What are the legal compliance points for creating a paid cryptocurrency transfer group?
In fact, there are quite a few legal compliance matters that group owners need to pay attention to.Author: Mankun Blockchain
In the field of cryptocurrency investment, crypto investment sharing communities have become one of the important channels for investors to obtain information. They often follow group leaders (such as KOLs) through social media and join the Web3 investment groups they create to get the latest updates and investment analyses in the crypto space in a timely manner. However, many of these communities charge a significant entry fee. Therefore, a new model of information sharing in the crypto space, the "paid information transfer group," has emerged - with a very low entry fee, users can join the group to access high-quality crypto investment information curated by the group leader.
At first glance, there seems to be no problem with the operation of transferring information. However, in reality, group leaders need to pay attention to various legal compliance issues.
What is a Paid Transfer Group?
The paid information transfer group in the crypto space (hereinafter referred to as "crypto transfer group") typically claims that its leader/operator has subscribed to multiple high-value paid communities in the crypto space and can use the "keyword capture" function of bots to transfer internal information from other paid communities in real time. "One entry fee, multiple group information" indeed attracts many people to pay.
The operational model of these crypto transfer groups usually includes the following characteristics:
Multi-source integration, information within the group may come from multiple paid communities, covering various fields such as Web3 market news and player investment analysis.
Automated transfer, many group leaders use bots to set keywords for automatic capture and forwarding of information from target communities.
Real-time updates, as bots automatically capture and forward information, these groups are often considered capable of timely transferring crypto news.
Low-price strategy, group leaders often emphasize that membership fees are far lower than those of the source communities, for example, "spend a few hundred U to experience strategies worth over 20,000 U from paid groups."
Value-added services, in addition to forwarding information, some group leaders also provide simple interpretations or suggestions, attempting to create additional value for users.
Taking a currently promoted transfer group as an example, the platform claims to have paid to join over 30 top-quality paid communities and uses bots to synchronize information in real time 24/7, providing group members with multidimensional information including but not limited to contract trading, spot market trends, and short selling strategies.
What Crypto Transfer Group Leaders Need to Know
The characteristics of paid information transfer groups in the crypto space can usually attract a large number of Web3 investment users to pay for membership, achieving a win-win situation for users and group leaders. However, Mankun lawyers believe that in this process, crypto transfer group leaders must also pay attention to some legal compliance issues. For example, the previous article published by Mankun Law Firm, "Operating a TG Telegram Group Actually Led to Imprisonment! How Should Web3 Communities Operate Compliantly?" has analyzed the compliance issues related to charging cryptocurrency membership fees and providing investment advice. Meanwhile, as leaders of paid transfer groups in the crypto space, they need to pay attention to the following aspects:
(1) Information Transfer Infringement Issues
In the model of paid information transfer groups, an unavoidable issue is the infringement of the intellectual property rights of other KOLs.
KOLs typically enjoy copyright protection for their original content published in paid communities, such as in-depth market analyses and exclusive project evaluations. Moreover, based on the community rules and daily statements of KOLs, most paid communities explicitly prohibit members from disseminating information outside the group, which can also be seen as further protection of KOLs' copyrights.
In this case, if the group leader copies and disseminates unauthorized original information for profit, it not only violates the service contract with the original community KOL but may also constitute an infringement of intellectual property rights, making them liable to the corresponding KOL.
Furthermore, operating their community by transferring paid content from other communities may also be viewed as unfair competition through the means of infringing on trade secrets, violating laws and business ethics, and harming the legitimate rights and interests of the original creators.
(2) Lack of Information Review Issues
Group leaders of transfer groups also need to consider the authenticity and accuracy of group messages.
The paid model of transfer groups determines that group leaders and members are not simply "netizens," but have established a service relationship: members pay an entry fee, and the group leader regularly publishes crypto investment news. Therefore, group leaders should ensure service quality and avoid disseminating false or erroneous information that could mislead group members.
However, most transfer groups use automated tools to capture information, making it difficult to review this information item by item. This leads to the possibility that if members invest based on this unverified information and suffer losses, the group leader may face certain legal compliance issues:
Breach of contract issues: If members suffer investment losses due to reliance on false or erroneous information, the group leader may be deemed to have breached the contract and face the risk of civil liability for damages.
Fraud issues: If the group leader continues to disseminate information despite knowing it may be problematic, they could potentially be seen as committing fraud.
Regulatory penalties: In some cases, if the disseminated false information has severe negative impacts, it may attract the attention and penalties of regulatory authorities.
(3) Project Promotion Issues
Additionally, many transfer groups may accept promotional invitations from Web3 project parties to promote specific projects within the group.
Mankun lawyers mentioned in the previous article "The Controversial KOL Financing in the Crypto Space, What are the Legal Risks?" that if community operators use exaggerated promotional methods to promote projects, such mixed truth and falsehood promotional content could likely expose group leaders to legal risks of civil fraud or even criminal fraud.
According to Article 148 of the Civil Code, if the group leader's false statements lead investors to have a misunderstanding and purchase tokens or participate in projects, resulting in property losses, their actions will constitute civil fraud, and investors have the right to seek compensation.
More seriously, if the group leader already has the intention to illegally possess investors' property and uses deceptive means to obtain funds from investors for the project, ultimately causing property losses to investors, their actions are likely to violate Article 266 of the Criminal Law regarding fraud and bear criminal responsibility.
Mankun Lawyer's Summary
As an emerging information dissemination model, paid information transfer groups in the crypto space have become an important avenue for community leaders to develop memberships, but they also bring significant legal compliance issues that cannot be ignored. Therefore, crypto transfer group leaders should recognize the legal boundaries of their actions. Mankun lawyers recommend taking the following measures to regulate management:
Obtain authorization: Establish formal cooperative relationships with KOLs or community leaders of original content to obtain clear authorization for content reproduction.
Clearly indicate sources: For reproduced or quoted content, clearly indicate the original author and source to respect the intellectual property rights of the original creators.
Strengthen information review: Conduct manual reviews of information captured by bots to ensure the authenticity and reliability of the information.
Clarify disclaimers: Clearly state disclaimers in group rules, reminding group members to independently assess the authenticity of the information.
Compliant promotion: When promoting projects, conduct compliance investigations and avoid exaggerated promotions or promises of returns, ensuring the objectivity of promotional content.
The emergence of paid information transfer groups reflects the market's demand for high-quality, low-cost information. However, while enjoying convenience, both community leaders and members should be aware of potential legal compliance points to jointly maintain a healthy and compliant information exchange environment. If issues arise in creating or operating paid transfer groups in the crypto space, please contact a lawyer for compliance consultation in a timely manner.
