Author: Lawyer Liu Zhengyao

Introduction

Today, a friend forwarded me an article by fellow lawyer Zhang Suhang titled "The Airdrop Studio Was Raided! 5 Million in Illegal Gains Confiscated!" and asked me to analyze whether there is really such a big risk in airdropping. After carefully reading Zhang's article, I believe that as a lawyer in the cryptocurrency space, it is necessary to combine my own practical experience, understanding of circumventing the Great Firewall (i.e., "scientific internet access"), and my long-term dealings with public security authorities to write an article analyzing this matter.

I. Case Overview

According to Zhang's article, he is currently handling a case involving a studio that was raided, with a total of three individuals who made 3 million in a year. Generally speaking, in legal jargon, "raided" actually means "raided for criminal activity," which involves criminal offenses. However, Zhang's article states that his clients were not involved in any criminal activities related to virtual currencies but violated relevant laws regarding "scientific internet access." As a result, they were fined 5 million yuan in illegal gains, had their phones and computers confiscated, and were fined an additional 10,000 yuan.

There is a small question here: if they made 3 million in a year, why were 5 million confiscated? Lawyer Liu speculates that they may have a total of 5 million in airdrops over more than a year. However, Zhang did not clarify this, so we cannot make random guesses. For now, let's assume the clients made a total of 5 million in airdrops.

II. Is Circumventing the Great Firewall Illegal? Wrong!

According to Zhang's viewpoint, using a VPN to circumvent the Great Firewall is considered an administrative violation, and public security authorities can impose fines within the range of 15,000 yuan and confiscate any illegal gains (if any). The basis for this is Article 6 of the "Interim Regulations on the Administration of International Connections of Computer Information Networks": "To directly connect computer information networks to international networks, one must use the international entry and exit channels provided by the Ministry of Posts and Telecommunications' national public telecommunications network. No unit or individual may establish or use other channels for international connections."

My view is completely opposite to Zhang's. The act of simply using a VPN to circumvent the Great Firewall does not violate any current laws, regulations, departmental rules, or other normative documents in our country. Using a VPN does not constitute establishing a channel for international connections; even when using a VPN, it is still utilizing the international entry and exit channels provided by the national public telecommunications network (such as those provided by the three major domestic telecom operators). In essence, a VPN merely bypasses the Great Firewall's blocking of certain foreign IPs (such as Google). For detailed technical and legal explanations, please refer to my articles from a few years ago, "Is There Any Legal Risk in Using VPNs and Other Tools to Circumvent the Great Firewall?" and "Does 'Circumventing the Great Firewall' Constitute a Crime?"

The key issue to discuss here is not whether a VPN was used; no one has the authority to claim that using a VPN is illegal. The crux of the matter lies in what actions were taken after using the VPN. If someone uses it to search for academic papers on Google or to follow celebrities on Instagram, a law-abiding police officer would certainly not say that this is illegal; however, if someone uses a VPN to engage in the following activities, that would be a different story (excerpted from the "Cybersecurity Law").

So, the core question arises: Is airdropping illegal? If it is illegal, then the police's confiscation seems justified; if it is not illegal, then the police cannot simply confiscate the money earned from airdropping based on the so-called "illegal circumvention of the Great Firewall."

III. Is Airdropping Illegal?

Regarding the act of airdropping, I have discussed it in many of my previous videos. I will not conduct a lengthy analysis here; my conclusion is that airdropping is not illegal.

Previously, a programmer in Chengde was fined over 1 million for writing code for an overseas company while circumventing the Great Firewall, but the programmer filed for administrative reconsideration, and I do not know the outcome (if anyone knows the details, please contact Lawyer Liu). At that time, I also wrote an article analyzing "A Programmer's Income Confiscated for 'Circumventing the Great Firewall': Is Scientific Internet Access Really Safe?" Another case involved "Using Circumvention Tools to Invest in Virtual Currencies and Getting Arrested: Is Trading Cryptocurrencies Illegal?" but it did not specify what administrative penalties were involved. In both articles, I expressed my views: writing code for overseas companies is not illegal, and trading cryptocurrencies is also not illegal.

Taking airdropping as an example, one of the popular methods recently was using multiple accounts to take advantage of Binance's alpha, or using bots to "millisecond" airdrop. However, whether it is Binance, an overseas cryptocurrency exchange, or other decentralized exchanges, wallets, or public chains, as long as these platforms issue virtual currencies, according to China's regulatory documents such as the "9.4 Notice" from 2017 and the "9.24 Notice" from 2021, they are considered "illegal financial activities." However, this only applies to the platforms themselves; users of these platforms have not been specified to face any illegal consequences.

Based on China's regulatory documents regarding virtual currencies or other laws and regulations, one cannot conclude that "airdrops are illegal." If someone believes it is illegal, they should point out which specific laws or regulations are being violated; if not, then it is permissible under the law. Of course, if it is a compliant domestic company engaged in legally protected legitimate business, then everyone should be cautious about trying to take advantage of it. Currently, there have been cases where individuals using technical means to exploit discounts from companies like Huolala and KFC were convicted of theft or illegally obtaining data from computer information systems.

Therefore, my personal view is: since circumventing the Great Firewall itself is not illegal, and airdropping is also not illegal, why can it be said that circumventing the Great Firewall to airdrop is illegal?

I write this article not to question Lawyer Zhang but to provide a different perspective for those like my friend who are anxious about this issue. There are wrongful cases in criminal proceedings, let alone instances of incorrect administrative penalties. Therefore, if Zhang's clients were indeed fined 5 million, there are many other avenues for relief that can be explored to recover the clients' losses. In today's context, where the Ministry of Public Security has explicitly prohibited deep-sea fishing, I believe that there are not many who dare to handle cases unlawfully without regard for the consequences.

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