Discussion on the Issuance of meme tokens and Related Legal Risks

Recently, a news article about the issuance of virtual currency involving a criminal case has sparked widespread attention. This case involves a post-2000 student who was convicted of fraud after issuing "meme tokens" on an overseas public blockchain. Although similar cases are not uncommon, it still raises people's awareness of the legal risks associated with the issuance of virtual currency. This article will delve into the potential criminal issues related to the issuance of meme tokens.

What is meme tokens?

Meme tokens usually refer to small-scale cryptocurrencies issued directly by individuals or organizations, apart from mainstream cryptocurrencies like Bitcoin and Ethereum. These types of coins often lack a complete white paper and clear application scenarios.

Case Review

In May 2022, a university student named Yang某某 issued a meme token called BFF on a certain overseas public chain. He first added liquidity and then quickly withdrew it, causing an investor, Luo某, to experience a sharp devaluation of his investment. Subsequently, Luo某 reported to the public security authorities, claiming he was defrauded of more than 300,000 yuan. Ultimately, Yang某某 was arrested on suspicion of fraud.

Does the behavior constitute a crime of fraud?

The view of the judicial authority

The prosecution believes that Yang某某 committed fraud by creating a false cryptocurrency under the same name as someone else and using the method of adding and withdrawing liquidity. They believe this behavior led to investors' misconceptions and property losses.

different viewpoints

However, there are also views suggesting that Yang's actions may not constitute fraud. The reasons are as follows:

1. Investors may not have fallen into misconceptions: According to the trading records, investor Luo completed a buy operation at the same second that Yang added liquidity. This speed of operation is very likely achieved through automated trading programs rather than manual operation.

2. Possibility of a Professional Investor: There are indications that Mr. Luo may be a professional cryptocurrency trader, skilled in using automated tools for high-frequency trading.

3. Lack of subjective fraudulent intent: If the investor indeed used an automated trading program, then Yang may not have specifically deceived that investor.

Legal Risk Warning

Although there is controversy over whether it constitutes fraud in this case, the issuance of meme tokens still faces multiple legal risks:

1. Illegal business operations: Engaging in financial-related activities without permission may constitute this crime.

2. Illegal fundraising crimes: If the project party is domestic, even if the virtual currency is issued overseas, it may be deemed as illegal public deposit absorption.

3. Gambling-related crimes: Certain virtual currency trading models may be considered a form of disguised gambling.

Conclusion

Although there is controversy over whether Yang's actions in this case constitute fraud, the issuance of meme tokens is undoubtedly a high-risk behavior. Within the current legal framework, such actions can easily violate multiple legal provisions. For individuals or organizations intending to enter the virtual currency field, it is advisable to fully understand the relevant legal risks and proceed with caution.