Complete case review of the criminal investigation involving the NFT digital collectibles platform

Writing by: 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 evolved from early concerns over administrative compliance risks to high-frequency criminal risks.

In practice, many cases are initially classified as “fraud” at the filing stage. However, as the case progresses into evidence review and element analysis, it often becomes apparent that there is considerable room for defense beneath the surface.

This article uses a case handled by Mankun Law Firm involving a criminal investigation of an NFT digital collectible platform as a sample. It systematically reviews the entire process from controversy over case classification, evidence dissection, to ultimately obtaining a non-prosecution decision. It also distills practical, reusable, and transferable methodologies for legal colleagues’ reference.

Case Classification Debate: Is it “Fraud” or “Misguided Promotion”?

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

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

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

After the campaign, due to market changes and lower-than-expected sales, the actual distributable prize pool was only a few ten thousand yuan. Some users who invested heavily believed the platform was deceptive and filed complaints and reports.

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

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

After reviewing the case and organizing facts, the legal team quickly identified three features that clearly distinguish this case from traditional fraud:

Real Business Operations

The platform was not a shell operation; the source of digital collectibles was legitimate, genuinely issued, and tradable. The platform maintained actual operations before and after the incident.

Vague Promotional Language, but Not Falsification of the Project

Promotional language used terms like “expected” and other future-oriented, anticipatory expressions, but did not fabricate nonexistent projects, rules, or profit models.

Serious Outcomes, but More Like Business Overreach Than Illegal Possession

User losses objectively existed, but considering the overall behavior pattern, the subjective state of the actors was closer to over-optimism about the market rather than intent to illegally appropriate others’ property.

Based on these judgments, the legal team concluded:

This case is closer to “out-of-control promotional risk” rather than “fraud criminal.”

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

Defense Focus: Not Entangling “Results,” but Dissecting “Constituent Elements”

In cases involving virtual currencies and digital collectibles, defense often falls into emotional debates over “whether money was stolen.” However, in criminal review logic, what truly matters is whether the elements are fully proven by evidence, not the outcome itself.

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

This also forms a “core dissection pathway” repeatedly used in similar cases.

(1) Is there “intent to illegally possess”?

Defense Focus

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

Evidence Organization Path

Retrieve and present the platform’s real operational records over a year, including ongoing investments in personnel, technology, servers, etc.;

Provide complete company account transaction records to prove that sales revenue was mainly used for platform operations, with no signs of personal extravagance, embezzlement, or concealment of funds;

Show objective facts that the platform continued to operate and communicate with users, offering compensation plans after the campaign ended.

Conclusion

All objective behaviors point to “continued business operation” rather than “intent to illegally possess.”

This step directly undermines the foundation for establishing fraud.

(2) Is there “factual fabrication or concealment” of truth in deception?

Defense Focus

Is “expected no less than 1 million yuan” a false promise or a business expectation expression?

Evidence Organization Path

Retrieve the platform’s early market analysis data, demonstrating that the “1 million yuan” figure was a forecast based on market enthusiasm at the time, not fabricated out of thin air;

Compare with similar marketing activities in the industry at the same time, showing that “expected” expressions are common in industry practices;

Emphasize that existing evidence cannot prove that the responsible persons knew at the time of promotion that the amount was impossible to realize.

Conclusion

This behavior aligns more with exaggerated publicity or improper promotional statements at the civil or administrative level, not reaching the standard of “fictitious facts” required for criminal fraud.

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

Defense Focus

Did users’ purchases stem from mistaken beliefs, or from a comprehensive judgment of the collectible’s value and market risks?

Evidence Organization Path

Point out that the user agreement explicitly warned about price fluctuations and market risks;

Show facts that some users continued trading even when the prize pool was significantly insufficient, reflecting speculative factors;

Argue that sharp market changes were an external cause of the losses.

Conclusion

It is difficult to establish a complete criminal causality chain:

“Deceptive behavior → mistaken belief → property disposition → illegal possession.”

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

[Extended Reflection] The Boundary Between Criminal Fraud, Administrative Violations, and Civil Deception

The core dispute in this case lies in the application of the principle of criminal law’s restraint. The lawyer’s main task is to achieve a precise “legal classification transfer”:

Criminal Fraud: Intent to illegally possess, with the fabrication of fundamental facts;

Administrative Violation (False Advertising): Exaggeration or misleading statements to promote transactions;

Civil Fraud: False statements that induce the counterpart to fall into mistaken beliefs.

Successful criminal defense often does not deny the problem but places it within the appropriate legal framework.

Golden Stage and Winning Strategies: Methodology During the Prosecution Review Stage

(1) Why is the prosecution review stage considered the “golden window”?

When lawyers intervene, the case has already been transferred to the procuratorate. This stage has three notable advantages:

Investigation files are mostly fixed, allowing comprehensive assessment of evidence structure;

Prosecutors are still independently reviewing and forming their opinions;

The case classification still has substantial room for adjustment.

The core value of lawyers is to provide a logical, coherent case analysis framework different from the “Prosecution Opinion.”

(2) Tactical Focus: Reconstructing the Evidence Evaluation Sequence

Reviewing the files reveals a tendency among investigators to “emphasize results, downplay motives; emphasize words, downplay objective facts.”

Accordingly, the defense strategy shifts to systematically reorganize the evidence structure:

Prioritize establishing the subjective purpose;

Use objective evidence like fund flow and operational records to counter subjective “feeling of being cheated” evidence;

Finally, evaluate the loss outcome within the market environment.

This adjustment essentially guides prosecutors to “recalculate” the case using a different logic.

(3) Key Tool: A “Directly Adoptable” Non-Prosecution Opinion

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

Each factual allegation corresponds to a clear evidence page number;

Every legal conclusion is grounded in element analysis;

Each industry dispute point offers a “decriminalized” resolution path.

The goal of this opinion is not merely persuasion but to reduce the prosecutor’s decision-making cost for non-prosecution.

(4) Risk Closure: Post-Non-Prosecution Extension Management

Non-prosecution is not the end. The legal team also assists the client in managing extended risks:

Administrative level: Prepare rectification plans and defense ideas for promotional language issues in advance;

Civil level: Develop tiered user communication and compensation plans to prevent conflicts from escalating into collective lawsuits.

Effective risk mitigation should achieve: criminal intervention, administrative moderation, and civil resolution.

Case Outcome: Moving to Non-Prosecution After Two Dismissals

Through continuous and professional communication, the case was twice returned for supplementary investigation by the procuratorate.

“Return for investigation” itself indicates that the original classification and evidence structure could not support prosecution.

Ultimately, the procuratorate, under Article 175(4) of the Criminal Procedure Law, issued a non-prosecution decision due to “insufficient evidence and failure to meet prosecution conditions.”

Three Core Insights for Legal Colleagues

Emerging field cases fundamentally revolve around “classification battles.”

Lawyers must fight to have the case placed within the appropriate legal narrative framework.

Element analysis is the clearest operational map.

Rather than entangling in factual emotions, organize evidence around elements.

The prosecution review stage is the central battlefield influencing case outcomes.

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