Author: Lawyer Shao Shiwei
In the second half of 2025, Lawyer Shao's team successively received multiple criminal judgment documents from courts in Hunan, Hubei, Northeast China, and other regions regarding Web3 cryptocurrency exchanges being convicted of operating gambling dens. At the same time, litigation processes for some exchange cases will continue to advance in 2026.
During frequent communication and confrontations with judicial authorities across various regions, we gradually realized that handling such cases differs significantly from traditional criminal cases—these cases are never purely about the application of law but are a complex amalgamation of law, policy, social impact, and judicial orientation.
Based on our practical experience in handling multiple criminal cases involving virtual currency exchanges, this article systematically outlines the common characteristics and key defense points of such new types of cases in judicial practice. Combined with specific case-handling insights, it offers cautious warnings about the potential criminal risks faced by Web3 practitioners. An excerpt of a defense opinion exceeding 10,000 words is attached at the end for reference and exchange among legal professionals.
1. Complexity in Handling Criminal Cases Involving Exchanges
The adjudication of criminal cases involving virtual currency exchanges differs significantly from traditional criminal cases.
When handling such cases, judges need to weigh far more than just the legal provisions and the question of guilt or innocence for individuals. They must also comprehensively consider the potential industry impact of the judgment, its educational and warning significance to society, and the balance under current financial regulation and technological innovation. This balancing act stems from the practical stance of the judicial officers.
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 every decision: Could a seemingly "correct" not-guilty verdict be overturned on appeal for touching current clear regulatory red lines? Could a ruling striving for breakthrough be subsequently "corrected" through internal supervision procedures for not aligning with higher-level judicial policy orientations?
Precisely because of this, representing clients in such cases is also a profound test of the professional wisdom and strategic balancing act of defense lawyers.
2. Core Defense Strategy in Web3 Gambling Den Cases: Using a Not-Guilty Plea to Achieve a Light Sentence in Reality
Therefore, facing this judicial reality and drawing from the practical experience of multiple successful cases, our team has refined an effective core defense strategy: using the ultimate standard and rigorous system of a not-guilty plea as a practical path to achieve the optimal outcome for the client, such as a lighter sentence, probation, or even non-prosecution.
The essence of this strategy is not to unrealistically pursue a paper declaration of innocence but to lay a solid foundation for securing the most lenient treatment for the client by constructing an irrefutable logic of innocence and a robust attack and defense on evidence, thereby maximally revealing the major controversies in the case's nature and the inherent flaws in the chain of evidence.
We advocate for a not-guilty plea and systematically raise points of dispute, fundamentally aiming to convey the following core viewpoints to the court:
The nature of the case is doubtful: This is absolutely not a traditional case of a gambling den. Equating complex financial derivative transactions like "perpetual contracts" directly to "gambling" involves major and fundamental disagreements, both in legal theory and judicial practice.
Lack of subjective awareness by the parties: For the vast majority of employees in routine positions such as technology, operations, and customer service, it was objectively impossible for them to foresee at the time of employment that their daily work would be characterized by judicial authorities as accomplice behavior in "operating a gambling den."
Based precisely on the above "fundamental disputes over the nature" and "natural chasm in subjective awareness," even if the court ultimately finds guilt based on various considerations, it should, and must, impose a lighter or reduced punishment on the parties and fully apply non-prosecution, probation, or conviction without punishment to achieve a true correspondence between crime, responsibility, and punishment.
In a nutshell, we use the extreme professional argumentation and rigorous logical system of a "not-guilty plea" to strive for all possible paths to a lighter defense for the client within the domestic judicial environment, in the realistic gap between law and policy.
3. "Combination Punch" Defense Strategy for New Types of Gambling Den Cases
Therefore, in recent practice, we have not only formed a clear defense approach but also tempered a complete, replicable "combination punch" style strategy:
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Combining in-court and out-of-court defense: While engaging in fierce confrontations in the courtroom, guide judicial officers to focus on the core disputes of the case through reasonable out-of-court defense strategies.
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Focusing on meticulous cross-examination of key evidence: Especially targeting judicial appraisal opinions, audit reports, etc., conduct in-depth cross-examination from perspectives such as their scientific nature, relevance, methodology, and procedural legality to dismantle the prosecution's evidence system.
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Using the charged crime to deduce evidence loopholes: Starting from the statutory elements of the crime of "operating a gambling den," reversely test the prosecution's evidence system, precisely pointing out the breaks in the chain of gambling logic and insufficient proof.
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Scrutinizing procedural and substantive details: Do not let go of any procedural flaws or evidence contradictions; systematically argue that "the facts of the case are unclear, and the evidence has not yet reached the statutory standard of proof being sure and sufficient" through the accumulation of details.
At the same time, we are well aware that facing such highly specialized and controversial new types of cases, how to make judicial officers accurately understand the business logic of Web3 is equally key to determining the effectiveness of the defense. Therefore, our communication strategy is not to engage in absolute confrontation with judicial officers but to strive to establish a professional, rational, and continuous channel for dialogue. Because even the sharpest defense points, if not effectively communicated and understood, can hardly influence the inner conviction of the adjudicators. Hence, we always maintain positive, sufficient, and constructive communication with judicial officers. Our core goal is not to require judicial officers to master all financial technical details but to guide them to clearly recognize the following three fundamental questions:
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Are there unavoidable flaws in the case-handling procedure?
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Are there major disputes over the nature of the case in law and fact?
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Is the evidence in the case sufficient to solidly support the charge of "operating a gambling den"?
Once judicial officers can fully perceive the above three points, their judgments will naturally lean towards being more cautious and lenient, resulting in significantly lighter penalties compared to traditional gambling den cases. This is the concrete embodiment of our defense strategy of "using a not-guilty plea to seek a light sentence in reality" in the dimension of communication.
In summary, the defense path for such cases is to ultimately achieve practical results most favorable to the client, such as reduced sentencing grades or probation sentences, by adhering to the core concept of a not-guilty plea and employing极致 meticulous defense and professional strategic communication.
4. Criminal Risks Potentially Faced by All Web3 Positions
Then, beyond individual cases, based on the multiple exchange-related criminal cases we have handled, we also need to issue a risk warning to all Web3 practitioners working remotely within China—regardless of whether your position is in technology development, operations and maintenance, product, design, operations, business BD, market promotion, customer service, or even support positions like finance and human resources (HR), once the platform you serve is investigated, personnel in related positions may be卷入 criminal investigation. This is not alarmism or spreading anxiety; this is the objective fact we have genuinely seen in the files of criminal cases.
Therefore, for domestic Web3 job seekers, before deciding whether to accept an offer from an exchange or project party, it is advisable to carefully assess the potential legal risks after employment in consultation with professional lawyers, considering the specific business model and the objective situation of domestic judicial practice.
5. Returning to the Legal Essence: Is a "Perpetual Contract" Actually Gambling?
In most litigated cases, cryptocurrency exchanges are characterized as "operating gambling dens," and their contract trading modules are often regarded by law enforcement departments as key evidence of possessing gambling attributes.
However, is a "perpetual contract" actually gambling? This remains a highly controversial issue.
Through handling multiple "contract-type" gambling den cases and深入研究 the business logic of different platforms, we found that whether the contract module of a virtual currency exchange constitutes operating a gambling den is not a simple question that can be answered with a blanket "yes" or "no" (this is similar in essence to the previously discussed debate by Lawyer Shao on whether virtual currency should be defined as "data" or "property" - The Qualitative Misconception of Illegally Obtaining Virtual Currency: Judicial Divergence on Property Attribute vs. Data Attribute (Part Three)), but rather requires case-by-case analysis based on the actual scenario, specifically analyzing the concrete business logic, risk control measures,清算 mechanisms, and profit models of different exchange contract modules.
Therefore, any abstract, general discussion of "whether perpetual contracts are gambling"—such discussion detached from specific case details and evidence—Lawyer Shao believes is actually of no substantive significance.
Furthermore, even if the contract module exhibits some features in its design that might be seen as "involving gambling," the core of the case immediately transforms into a purely legal technical question:
Has the judicial organ's burden of proof been fulfilled? Is the evidence presented确实、充分, sufficient to prove beyond doubt that this business meets all the statutory elements of the crime of "operating a gambling den" in the Criminal Law? This is precisely the key area where professional criminal defense needs to focus its efforts and where weaknesses in the prosecution system might be found.
6. Final Words
Of course, we are well aware that regarding the定性 issue of such cases, different viewpoints and ongoing discussions still exist in theoretical circles and practice, and absolute consensus has not yet been formed. Its complexity deserves deep consideration by legal colleagues. Now attached are some key defense points formed during our case handling process (content has been desensitized), humbly provided for criticism and correction by peers in professional exchanges.
Attachment: Defense Statement for Virtual Currency Exchange Suspected of Operating a Gambling Den
Special Disclaimer: This article is an original work by Lawyer Shao Shiwei, representing only the personal views of the author of this article and does not constitute legal consultation or advice on specific matters.
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