Is crowdfunding considered illegal fundraising?

As a new financing method, crowdfunding provides financial support for innovation and entrepreneurship, but there is also the risk of being abused to illegally raise funds.

1. The definition and difference between crowdfunding and illegal fund-raising

Crowdfunding refers to publishing financing project information to unspecified objects through the Internet platform and raising small amounts of funds for the project financing activities implemented. It usually has the characteristics of openness, small amount, and extensiveness.

Illegal fund-raising refers to raising funds from the public by issuing stocks, bonds, lottery tickets, investment fund securities or other debt certificates without the approval of relevant departments in accordance with the law, and promising to raise funds within a certain period of time. The act of repaying principal and interest or giving returns to investors in currency, kind, or other ways. Illegal fund-raising often involves illegal activities such as fraud and false propaganda.

2. Legality and Risk Prevention and Control of Crowdfunding

Crowdfunding is a beneficial financing method under the premise of legal compliance. However, due to the openness and widespread nature of crowdfunding, it can easily be used by criminals to conduct illegal fund-raising activities. Therefore, for crowdfunding activities, relevant laws and regulations must be strictly abided by to ensure that the information is true, complete and accurate, and to prevent fraud and false propaganda.

In order to ensure the legitimacy of crowdfunding, relevant departments should strengthen supervision, register and manage crowdfunding platforms, and standardize their business practices. At the same time, investors should also increase their risk awareness, choose crowdfunding projects prudently, and avoid falling into illegal fund-raising traps.

3. The boundary between crowdfunding and illegal fund-raising

The boundary between crowdfunding and illegal fund-raising is not clear and needs to be judged based on the specific circumstances. Generally speaking, legal crowdfunding activities should meet the following conditions: the project is authentic and reliable, the purpose of the raised funds is clear, the returns are reasonable and legal, and the risks are controllable. Illegal fund-raising often involves illegal activities such as false propaganda, promises of high returns, and unclear uses of funds.

In summary:

As a new financing method, crowdfunding has positive significance under the premise of legal compliance. However, since the boundaries between crowdfunding and illegal fund-raising are not clear, relevant laws and regulations need to be strictly abided by, and supervision and risk prevention need to be strengthened. Investors should also increase their risk awareness and choose crowdfunding projects carefully.

Legal basis:

"Criminal Law of the People's Republic of China"

Article 176 provides:

Whoever illegally absorbs public deposits or absorbs public deposits in disguised form and disrupts financial order shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall also or solely be fined not less than 20,000 yuan but not more than 200,000 yuan; if the amount is huge or there are other serious circumstances, he shall be sentenced The offender shall be sentenced to fixed-term imprisonment of not less than three years but not more than ten years, and shall also be fined not less than 50,000 yuan but not more than 500,000 yuan.

"Interpretation of the Supreme People's Court on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fund-raising"

Article 1 stipulates:

Violation of national financial management laws and regulations , if the act of absorbing funds from the public (including units and individuals) meets the following four conditions at the same time, unless otherwise provided in the criminal law, it shall be deemed as "illegal absorption of public deposits or "Absorbing deposits from the public in disguised form":

(1) Absorbing funds without the legal approval of relevant departments or using the form of legitimate operations;

(2) Through the media, promotion meetings, leaflets, mobile phones Publicly publicize to the public through text messages and other means;

(3) Commitment to repay principal and interest or pay returns within a certain period of time in the form of currency, kind, equity, etc.;

(4) To The public, that is, the unspecified objects of society, absorb funds.