In the previous section, we dismantled the two most common "organizational structural misunderstandings" in Web3 projects: the "false neutrality" of the foundation and the "empty shell" of DAO. What they have in common is that formal compliance cannot conceal actual control, and the so-called "decentralization of power" has become a counter-evidence of responsibility avoidance.

However, compliance risks are not limited to organizational forms. In daily operations, more projects often fall into path dependencies such as "service outsourcing", "multi-location registration", and "exemption on the chain", trying to weaken regulatory traceability by blurring the boundaries of responsibility.

These strategies sound like they have "large operating space" and are even considered "industry practices", but from a regulatory perspective, they are precisely the blind spots with the highest risks.

Next, Portal Labs will continue to dismantle the last three typical high-risk structures and combine them with real cases to help you identify structural traps at the operational level.

"Service outsourcing" conceals operational responsibilities

Faced with regulatory uncertainty, many Web3 project parties tend to adopt the "outsourcing" strategy, handing over core functions such as contract development, front-end maintenance, and marketing promotion to third parties in the hope of weakening their own operational attributes and evading regulatory responsibilities.

However, regulators do not only look at who the contract is signed to, but also focus on "who actually makes decisions and who benefits from it." In other words, the legal effect of outsourcing does not depend on the superficial form, but on the actual ownership of control. If the regulator finds that the so-called third-party service provider and the project team have interest binding, command control, personnel overlap, etc., even if the contract is independent, it may be identified as an extended operating unit of the project party. At this point, all actions will be re-attributed to the project entity.

In 2022, when the US SEC sued Dragonchain, it pointed out that although its team had established multiple legal entities and outsourced some operations to outsourcing companies, the SEC determined through email records, operational trajectories and personnel positions that all key decisions were still controlled by Dragonchain's parent company, and the outsourcing structure did not constitute responsibility isolation.

In Hong Kong, when handling compliance investigations of certain types of virtual asset service providers, the SFC also made it clear that if the core operations and technical decisions are still in the hands of the same actual controller, even if the business is performed by the "service provider", it will not be considered an independent operation. This kind of "formal split" arrangement is instead regarded as negative evidence of deliberate evasion of regulatory obligations.

Service outsourcing itself is not illegal. The problem is whether the control and responsibility chain are truly isolated. If only the execution function is transferred in form and the control is not moved, the project entity will ultimately be blamed in the face of regulatory penetration. A truly resilient compliance path should clarify in the early structural design stage: which links can be transferred to third parties, which functions must be undertaken internally and the responsible parties must be disclosed to the outside world.

"Multi-location registration + distributed nodes" conceals the control center

In pursuit of a balance between the "borderless narrative" and the "regulatory gray zone", some Web3 projects choose to artificially split the registration location and operating nodes. They usually set up shell companies in countries with loose regulatory environments such as Estonia, Portugal, and Lithuania, while claiming global node deployment, trying to create a decentralized impression of "no single control center".

But in reality, most of these structures still show highly centralized control, with decision-making concentrated in a few core members, capital flows dominated by a single entity or individual, and key code update permissions controlled within a single address. This type of "decentralized structure, centralized control" arrangement is increasingly difficult to resist regulatory penetration identification. Especially when a project faces legal disputes or cross-border investigations, regulators will prioritize tracing the "location of the actual controller" and "location of key behaviors" to establish jurisdiction. Distributed nodes are only a technical deployment method and cannot conceal the essence of operations.

In the 2024 Williams v. Binance case, the U.S. Second Circuit Court ruled that as long as U.S. users purchase crypto tokens through the Binance platform and the trading system infrastructure (such as AWS nodes) is located in the United States, U.S. law is applicable, even if Binance claims to have no U.S. entity. This case shows that U.S. regulators do not agree with the "statelessness" claim, as long as users are connected to engineering behavior and subject control, they can be penetrated.

Regulation in other regions is also evolving simultaneously. Starting in 2024, MAS in Singapore will explicitly require projects applying for virtual asset service licenses to disclose the "actual management location" and "actual residence of key managers"; the Hong Kong SFC also emphasized in the guidelines that "overseas registration structures cannot prevent local regulatory rights from being traced back to the controller."

"Multi-location registration" and "distributed nodes" are not structural safety cushions. If the strategy, code, funding and governance rights of a project are still concentrated in a certain team or individual, the regulatory perspective will focus directly on the control center. Compared with building a shell structure to cover up, clarifying the responsibilities of the actual controller of the project and the distribution of regulatory obligations can reduce legal risks.

"On-chain release ≠ unmanned operation"

In the understanding of some technical teams, once the smart contract is deployed, the Web3 project is "decoupled from it". They regard the code on the chain as "decentralized delivery" and try to complete the division of legal responsibilities through technology: we don't operate, we just write code.

But regulators do not accept this "technology is exemption" argument. On the chain is just a form, and off the chain is the behavior. Who initiated the marketing? Who organized the delivery? Who actually controls the circulation path? These factors are the core of regulatory judgment on the attribution of responsibility. Supervision will not determine that the project is decentralized simply because the code has no administrator and the contract can be called arbitrarily. If the project party is still promoting tokens, setting trading incentives, retaining official communities, cooperating with KOLs to distribute or accepting early financing, its operating identity cannot be erased.

In 2024, US investors filed a class action lawsuit against the Pump.Fun platform, accusing it of operating through memecoin issuance and pump-and-dump money laundering and speculation. Although it claimed that "on-chain contracts are open", the lawsuit clearly stated that "marketing activities and KOL promotion are the core of driving transactions." This case points out that supervision does not only focus on code, but focuses on reviewing who is operating off-chain.

In February 2025, the SEC issued a Staff Statement, reiterating that even "entertainment-type" meme tokens cannot be labeled "exempt"; as long as there is an expectation of wealth appreciation or marketing intervention, it must still be judged according to the Howey Test. In addition, global supervision has also reached a consensus. Since 2024, the SEC, CFTC, Hong Kong SFC, Singapore MAS and other local regulators have strengthened the "behavior-oriented" judgment logic, and listed the off-chain promotion and distribution path as a key review item, especially the "leading issuance" model through KOL, airdrops, and exchange listings, which are almost all regarded as typical operating behaviors.

On-chain deployment is not the end of responsibility, but the starting point of responsibility. As long as the project party still promotes the circulation of tokens through off-chain behavior, it will always be under the supervision. The key to true decentralization has never been the technical form, but whether it can withdraw from operations, give up control, and let the market evolve on its own.

Don’t just look at the “structure”, look at the “control relationship”

In the past two years, the logic of supervision has become clearer and clearer, that is, it is not about what structure you have built, but how you operate and who benefits.

As Portal Labs has always emphasized, what Web3 projects really need is not the complex stacking of structures, but the clear setting of responsibility and control boundaries. Instead of trying to cover up risks through “structural games”, it is better to establish a compliant architecture with resilience and explainability from the beginning.