From the perspective of digital collectibles, the criminal legal risks of KOL promotion.

Written by: Xu Qian, Li Xinyi

Introduction

In the public perception, KOLs are opinion leaders and industry elites, often regarded as “professional technical talents” who express personal viewpoints. However, why have KOLs in the Web3-related fields and derivative industries frequently been involved in criminal cases? In what ways can lawyers provide advice on criminal risk prevention for KOLs? As the author has defended a KOL who was a defendant in a digital collectibles fraud case, this article will explore, from the legal perspective, the boundaries of KOLs in the Web3-related fields who are “suspected of criminal offenses,” based on experiences from the digital collectibles industry.

This article only represents the author's personal views and does not constitute legal opinions or advice, nor does it constitute a judgment on whether KOL behavior patterns constitute a crime. Whether certain behaviors are recognized as criminal offenses is highly case-specific and requires judicial authorities to make determinations based on all evidence in accordance with the law.

Definition of KOL

In a legal context, KOL (Key Opinion Leader) is not a strictly legal concept, but refers to individuals or institutions that have a certain influence, appeal, and fan base in a specific field. In the digital collectibles industry, common KOLs usually include:

Senior collectors: Gaining the trust of followers with their unique insights and rich collection experience.

Industry analysts: Interpret projects and analyze market trends through articles, videos, and other means.

Community Leaders: They operate large communities and can quickly gather popularity and attention.

Its core characteristic lies in “influence,” which can directly or indirectly affect fans' investment decisions and purchasing behaviors. When extending to project parties (platforms), they need these KOLs to endorse and promote.

Why does the digital collectibles industry need KOLs?

The characteristics of the digital collectibles industry naturally align with KOLs.

1. High information asymmetry: Project teams have all the information, while ordinary investors struggle to independently judge authenticity and value due to the complexity of blockchain technology, vague artistic value, and uncertain rights. KOLs act as “information filters” and “value discoverers.”

2. Trust Scarcity: In a decentralized and anonymous environment, the cost of establishing trust is extremely high. KOLs leverage their long-accumulated reputation to “endorse” projects, and their simple phrase “I am optimistic” outweighs the promotional efforts of project parties with a thousand words.

3. Community-driven attributes: The popularity of digital collectibles heavily relies on community consensus and FOMO (Fear of Missing Out) emotions. KOLs are key nodes in creating and amplifying this emotion, quickly driving traffic to the project, achieving a “cold start.”

4. Highly efficient marketing: Compared to traditional advertising, KOL's precise targeting and whitelist permissions result in a higher conversion rate, making it a powerful tool for project parties to quickly acquire customers.

Common KOL work content

The work of a KOL seems diverse, but it revolves around “marketing” and “promotion.”

Content creation and publishing: producing videos, writing articles, posting updates on social media, analyzing, evaluating, and recommending specific digital collectible projects.

Live streaming sales and shout orders: showcasing collectibles during the live broadcast, publicly sharing one's purchase records, and clearly guiding fans to “buy in” and “hold”.

Community Operation and Management: Publish project information in the community, answer questions, create a lively atmosphere, and maintain community engagement.

Cooperative Promotion: Accept advertising commissions from project parties to publish promotional copy on their social media accounts.

Organize a “whitelist” event: By organizing activities to secure priority purchase qualifications (whitelist) for fans, enhance fan loyalty.

The legal logic of KOL being classified as a criminal accomplice.

Why are KOLs who are merely engaged in publicity identified as accomplices to fraud in judicial practice? The core legal logic lies in the theory of “joint crime.”

According to the provisions of the Criminal Law, joint crime refers to the intentional crime committed by two or more people together. Once a KOL crosses the boundary of mere “information dissemination” and forms a “joint criminal intent” with the project party, or engages in “assistance behavior,” it may constitute complicity.

The main reasons for the conviction include:

1. Subjective “knowing” or “should have known”: This is the key to conviction.

It is known: there is evidence proving that the KOL clearly knows that the project party is a “pie in the sky” or “air project” (lacking actual value support), and the model is a “musical chairs” scam, yet still promotes it. For example, having private communication with the project party, knowing the insider information about the funding scheme.

It should be noted: Although the KOL claims to be unaware, based on their expertise, industry experience, and common sense, they should be able to discern that the project carries significant risks or even constitutes a scam. For instance, the project's business model is clearly illogical, promises excessively high returns, and the technical team is falsely packaged, among other issues. The court is likely to determine that a KOL with professional capabilities “should” be able to recognize these red flags.

2. The objective “behavior”: Its promotional activities provided substantial assistance to fraudulent activities or produced substantial results.

Taking fraud as an example. The path of fraud is: “The perpetrator engages in acts of fabricating facts and concealing the truth (reaching a level of severity under criminal law) → the victim falls into a state of misunderstanding (there is a causal relationship between the two) → the victim, based on the misunderstanding, transfers property → the perpetrator illegally possesses the property.” If the actions of the KOL lead many victims to believe and invest, they are often recognized as “accomplices” in judicial practice.

Expand the criminal influence of the project party: precisely push the scam to a large number of potential victims.

Help project parties strengthen deception: use their own credibility to make fans let down their guard and believe in the project's false propaganda.

The project party successfully obtained illegal funds: The traffic directed by KOL directly led to a large number of investors investing funds, which is causally related to the harmful outcome.

3. There is a conflict of interest with the project party: If the KOL's compensation is directly linked to sales volume or the number of new users, and is even settled through methods such as “revenue sharing” or “fixed monthly salary,” this forms a “community of interest.” This model will strengthen the court's determination of their “joint crime.”

How can KOLs protect themselves?

Before discussing KOL risk prevention, let's first identify which behaviors are likely to be deemed criminal? The following behaviors not only exist in the KOL industry but also pose legal risks in other promotional and marketing fields, such as “false projects,” “rat trading,” and “guaranteed returns.”

(1) Identify high-risk behaviors of KOLs

Participating in false advertising: Knowing that the project's technology, team, application scenarios, qualifications, and licenses are false, yet still engaging in packaging and promotion.

Promising or implying capital preservation and high returns: using phrases like “guaranteed profit” and “capital protection” to make income promises.

Projects promoting “capital pool” and “Ponzi scheme” models: promoting those that use the model where funds from later participants pay dividends to earlier ones, leading to inevitable breaks in the project's funding chain.

“Shouting Orders and Pumping the Price” followed by “Dumping and Selling Off”: Buying low in advance and then calling on fans to buy at a high price, subsequently selling off for profit, and even knowing about or collaborating with the project party to establish a “mouse warehouse” to seek high profits.

Charging high promotional fees without conducting any due diligence on the project: this “just get paid and do the job” attitude raises suspicions of “should have known” about the project's issues but neglecting them after something goes wrong.

(2) Risk Prevention Suggestions

In a field where opportunities and risks coexist, compliance awareness is a necessary “safety belt.” KOLs should do the following:

1. Stick to the bottom line and isolate risks.

Before engaging in any promotion, conduct necessary background checks on the project party. Verify the team's true background and past achievements, the feasibility and innovation of the technical solution, the legality and sustainability of the business model, and the authenticity of the application scenarios. Be wary of projects that boast excessively without a clear technical logic.

Request the project party to provide official documents such as company qualifications, Value-added Telecommunications Business Operation License ( ICP, EDI ), Network Culture Business License, Blockchain Information Service Filing Cybersecurity Assessment Report, white paper, legal opinion, etc. Those that cannot be provided or are vague will be rejected.

2. Content compliance, safe expression

It is strictly prohibited to use terms such as “guaranteed profit”, “lowest point”, “highest point” and other promise-based, inducement words, while also avoiding the use of extremely inflammatory vocabulary to create market sentiment.

It must be clearly stated “Investment carries risks, and one should enter the market with caution” and “This article is a commercial promotion and does not represent investment advice,” and other risk warnings.

Objectively state the facts of the project, clearly distinguish between “facts” and “personal opinions”, and use cautious wording.

3. Avoiding conflicts of interest, cooperation has its boundaries.

Prioritize a fixed-fee advertising cooperation model, linking income directly to the promotional activities themselves, rather than directly tying it to the project's sales performance, token, or digital collectible price. The latter's “performance sharing” or “revenue sharing” model may be recognized in judicial practice as forming a vested interest with the project party, thereby increasing the risk of being deemed a joint crime.

Standardize the cooperation model, maintain a certain distance from the project during collaboration, clarify one's position as an “independent promoter,” and avoid claiming or being misunderstood as a partner, advisor, or other core member of the project.

When in doubt about a project, adhere to the principle of “better to miss out than to make a mistake”; even if the benefits are high, it should be declined.

4. Preserve evidence and improve processes

All communication records with the project party (chat records, emails, etc.), contracts, payment receipts, and materials provided by the project party (promotional materials, qualification documents, etc.) should be kept complete and preserved for a long time. This not only proves that the basic review obligations have been fulfilled but also serves as strong evidence for self-defense in case of any litigation.

Conclusion

As the trendsetter of the times, KOLs must always remember while enjoying the dividends of influence: the law is the bottom line of behavior. The greater the influence, the heavier the responsibility. An imprudent promotion not only risks exhausting the credibility you have built over the years, but may also drag you into the abyss of crime. Only by maintaining a sense of awe and proceeding in compliance can you remain undefeated when the tide recedes.