Risks and Compliance in the Digital Collectibles Industry

Recently, the Hubei Provincial Public Security Department reported a case of "digital collection" fraud. The case involves 11 suspects from a digital collection platform operating company, with the amount involved exceeding 12 million yuan, making it the first "digital collection" fraud case in Hubei Province.

As the craze for digital collectibles wanes, many players who have entered this industry are starting to feel abandoned by the times. Earlier this year, the People's Court of Futian District in Shenzhen made a ruling on a fraud case involving a digital collectible trading platform, sparking widespread discussion within the industry. Recently, news of a criminal case involving a digital collectible platform in Hubei has caused many players to lament: "Digital collectibles were ultimately a misstep."

Currently, players on the digital collection platform are in a precarious situation. Their future seems to hold only two possibilities: either they become overnight millionaires or their dreams shatter. Everyone is worried about becoming the next victim, as when the frenzy subsides, what might be left is only the harsh reality of "explosive failures."

Traps in the Digital Collectibles Hype

Recently, an article about a 31-year-old programmer who fell into difficulties due to playing digital collectibles has attracted widespread attention. This player invested all the savings of two generations of his family into a certain digital collectibles platform and also incurred over a hundred thousand in debt, ultimately having to take on several part-time jobs to repay the debt. He helplessly stated: "Digital collectibles have turned into a speculative game of hot potato, depending on who runs the fastest."

So, why have digital collectibles become a "speculative game"? Why are there so many players suffering losses in this "game"? Let's return to the essence of digital collectibles and analyze the risks involved.

From a legal perspective, digital collectibles can be defined as: certificates of rights and authenticity generated based on blockchain and other cryptographic technologies, which are non-reproducible, non-modifiable, and non-divisible. They are proof of virtual property or property-related interests. Essentially, they are a certificate of rights, rather than the copyright of the work or the property rights contained therein. Only when digital collectibles declare that the buyer and the IP party jointly share partial copyright in a trustworthy technological form do they hold actual value for the buyer.

The trading of digital collectibles can be divided into occasional transactions and commercial transactions. Occasional transactions are generally not prohibited by law, while commercial transactions may face compliance risks, especially in cases where multiple resales are allowed. This could lead to a rise in the price of collectibles and even attract speculators engaging in buy-low, sell-high speculation.

The Compliance Path of Digital Collectibles Platforms

In the current situation, the compliance construction of digital collectible platforms is particularly important. For players who are already involved, the compliance of the platform is related to whether they can safely exit this "explosive game". Here are some key compliance points:

1. Obtain the necessary administrative permits: Although lacking relevant permits does not directly constitute a crime, platforms without permits are more likely to attract the attention of law enforcement agencies. Therefore, obtaining necessary administrative permits such as the ICP license is an important step in reducing risk.

2. No interference with secondary market prices: Many platforms have opened up secondary market trading, which is also a major source of risk. Platforms and their staff should not artificially influence trading prices through account manipulation or hiring bots, otherwise they may face fraud charges.

3. Reasonably control the prices of digital collectibles: Although there is a certain subjectivity in pricing digital collectibles, it should remain within a reasonable range. Excessively high pricing may be considered fraudulent behavior.

4. Exercise caution in platform promotion: To avoid the risk of illegal fundraising, the platform should avoid using language that promises returns or investment profits during promotion. Additionally, for promised rights or gifts, the platform must ensure that they can be fulfilled; otherwise, it may face allegations of breach of contract or even fraud.

Conclusion

As the digital collectibles industry gradually cools down, compliance construction on platforms has become an urgent task. Although the industry's craze has faded, it is hoped that industry participants can adhere to compliance bottom lines and maintain the healthy development of the industry until this trend truly passes. For investors, they should also remain rational, recognize the essence of digital collectibles, and avoid blindly following trends to prevent unnecessary losses.