Author: Xu Qian, Duan Zeyu

Introduction | When Emerging Business Models Encounter Traditional Criminal Law

In the past two years, cases related to virtual currencies, NFTs, and digital collectibles have gradually evolved from early administrative compliance risks to a high-risk area for criminal liability.

In practice, many cases are directly classified as "fraud" at the initial stage of filing. However, as the cases enter the evidence review and constituent element analysis phase, it is often found that beneath the surface, there remains considerable room for defense.

This article uses a criminal case involving an NFT digital collectibles platform handled by Mankun Law Firm as a sample, systematically reviewing the entire process from the dispute over classification, evidence dissection, to ultimately obtaining a non-prosecution decision, and extracting reusable and transferable practical methodologies for reference by legal colleagues.

Debate on Case Classification: Is it "Fraud" or "Out-of-Control Promotion"?

(1) Basic Facts: A Failed Marketing Campaign Triggers Criminal Filing

In 2022, a digital collectibles platform launched a marketing campaign to boost sales and publicly announced:

"The sales revenue from collectibles will enter a prize pool and be distributed according to the rules, with the prize pool amount expected to be no less than 1 million yuan."

After the event ended, due to changes in the market environment and sales falling short of expectations, the actual distributable prize pool amount was only tens of thousands of yuan. Some users who invested heavily believed the platform had engaged in deceptive behavior and subsequently filed concentrated complaints and reports.

After police intervention, a criminal investigation was initiated on suspicion of fraud.

(2) Initial Judgment by Lawyers: Three Key Signals Distinguishing from Typical Fraud

After systematically reviewing the case files and clarifying the facts, the legal team quickly identified three characteristics that clearly differentiate this case from traditional fraud cases:

• The commercial activity genuinely exists

The platform is not a shell operation; the digital collectibles are legally sourced, genuinely issued, and tradable, and the platform maintained actual operational status before and after the incident.

• Promotional language is ambiguous but does not fabricate the project itself

The promotion used terms like "expected," which have a future-oriented and anticipatory nature, but did not fabricate non-existent projects, rules, or profit models.

• The results are severe but resemble commercial overreach rather than illegal possession

User losses are objectively present, but considering the overall behavior pattern, the subjective state of the actors is closer to being overly optimistic about market judgment rather than intending to illegally possess others' property.

Based on the above judgments, the legal team reached a core classification conclusion:

This case is closer to "out-of-control promotion risk" rather than "fraud crime."

This judgment became the starting point and logical foundation for all subsequent defense work.

Core of the Defense: Focus on "Constituent Elements" Rather than "Results"

In cases involving virtual currencies and digital collectibles, the defense can easily fall into emotional debates surrounding "whether money was defrauded." However, in the logic of criminal review, what truly matters is not the result itself, but whether the constituent elements are fully proven by evidence.

Based on this understanding, the legal team focused all efforts on the following three legal questions—

This is also a "core dissection path" that we repeatedly use in similar cases.

(1) Is there an "intent to illegally possess"?

Focus of the Defense

Were the funds involved illegally possessed, transferred, or personally disposed of?

Evidence Organization Path

• Retrieve and present the platform's real operational records for a year, including ongoing investments in manpower, technology, and servers;

• Provide a complete account of company fund flows, proving that sales revenue was primarily used for platform operations, with no instances of personal extravagance, withdrawal, or concealment of funds;

• Present the objective fact that the platform continued to promote subsequent operations and user communication and compensation plans after the event ended.

Conclusion

All objective behaviors point to a "sustained operational purpose," rather than an "illegal possession purpose."

This step directly undermined the foundation for establishing the crime of fraud.

(2) Is there deceptive behavior involving "fabricating facts or concealing the truth"?

Focus of the Defense

Is "expected to be no less than 1 million yuan" a false promise or a commercial expectation expression?

Evidence Organization Path

• Retrieve the platform's preliminary market analysis materials, proving that "1 million yuan" was a prediction based on the market heat at the time, not fabricated out of thin air;

• Compare similar marketing activities in the industry during the same period, indicating that the "expected" expression has a certain prevalence in the industry;

• Emphasize that existing evidence cannot prove that the person in charge knew that this amount had no possibility of realization when promoting.

Conclusion

This behavior is more consistent with exaggerated promotion or improper promotion at the civil or administrative level, and has not reached the proof standard required for criminal fraud of "fabricating fundamentally non-existent facts."

(3) Are user losses directly caused by "deceptive behavior"?

Focus of the Defense

Did users purchase collectibles due to a misunderstanding, or based on a comprehensive judgment of the collectibles' value and market risks?

Evidence Organization Path

• Point out that the user agreement clearly indicates the price fluctuations and market risks of digital collectibles;

• Present the fact that some users continued to participate in transactions even when the prize pool amount was significantly insufficient during the later stages of the event, reflecting the existence of speculative factors;

• Argue that the sharp changes in market conditions were an important external cause of the losses.

Conclusion

It is difficult to establish a complete criminal causal chain:

"Deceptive behavior → Misunderstanding → Property disposition → Illegal possession."

User losses are the result of multiple commercial and market factors acting together.

Extended Reflection The Boundaries of Criminal Fraud, Administrative Violations, and Civil Fraud

The substantive dispute in this case lies in the application of the principle of criminal law's restraint. The core work of the lawyer is to achieve a precise "legal classification transfer":

• Criminal Fraud: With the intent to illegally possess, fabricating fundamental facts;

• Administrative Violation (False Promotion): Making exaggerated and misleading statements to facilitate transactions;

• Civil Fraud: Making false statements that lead the other party into a misunderstanding.

Successful criminal defense often does not deny the problem but rather places the problem back into the appropriate legal framework.

Golden Phase and Winning Moves: Methodology in the Review and Prosecution Stage

(1) Why is the review and prosecution stage considered a "golden window"?

By the time the lawyer intervenes, the case has been transferred to the prosecutor's office. This stage has three significant advantages:

• The investigation files are basically fixed, allowing for a comprehensive assessment of the evidence structure;

• The prosecutor is still in the independent review and forming their own opinion stage;

• There is still substantial room for adjustment in the case classification.

The core value of the lawyer lies in providing a logically coherent case analysis framework that differs from the "Prosecution Opinion."

(2) Tactical Focus: Reconstructing the Order of Evidence Evaluation

After reviewing the files, it was found that the investigative agency had a tendency to "emphasize results over motives; emphasize words over objectivity."

Accordingly, the defense strategy shifted to a systematic reorganization of the evidence structure:

• Prioritize arguing whether the subjective purpose is established;

• Use objective evidence such as fund flows and operational records to counter the subjective evidence of "feeling deceived";

• Finally, evaluate the loss results and interpret them in the context of the market environment.

This adjustment essentially guides the prosecutor to "recalculate" the case using a different logic.

(3) Key Tool: A "Non-Prosecution Opinion" That Can Be Directly Accepted

The "Non-Prosecution Legal Opinion" submitted in this case is valuable not for its length but for its writing approach:

• Each factual accusation corresponds to a clear evidence page number;

• Each legal conclusion returns to the analysis of constituent elements;

• Each industry dispute point provides a "decriminalization" solution path.

The goal of this opinion is not merely to persuade but to reduce the judgment cost for the prosecutor in making a non-prosecution decision.

(4) Risk Closure: Extended Handling After Non-Prosecution

Non-prosecution is not the end. The legal team simultaneously assists the client in completing risk extension management:

• Administrative Level: Prepare rectification plans and defense strategies in advance regarding promotional language issues;

• Civil Level: Develop tiered user communication and compensation plans to avoid conflicts spilling over into collective lawsuits.

Truly effective risk resolution should achieve: criminal blockage, administrative mitigation, and civil digestion.

Case Outcome: Non-Prosecution After Two Returns for Supplementary Investigation

Through continuous and professional communication, this case was returned for supplementary investigation by the prosecutor's office twice.

The "return for investigation" itself indicates that the original classification and evidence structure could not support prosecution.

Ultimately, the prosecutorial authority made a non-prosecution decision based on Article 175, Paragraph 4 of the Criminal Procedure Law, citing "insufficient evidence, not meeting prosecution conditions."

Three Core Insights for Legal Colleagues

• Cases in emerging fields are essentially a "battle of classification."

The lawyer's goal is to determine which legal narrative framework the case is placed into.

• Constituent elements are the clearest battle map.

Rather than getting entangled in emotional facts, it is better to organize evidence around constituent elements.

• The review and prosecution stage is the central battlefield influencing the case's direction.

A high-quality legal opinion written from the prosecutor's perspective is often a decisive factor.

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