In China, issuing tokens is not entrepreneurship, but a high-risk gamble to exchange freedom for money. When you see 'hundred times dog coin' or 'Chinese pride' calls in WeChat groups, you are actually staring at a group of shackled sickles - they weave a myth of getting rich with a cost of 100 yuan, which may leave you with nothing and possibly put the operators in jail. This is not alarmism but a survival guide written with legal provisions and real cases.
1. Domestic token issuance: Three steps from illegal to criminal.
❶ Step one: Illegal token sale - a ticket starting at three years.
Legal red line: According to Article 225 of the Criminal Law, issuing tokens without permission is suspected of 'illegal business operations', and amounts exceeding 5 million yuan can result in more than 5 years in prison;
Real case: A certain team issued 'XX ecological coin', attracting 300 people to invest through WeChat groups, amounting to 1.2 million, the main culprit was sentenced to 3 years and 6 months with a fine of 500,000.
❷ Step two: Organizing pyramid schemes or fraud - an upgraded package starting at ten years.
Cumulative charges:
Promising 'referral bonuses' = 'organizing and leading pyramid schemes' (maximum sentence of 15 years);
Fictitious 'blockchain technology' for fundraising = 'fundraising fraud' (amount exceeding 5 million can lead to life imprisonment);
Shocking case: The Pangu Community case involved over 2 billion, the main culprit Mo Da was sentenced to 12 years, and the MXC coin, which claimed 'price exceeds BTC', went to zero, leaving tens of thousands of investors with nothing.
❸ Step three: Even transnational crime cannot escape the law - the principle of territoriality's net is wide.
Legal pursuit:
Chinese people issuing tokens overseas and promoting them domestically = 'cross-border crime', extradition back to China for trial;
Foreigners issuing tokens targeting Chinese users = 'illegal financial activities', freezing assets + expulsion;
Typical case: Before banning Chinese IPs, a certain NFT project in Korea had already absorbed 50 million yuan through domestic agents and was ultimately demanded by the Chinese side to freeze its accounts.
2. The sickle logic of dog coins: How does a cost of 100 yuan harvest millions in funds?
❶ Low-cost crime industry chain.
Token issuance cost:
Smart contract deployment: 100-500 yuan (ready-made templates from Taobao/Telegram groups);
False advertising: 500 yuan/day (buying water army to brush groups, stealing images and modifying text);
Profit formula: Deceiving 20 people to invest (5U per person) = covering costs, subsequent pure profit exceeds 90%.
❷ Running away timetable: from calls to disappearance in extreme operations.
72-hour flash sale:
Day 1: Announce on Twitter/Telegram 'received investment from XX capital', pull in WeChat groups with over 200 people;
Day 2: Launch and rise 300%, inducing retail investors to increase positions while the dealer sells 50% of the tokens;
Day 3: Close the trading platform, disband the community, and blacklist all contact methods;
'Pattern operation' tricks:
Initial small rebates create a 'reliable' image, attracting investments exceeding tens of millions;
Suddenly claiming 'technical upgrade' locks assets, actually transferring them, ultimately declaring zero due to 'hacker attack'.
❸ The fatal illusion of retail investors: I can run faster than the dealer.
Game traps:
90% of dog coins peak upon launch, with a drop of over 95% within 72 hours;
The dealer holds the 'minting rights', allowing unlimited token issuance to crash the market;
Data shock: The average survival cycle of dog coins monitored in China in 2024 is 17 days, with a return on investment probability of less than 3%.
3. Why do domestic tokens 100% run away? Three iron rules break the illusion.
❶ Legal risks crush all 'patterns'.
Cost comparison:
The maximum sentence for opening a casino is 10 years, while the maximum for issuing tokens is life imprisonment;
For the same amount, the prison term for issuing tokens is 2-3 times that of opening a casino;
Rational choice: The operator is not 'Prometheus', but rather a criminal who prioritizes 'cost-performance' - they run away once they've scammed enough money, never reluctant to fight.
❷ Regulatory sky net has no dead angle coverage.
Technical monitoring:
The Central Bank Digital Currency Research Institute monitors USDT flow in real-time, and unusual transfers trigger warnings;
WeChat/Alipay intercepts keywords related to 'virtual currency' transactions, making the funds traceable;
Case warning: A certain 'metaverse token' called in WeChat groups for 3 days, and the police locked in 12 core members through transaction flows, all were captured within 72 hours.
❸ International environment forces running away.
Compliance crushing:
Platforms like Binance, OKX ban Chinese IPs, and dog coins lose the 'endorsement of regular exchanges' channel;
Overseas VCs refuse to invest in 'Chinese concept' projects, dog coins can only rely on retail investors to survive;
The outcome is doomed: Without financial blood transfusion, they can only rely on new investors to fill old pits; Ponzi schemes are bound to collapse.
4. Ultimate warning for retail investors: Three no principles to save lives.
❶ Do not touch the words 'domestic tokens'.
Identification features:
The community shouts in Chinese, emphasizing 'Chinese people do not deceive Chinese people';
Promoting 'Support RMB deposits and withdrawals' 'Domestic operating center exists';
Iron rule: As long as the project party actively associates with 'domestic' 'Chinese people', directly blacklist without hesitation.
❷ Do not believe 'low risk high return' nonsense.
Counterintuitive formula:
If the annualized return exceeds 30%, the risk coefficient rises exponentially;
Projects in the crypto world claiming 'capital preservation and interest' are 100% scams;
Practical skills: Use 'reverse questioning method' to test the operator: 'If it’s so profitable, why not keep quiet and make a fortune by themselves?'
❸ Do not be the 'last stick' and take over.
Escape strategy:
Do not touch new tokens within 24 hours, observe the authenticity of trading volumes;
Use 1% of funds for trial and error, withdraw profits of 20% immediately, never add more investment;
Ultimate wake-up call: Remember the tragic conditions of projects like Pangu Community, Athena, etc. - those shouting 'consensus is king' ultimately let retail investors 'consensus drop to zero'.
Conclusion: There is no 'grey area' survival space between legality and illegality.
The essence of domestic token issuance is a 'death game' that exchanges ten years of prison for short-term high profits; participating in dog coins means handing over your hard-earned money to a group of criminals who may run away at any time. When you see 'wealth myths' in WeChat groups, think about this: If there really were risk-free opportunities, why would it fall to a stranger like you?
The correct way to open cryptocurrency is to invest in mainstream coins (BTC, ETH) and hold them for the long term, rather than participating in the side door 'domestic dog coins'. Remember: In the crypto world, not losing money is more important than making money - especially in front of the legal red line, a stroke of luck may lead to a lifetime of regret.
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