanisms, and profit models of different exchanges’ contract modules for individual analysis.

Therefore, any abstract, blanket discussion of “whether perpetual contracts are gambling” — such discussion divorced from specific case facts and evidence — Attorney Shao believes actually lacks substantive meaning.

Furthermore, even if the contract module presents certain characteristics in its design that might be viewed as “involving gambling,” the case’s core immediately transforms into a purely legal technical issue:

Has the prosecution fulfilled its burden of proof? Is the evidence it presents truly certain and sufficient to prove without any doubt that the business meets all statutory elements of “operating gambling establishments” under the Criminal Code? This is precisely the critical focal point where professional criminal defense must work hard to advance and potentially discover weak links in the accusatory system.

6. Closing Remarks

Of course, we recognize that theoretical and practical circles continue to maintain different viewpoints and ongoing discussions regarding the characterization of such cases, without yet forming absolute consensus, and the complexity merits deep consideration by legal colleagues. We now append portions of defense strategies we have formed through case handling (with content appropriately anonymized) for criticism and correction among colleagues in professional exchange.

Special Statement: This article is original work by Attorney Shao Shiwei and represents solely the personal viewpoint of this article’s author, and does not constitute legal consultation or legal opinions regarding specific matters.

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