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

Original Authors: Xu Qian and Li Xinyi

Introduction

In popular perception, KOLs are opinion leaders, industry elites, and more often “professional technical talents” who express personal viewpoints. However, why are KOLs in Web3-related fields and derivative industries frequently criminally prosecuted? And how can lawyers offer advice to KOLs for criminal risk prevention? Having defended a defendant who was a KOL in a digital collectibles scam case, this article draws from experience in defending in the digital collectibles industry to explore, from a legal perspective, the boundaries of “suspected criminal conduct” by KOLs in Web3-related fields.

This article solely reflects the author’s personal opinions and does not constitute legal advice or recommendations, nor does it judge whether KOL behavior patterns constitute a crime. Whether certain actions are deemed criminal is highly case-specific and requires judicial discretion based on all evidence.

Definition of KOL

In legal terms, KOL (Key Opinion Leader) is not a strict legal concept but refers to individuals or organizations with influence, appeal, and a follower base within a specific field. In the digital collectibles industry, common types of KOLs include:

• Senior Collectors: Gaining followers’ trust through unique insights and extensive collection experience.
• Industry Analysts: Interpreting projects and analyzing market trends via articles, videos, etc.
• Community Leaders: Managing large communities capable of quickly gathering popularity and attention.

Their core feature is “influence”, which can directly or indirectly affect followers’ investment decisions and purchasing behaviors. When extending to project parties (platforms), these KOLs are often called upon to endorse or promote.

Why Does the Digital Collectibles Industry Need KOLs?

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

1. Information Asymmetry: Project parties hold all information, while ordinary investors face complex blockchain technology, ambiguous artistic value, and uncertain rights, making independent judgment difficult. KOLs serve as “information filters” and “value discoverers.”

2. Trust Scarcity: In a decentralized, anonymous environment, establishing trust is costly. KOLs leverage their long-term reputation to provide “credit endorsement” for projects; a simple “I support” statement can outweigh extensive promotional efforts by the project.

3. Community-Driven Nature: The popularity of digital collectibles heavily depends on community consensus and FOMO (fear of missing out). KOLs are key nodes in creating and amplifying this emotion, quickly driving traffic to projects and enabling “cold starts.”

4. High Marketing Efficiency: Compared to traditional advertising, KOLs’ targeted promotion and whitelist privileges result in higher conversion rates, making them powerful tools for project parties to rapidly acquire users.

Typical KOL Work Content

While seemingly diverse, KOL work mainly revolves around “marketing” and “promotion”:

• Content Creation and Publishing: Producing videos, writing articles, posting updates on social media, analyzing, reviewing, and recommending specific digital collectibles projects.
• Live Streaming and Pumping: Showcasing collectibles during live broadcasts, publicly sharing purchase records, and clearly guiding fans to “buy” or “hold.”
• Community Operation and Management: Posting project information, answering questions, creating atmosphere, and maintaining community enthusiasm.
• Collaborative Promotion: Accepting project party’s advertising commissions to publish promotional content on their social media accounts.
• Organizing “Whitelist” Activities: Arranging events to secure priority purchase rights for fans (whitelist), thereby increasing fan loyalty.

Legal Logic for Labeling KOLs as Criminal Co-Conspirators

Why do judicial practices sometimes classify KOLs who promote as accomplices in scams? The core legal logic is based on the theory of “joint crime.”

According to the Criminal Law, joint crime refers to two or more persons intentionally committing a crime together. If a KOL crosses the boundary of mere “information dissemination” and forms “joint criminal intent” with the project party, or performs “helping behaviors,” they may be considered an accomplice.

Main reasons for conviction include:

1. Subjective “Knowledge” or “Should-Know”: This is key to conviction.

• Knowledge: Evidence shows the KOL clearly knew the project was an “eyewash” (without real value) or a “pump-and-dump” scam, yet still promoted it. For example, having private communications with the project party and knowing the fund-raising scheme.
• Should-Know: Even if the KOL claims ignorance, based on their expertise, industry experience, and common sense, they should be able to recognize significant risks or scams. For instance, if the project’s business model is illogical, promises excessively high returns, or the technical team is falsely packaged, courts tend to presume that a professional KOL “should” recognize these red flags.

2. Objective “Behavior”: Their promotional actions directly provide substantial assistance or produce tangible results in the scam.

For example, in a scam scenario: the path is “the actor fabricates facts or conceals truths (reaching criminal severity) → victims fall into mistaken beliefs (causal relationship) → victims transfer assets based on mistaken beliefs → actor illegally appropriates assets.” If a KOL’s actions lead many victims to believe and invest, they are often deemed “co-conspirators” in practice.

• Expanding the scam’s impact: Delivering the scam precisely to many potential victims.
• Helping the project strengthen deception: Using their reputation to make followers relax vigilance and believe false promotions.
• Enabling the project to obtain illegal funds: The KOL’s traffic leads to substantial investments, establishing a causal link to the harm caused.

3. Interests Tied to the Project Party: If the KOL’s compensation is directly linked to sales volume, new user recruitment, or involves “partnership sharing” or “fixed monthly salary,” this creates a “shared interest community.” Such arrangements increase the risk of courts recognizing them as joint criminals.

How Can KOLs Protect Themselves?

Before discussing risk prevention, identify behaviors highly susceptible to being deemed criminal. These behaviors are not limited to the KOL industry but also apply to other promotional and marketing fields involving “false projects,” “front-running,” “guaranteed returns,” etc., which carry legal risks:

(1) High-Risk KOL Behaviors

• Participating in false promotion: Knowing that the project’s technology, team, application scenarios, or licensing are fake, yet still packaging and promoting it.
• Promising or implying guaranteed returns or high profits: Using phrases like “sure profit,” “guaranteed principal,” or similar to promise earnings.
• Promoting “fund-raising” or “Ponzi scheme” models: Promoting schemes where later investors’ funds pay earlier investors, which inevitably leads to a collapse of the capital chain.
• “Pump and dump” activities: Buying low in advance, then urging followers to buy high, then selling off for profit, or even collaborating with the project to establish “RATS” (front-running) to gain high returns.
• Receiving high promotion fees without due diligence: Taking money and promoting regardless of project risks, which could be suspected of “should-know” issues.

(2) Risk Prevention Recommendations

In a field full of opportunities and risks, compliance awareness is a “safety belt.” KOLs should:

1. Uphold bottom-line principles and isolate risks

• Conduct background checks before any promotion: Verify the project team’s real background and past achievements, the feasibility and innovation of technical solutions, the legality and sustainability of the business model, and the authenticity of application scenarios. Be wary of projects with exaggerated claims and no clear technical logic.
• Require project parties to provide official documents: Such as company licenses, ICP licenses, EDI licenses, network cultural operation permits, blockchain information service filings, white papers, legal opinions, etc. Refuse if they cannot produce or evade providing these.

2. Content compliance and safe expression

• Absolutely prohibit using promotional language like “sure profit,” “bottom point,” “top point” or other inducement and misleading terms, and avoid overly sensational language that stirs market sentiment.
• Clearly mark “investment involves risk, enter the market cautiously,” “this is a commercial promotion, not investment advice” and other risk reminders.
• Objectively state project facts, clearly distinguish “facts” from “personal opinions,” and use cautious wording.

3. Avoid conflicts of interest and define boundaries

• Prefer fixed-fee advertising collaborations, linking income to the promotion itself rather than directly to project sales, tokens, or digital collectibles’ prices. The latter “performance sharing” or “revenue sharing” models could be viewed as forming a shared interest community, increasing the risk of being recognized as joint crime.
• Standardize cooperation modes, maintain a certain distance from the project, and clarify your role as an “independent promoter,” avoiding claims or misperceptions of being a partner, advisor, or core member of the project.
• When in doubt about a project, follow the principle of “better to miss out than to make mistakes,” even if the potential gains are high.

(4) Keep records and improve procedures

• Save all communication records (chat logs, emails), contracts, payment receipts, and project-provided materials (promotional content, licenses) comprehensively and long-term. This demonstrates due diligence and provides strong evidence for self-defense if involved in legal proceedings.

( Conclusion

As trendsetters of the era, KOLs enjoying the benefits of influence must always remember: Law is the bottom line of conduct; the greater the influence, the heavier the responsibility. A single reckless promotion can not only ruin years of accumulated reputation but also drag you into criminal liability. Only by maintaining reverence and acting in compliance can you remain invincible when the tide recedes.