The Bottom Line Up Front
Operating a “Web3 studio” that rents out thousands of accounts to create fake volume for token projects is not a regulatory gray area in China—it is a criminal minefield. The act of “providing liquidity services” is, under current Chinese law, indistinguishable from aiding fraud, illegal fundraising, unlicensed financial activity, money-laundering and criminal-network assistance.
Regulatory Backdrop: Two Notices, Zero Wiggle Room
2017 “Notice 94” – ICOs banned; virtual-currency fundraising = illegal financial activity
2021 “Notice 924” – All virtual-currency trading, pricing, clearing and market-making = illegal; facilitating such activity is also prohibited
Together the two notices criminalize every step of the studio business model.
The Standard Playbook (a.k.a. Prosecutor’s Checklist)
Token launch on Pump.fun / Four.Meme → hype “lock & burn” of LP tokens
Studio buys or farms thousands of addresses → washes trade on DEX to paint a volume chart
Social-media squads post screenshots of “presale sold out in 3 s” and “already 20×”
Retail FOMO rushes in; studio bots place thin-floor bids to hide exit liquidity
Team yanks LP or dumps unlocked tokens; price collapses; studio collects its USDT fee
Each step maps neatly to specific criminal statutes.
Five Criminal Liabilities You Can’t Code Around
Fraud (Art. 266 Criminal Law) – Knowingly helping founders create false appearance of demand or locked liquidity = joint offender
Illegal Absorption of Public Deposits (Art. 176) – Even using your own capital to “fill quota” induces unspecified public to invest later
Illegal Business Operations (Art. 225) – Running an unlicensed market-making/trading venue; profit from fees seals the charge
Assistance to Cyber-Crimes (Art. 287bis) – Supplying bulk accounts, KYC docs, APIs or scripts used by scammers
Money-Laundering (Art. 191) – Swapping tainted tokens into USDT/CNY or cross-border transfers
Owners face principal liability; employees who “just followed orders” but knew the purpose are treated as accomplices.
Chain-Aware Prosecutors Are Catching Up
Courts once dismissed crypto-loss reports as “investment risk.” Today blockchain analytics (Chainalysis, TRM, even Etherscan + Excel) let investigators trace wash-trade clusters, LP removal timestamps and fund hops to off-ramps within days. The “00后 college kid” who rugged a meme-coin LP for $120 k got 4.5 years in prison in 2023; the court cited pre-meditated false marketing and coordinated bot volume—exactly what studios supply.
Conclusion: The Gray Zone Has Shrunk to Zero
In China the act of manufacturing liquidity is no longer a regulatory ambiguity; it is a predicate crime. If your business model depends on renting accounts, wash trading, or “supporting” overseas token launches, you are already on the wrong side of the criminal threshold. The only remaining variable is whether the subpoena arrives before the exit liquidity.