Special Disclaimer: This article is an original work by Mankun Law Firm. It represents only the personal views of the author and does not constitute legal consultation or legal advice on specific matters.
Special Disclaimer:
This article is an original work by Mankun Law Firm. It represents only the personal views of the author and does not constitute legal consultation or legal advice on specific matters. For reprint permissions, please contact Mankun Law Firm staff at: MankunLawFirm
Wuyou Meta, which relaunched its version 2.0 in early October, was regarded by many as the "Light of October" in the digital collectibles circle, with a strong upward momentum. The trading price of the synthesized "White Feather Fairy" quickly surpassed the 20,000 yuan mark. However, just a week ago, the market capitalization of Wuyou Meta experienced a significant drop. Although subsequent activities helped the market recover in an orderly manner, the severity of the decline served as a sobering reminder to many users who were aggressively investing.
Today, we will discuss the legal compliance status of Wuyou Meta, the popular digital collectibles platform of October.
According to official introductions, Wuyou Meta is a key one-stop digital collectibles e-commerce platform under Hainan Qingyou Network Technology Co., Ltd. It gathers top-tier experts and technical personnel in the domestic financial and blockchain fields, focusing on the development of financial application products based on blockchain technology. The core team members previously worked at well-known internet giants such as Tencent and Baidu. They are committed to building next-generation Web3 infrastructure and implementing full-ecosystem scenarios, continuously exploring the collision and integration of traditional culture and digital technology.
Platform Mechanics
Wuyou Meta kicked off its anniversary celebration with a public lucky draw event, offering prizes including mobile phones and digital collectibles (Chang'e, Hou Yi, and White Jade Ruyi), which rapidly activated the platform's market.
In terms of platform mechanics, Wuyou Meta currently primarily employs a conventional combination of decomposition, synthesis, and exchange. The consignment market operates using both fixed-price and non-fixed-price models. For example, on the night of the lucky draw, Wuyou Meta opened the consignment market for the Chang'e collectible. Under the non-fixed-price model, the final transaction price of the Chang'e collectible stabilized at around 4,000 yuan. Among the many collectibles subject to the fixed-price model on Wuyou Meta, the "White Feather Fairy" and "Silver Armor Sword Saint" had the highest price limits, both set at 25,888 yuan.
Regarding platform activities, in addition to the standard priority synthesis, priority decomposition, and lottery purchase events common to digital collectibles platforms, Wuyou Meta's public support campaign concluded successfully a few days ago. According to data from DingLian, this campaign was a strategic move.
The process of the public support campaign was as follows: Two major collectibles were designated as opposing PK factions. Players joined a faction and obtained PK points by holding a specific collectible or consuming it to exchange for support cards. After the event, each PK point could be used to obtain a blind box for a lucky draw, and the winning faction received faction rewards.
Compliance Review
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Platform Qualifications
In early October, a notice issued jointly by the local Market Supervision Administration of Chengmai County, Hainan Province, and other departments listed the qualification materials required for digital collectibles companies registered in the region (see article: "Strong Regulation Arrives: Hainan Says Goodbye to NFT Digital Collectibles"). This notice also signaled the tightening of regulatory policies on the digital collectibles industry in Hainan.
Based on the relevant laws and regulations applicable to the characteristics of the digital collectibles industry, combined with the aforementioned notice and the operational status of Wuyou Meta, the qualifications and licenses of Hainan Qingyou Network Technology Co., Ltd. (hereinafter referred to as "Qingyou Company") are as follows:
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ICP License and EDI License
According to the relevant provisions of the Measures for the Administration of Internet Information Services and the Notice on Handling Licenses and Filings for Internet Information Services, entities engaged in commercial internet information services must obtain an Value-Added Telecommunications Business Operating License for Internet Information Services (ICP License). Entities that provide online data processing and transaction/transaction processing services to users through communication networks, utilizing various data and transaction/transaction processing application platforms connected to communication networks, must also obtain a Value-Added Telecommunications Business Operating License for Online Data Processing and Transaction Processing Services (EDI License).
According to public inquiries, Qingyou Company has currently obtained an ICP License.
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Artwork Business Unit Filing and Network Culture Operation Permit
According to the Measures for the Administration of Artwork Operations, business units engaging in artwork operations via information networks must apply for a business license and file with the cultural administrative department of the people's government at or above the county level in their place of residence within 15 days of obtaining the business license.
Commercial internet cultural activities refer to activities aimed at profit, obtaining benefits by charging internet users or through e-commerce, advertising, sponsorship, etc., and providing internet cultural products and services. A Network Culture Operation Permit is required.
According to public inquiries, Qingyou Company has not yet obtained the aforementioned certificates.
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Blockchain Information Service Filing
Article 11 of the Provisions on the Administration of Blockchain Information Services stipulates that blockchain information service providers shall, within ten working days from the date of providing services, fill in information such as the provider's name, service category, service form, application area, and server address through the Blockchain Information Service Filing Management System of the State Internet Information Office, and fulfill filing procedures.
According to public inquiries, Qingyou Company has not yet obtained blockchain filing.
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Public Security Network Filing
According to the relevant provisions of the Regulations of the People's Republic of China on the Security Protection of Computer Information Systems and the Measures for the Security Protection Management of International Networking of Computer Information Networks, websites must file with the local public security organ's cybersecurity department. This filing must be completed within thirty days after the network is officially connected. Failure to comply may result in warnings or suspension of operations for rectification for up to six months by the public security organs.
According to public inquiries, Qingyou Company has not yet completed the public security network filing.
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ICP Filing
In accordance with the Measures for the Administration of Internet Information Services, telecommunications authorities conduct filing and approval work for websites engaged in internet information services (i.e., ICP filing). According to public inquiries, Qingyou Company has completed the ICP filing.
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Exchange Activity
On October 18, Wuyou Meta announced a major collectible exchange activity to be officially launched the following day, which triggered severe turmoil in the consignment market, causing the platform's market capitalization to plummet overnight. It is foreseeable that many users who entered at high prices may suffer losses, potentially leading to further disputes. So, does Wuyou Meta's exchange activity pose risks to itself?
Mankun lawyers have previously analyzed the relevant legal risks associated with digital collectible exchange activities, which will not be reiterated here. (See article: "Is Forced Exchange of NFT Digital Collectibles Legal?》") However, according to the content of the exchange announcement, Wuyou Meta's current exchange was a unified automatic (forced) exchange by the platform. It neither required manual authorization and consent from users nor granted users the autonomous right to choose whether to participate in the exchange activity. Furthermore, announcing the exchange activity only one day in advance clearly did not provide a sufficient "reasonable notice period."
Wuyou Meta's User Agreement proactively attempted to prevent liabilities and risks that might arise on the platform. Articles 11 to 13 of the agreement explicitly state:
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"Users shall unconditionally cooperate with the synthesis process and shall not raise any objections or claims regarding the synthesis. However, the platform makes no guarantees regarding the effect after synthesis, nor does it guarantee that the value or price of the goods after synthesis will be higher than that of the original goods."
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"The maximum total liability of Wuyou Meta arising from or in any way related to these terms, access to and use of services, content, digital collectibles, or any products or services purchased on the service, shall not exceed the amount received by Wuyou Meta from the sale of the digital collectibles that are the subject of the claim."
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"To the fullest extent permitted by law, Wuyou Meta shall not be liable to users or any third party for any loss of profits, or any indirect, incidental, exemplary, consequential, special, or punitive damages, or any damages related to loss of revenue, loss of profits, loss of business, loss of anticipated savings, loss of use, loss of goodwill, or loss of data, whether caused by tort (including negligence), breach of contract, or other reasons, even if foreseeable and even if Wuyou Meta has been informed of the possibility of such damages."
Although Wuyou Meta has made every effort to avoid its own risks in the platform's User Agreement, according to relevant legal provisions, such clauses are likely to be deemed invalid as they unreasonably exempt or mitigate the platform's liability, restrict or exclude users' primary rights, and aggravate users' responsibilities. (For related articles, see: "Practical Sharing | How Should NFT Digital Collectibles Platforms Draft Their 'User Agreement'?") Therefore, whether these clauses can serve as the source of rights for Wuyou Meta to conduct such exchange activities is obviously open to question.
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Lucky Draw Mechanics
Wuyou Meta employed lucky draw methods in both its anniversary celebration and the public support campaign discussed above. Taking this opportunity, the Mankun team briefly discusses how to conduct lucky draw promotional activities in a compliant manner. According to the Anti-Unfair Competition Law, the Interim Provisions on Regulating Promotional Activities, and other relevant regulations, the following points should be noted for compliant conduct:
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Lucky draw activities must be genuine and credible; false activities or false publicity must be avoided.
Making false or misleading commercial publicity regarding prize sales activities not only violates laws and regulations on prize sales but may also constitute false publicity or false advertising.
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Lucky draw information must be disclosed clearly, publishing the conditions and methods of the draw.
When issuing lucky draw announcements, platforms must publicly disclose details such as participation methods, types of prizes, quantities of prizes, winning probabilities, time and method of drawing, prize amounts, redemption methods, conditions for forfeiting prizes, and the organizer's contact information. These details must not be changed, no additional conditions may be attached, and redemption must not be affected, except where beneficial to consumers.
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Prize amounts must comply with regulations and must not exceed 50,000 yuan.
Situations where prize amounts must not exceed 50,000 yuan include, but are not limited to: the amount of the highest prize exceeds 50,000 yuan; where the same ticket or a single purchase of goods provides two or more chances to win, the cumulative amount exceeds 50,000 yuan; or where non-cash items or other economic benefits are used as rewards, their amount calculated based on the normal market price of similar goods or services during the same period exceeds 50,000 yuan.
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Lucky draw activities must be conducted in a standardized manner and archived in accordance with the law.
In conducting lucky draw activities, falsification of winning probabilities or prize distribution is strictly prohibited; any form of "pre-determined winner lists" or favoritism is strictly prohibited. After the event, the platform must establish archives to truthfully, accurately, and completely record the prize-setting rules, publicized information, redemption results, winners, and other content, preserve them properly for two years, and accept supervision and inspection in accordance with the law.
Conclusion
In summary, the grand launch of Wuyou Meta injected vitality into the relatively quiet digital collectibles circle. Many KOLs and users bet on Wuyou Meta to firmly hold the leading position among digital collectibles platforms in October.
After weathering the storm of the sharp decline, how Wuyou Meta operates next and how it resolves compliance and legality issues will continue to affect user trust in the platform. In the future, we hope that Wuyou Meta can provide users with more innovative gameplay, endow digital collectibles with more practical application scenarios, and promote the healthy and steady development of the digital collectibles industry.
References
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