727 FinanceIs it legal to act as a U-card agent in China? From the perspective of a criminal defense lawyer, this article analyzes four major misconceptions and legal risks in VCC virtual credit card agency work, including frozen cards, money laundering, the crime of illegal business operations, and more, reminding practitioners to be alert to the possibility of criminal prosecution.
As a criminal lawyer in the crypto field, we very frequently see in practice that a large number of retail coin speculators, U merchants, and others have their bank cards frozen due to unfortunately receiving illicit funds during transactions, or are suspected of money laundering-type criminal offenses.
How to ensure that one's bank card is not frozen when selling U has become a issue of concern to everyone.
Where there is demand, there is a market, so VCC virtual credit cards/U cards came into being.
This article wants to discuss: in China, would being a U card agent be a legal and good business?
I Author of this article: Lawyer Shao Shiwei
01. Four major misconceptions of U card agents
❓ As long as the VCC virtual credit card/U card issuer represented is legitimate, there is no problem
Many UP hosts and KOLs, when promoting U cards on social media platforms at home and abroad, will state that the U card issuer they represent is a certain large listed company, has authoritative qualification licenses issued by overseas countries such as the United States and Canada, and will show users the detailed background check details they have done on the U card issuer, in order to enhance persuasiveness and make users realize that the U card they represent is issued by a legitimate company, so it can be purchased with confidence, and there will be no risk of swallowing user funds or running away.
❓ As long as after-sales service is done well and customer relationships are maintained, there is no problem
Compared with overseas U card issuers, domestic U card agents are the domestic promoters and marketers of U cards; compared with users, they act as merchants, selling U cards and providing consultation as well as pre-sale, in-sale, and after-sale services.
For example, the U card issuer has set up a KYC review mechanism, and users need to fill in an overseas mobile phone card to receive verification codes, but mainland users do not have overseas mobile phone numbers, so the U card agent helps users contact customer service to provide convenience for customers.
❓ I am only selling U cards, not doing the business of buying and selling U for price differences, so it is legal
The business of U merchants making price differences by buying and selling virtual currency, due to relatively high-frequency transactions, whether the price difference charged is higher than the market price or in line with the market price, may involve receiving illicit money and thus related legal risks. Therefore, U card agents believe that they are only selling related physical cards or virtual cards, do not touch OTC transactions, and therefore have no legal risk.
❓ As long as promotion is carried out on overseas social media platforms such as Telegram, Twitter (X), and YouTube, there is no problem
Some U card agents will consider that virtual currency transactions carry risks in China, so selling U cards in China will also be relatively sensitive. Therefore, they will move their promotion platforms from domestic platforms such as WeChat Moments, Douyin, and Bilibili to overseas social media platforms such as Telegram, Twitter (X), and YouTube.
In addition, in order to expand promotion, enhance their influence, and cover more potential users, many U card agents will set up Telegram groups so that users can communicate freely in the groups. If users encounter card-related problems, even if the agents are not online, users can promptly seek help from group members.
02. What legal risks should be noted when acting as a U card agent in China?
In China, as long as the business engaged in is related to virtual currency, domestic policy provisions must be taken seriously. According to the 924 Notice, 26 Notice, and others, "virtual currency-related business activities are illegal financial activities," and "no network business premises, commercial displays, marketing promotion, paid traffic diversion, or other services may be provided for virtual currency-related business activities."
Even if the country where an overseas U card issuer is located does not prohibit the issuance of U cards and authorizes relevant qualification licenses, it does not mean that the issuance, promotion, and sale of U cards within China's territory are legal. According to the aforementioned policy provisions, acting as a U card agent in China can be regarded as providing commercial display, marketing promotion, and other services for virtual currency-related business activities. In this way, the business activities of U card agents inevitably involve related legal risks and policy risks.
But after all, there is still great market demand in China, so there are still many people eager to try this business, and they believe that as long as they can maintain good customer relationships and there are no customer complaints, then there will be no problem. They may even move promotion to overseas platforms and communicate with customers on encrypted software such as Telegram.
However, whether U card users will encounter problems during actual use, and whether the related problems can be properly resolved, are often beyond the agent's control. For example, if the funds recharged by users are withheld by the platform, while the actual operator is located overseas, domestic users, when facing difficulties in safeguarding their rights, are likely to turn to domestic agents to hold them accountable, or even report the matter to public security organs.
Once a criminal report is triggered, whether the public security organ will, based on regulatory provisions such as the "924 Notice," investigate the agent's business activities, or even pursue criminal liability on suspicion of crimes such as illegal business operations, is subject to certain uncertainty. Even if the agent itself did not participate in fund exchange or actually control user assets, it does not mean that related criminal risks can be completely ruled out.
Although U card agents themselves sell the cards and do not involve virtual currency transactions, it cannot be guaranteed that all buyers purchase them for their own use. As Lawyer Shao previously analyzed regarding possible scenarios in which U card buyers use U cards for transactions:
Some U card users may not be acting purely out of personal consumption needs, but may use U cards to provide virtual currency exchange, cash withdrawal, and other services for others, and earn price differences or charge handling fees from them.
For example, after the two parties agree on the exchange price between virtual currency and RMB, one party receives another person's USDT, then withdraws cash through a U card and delivers RMB. If the relevant virtual currency originates from upstream illegal and criminal activities, the persons involved in exchange and cash withdrawal may face criminal risks such as the crime of concealing or disguising criminal proceeds.
If a U card buyer is suspected of money laundering-type crimes due to using a U card for fund transfer, exchange, and other activities, then as the party providing the U card, may the agent also bear corresponding criminal liability? This needs to be judged based on specific circumstances such as whether the agent clearly knew of the relevant illegal and criminal activities and whether the agent provided substantive assistance.
In addition, U card agents also need to pay attention to risks related to the crime of illegally using information networks. For example, some agents may promote products by establishing WeChat groups, Telegram groups, and other methods. If the groups are used to carry out illegal and criminal activities such as fraud and money laundering, whether the founders and managers of the groups bear criminal liability also needs to be judged based on factors such as their subjective awareness, the actual use of the groups, and specific management conduct.
03. Written at the end
In China, because virtual currency-related business activities are characterized as illegal financial activities. In judicial practice, some U card platforms have already been subject to criminal prosecution on suspicion of illegal business operations. Against this background, even if U card agents do not directly participate in virtual currency exchange, they may still be found by judicial authorities to be participants in related crimes due to their agency, promotion, or sales activities, and may even face charges of joint crimes.
Therefore, from the perspective of criminal legal risk prevention, Lawyer Shao does not recommend that U card agents carry out U card agency, promotion, or sales business targeting users in mainland China.
Special statement: This article is an original article by Lawyer Shao Shiwei and represents only the personal views of the author. It does not constitute legal consultation or legal opinion on any specific matter.