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Source: Lawyer Liu Honglin
introduction:
The gaming industry has always been one of the fastest growing and most profitable industries in the world.In traditional games, game operators hold control of the game, and the game market lacks transparency and trust. If special situations such as game server discontinuation occur, players’ interests cannot be protected.Compared with traditional games, Web3 games (or GameFi, blockchain games) rely on blockchain technology to enable every player to control their own in-game assets, and the use of smart contract technology also makes transactions open and transparent.So in recent years, more and more game entrepreneurs have focused on Web3 games.
However, due to the existence of the financial attributes of Web3 games and the game mode that focuses on playing to earn (making money while playing), compared with traditional games, Web3 games have natural policy risks in my country.
So what issues should be paid attention to for Web3 game entrepreneurs?This article sorts out the game project preparation stage, the promotion and promotion stage before and after the game is launched, the game content itself, and the top ten legal issues that entrepreneurs need to pay attention to during the game operation process.
01If the technical team is located abroad, can it avoid domestic legal risks?
This is the most frequent legal problem that Lawyer Shao encountered during the consultation process, and no one is there.
Because many Web3 entrepreneurs have a certain understanding of my country’s blockchain-related legal provisions, they often think thatSince there are so many restrictions on development in the country, it is better to put the project abroad.?Then the first thing to solve is the problem of “people”.In order to avoid the legal risks that the project itself may bring to itself, people often think of finding foreign technical teams to develop.Or vice versa, people and projects are overseas, but the development team we are looking for is domestic.
In fact, looking at the two models, it may be possible to avoid civil and administrative risks to a certain extent, butCriminal risks are difficult to avoid.Because according to the provisions of my country’s criminal jurisdiction, local jurisdiction and personal jurisdiction are stipulated in accordance with the Criminal Law of my country.Territory jurisdiction means that as long as the criminal act or result occurs in our country’s field, our country enjoys jurisdiction; personal jurisdiction means that as long as we are Chinese and commit crimes outside our field, our country also enjoys jurisdiction.Therefore, as long as it is a Chinese who commits a crime, or the crime or the result is in China, our country has the right to take charge.
02What are the policy restrictions for building Web3 games in the country?
Web3 games that focus on play to learn, tokens will be produced in the game. The tokens generated in foreign Web3 games can be directly cashed in on exchanges, but in China, virtual currency-related businesses have been classified as illegal finance.Activities, banning the issuance of coins, banning ICOs, and banning token financing trading platforms from engaging in exchange between virtual currencies and fiat currencies, virtual currencies, etc.
Relevant policies: On February 18, 2022, the China Banking and Insurance Regulatory Commission issued the “Risk Warning on Preventing Illegal Fundraising in the Name of “Metaverse” to remind the public to be vigilant against fraud under the banner of Metaverse blockchain games.Some criminals tied up the concept of “meta-universe”, claiming that “making money while playing games” and “short investment cycle and high returns”, tricking participants into investing through exchange of virtual coins and purchasing game equipment.On April 13, 2022, the China Internet Finance Association, the China Banking Association and the China Securities Association issued the “Initiative on Preventing NFT-related Financial Risks”, which directly or indirectly investing in NFTs and providing financing support for investment in NFTs is prohibited.matter.
All of these make Web3 game entrepreneurship in the country subject to strict policy supervision.
03Is it necessary to obtain a game version number when a Web3 game is launched?
This question needs to be distinguished from domestic or foreign.
If you are publishing Web3 games in China, you need to obtain a game version number according to the “Interim Provisions on Game Publishing Management” and other laws.But game practitioners understand how difficult it is to get the domestic game version number.
If you launch a game without a version number or set number in China, there will be a risk of administrative penalties at the least, and a sentence will be imposed at the worst.Crime of Illegal Business.Although the game is online without obtaining the version number, it is still a serious dispute as to whether it constitutes the crime of illegal business operations stipulated in the Criminal Law in the strict sense. However, in judicial practice, there are indeed many cases where game dealers are convicted of illegal business operations. This articleI won’t repeat it again.
If you are publishing Web3 games abroad, thenNo restrictions on the version number stipulated by our laws.For example, the project party will launch Web3 games to Steam. As a game distribution platform launched by an American company, Steam does not have domestic version number restrictions.Then many consultants will ask further questions: Is the games listed on Steam for domestic players, is it legal?In short, from a compliance perspective, regardless of whether the games listed on Steam are locked in the country, it is recommended to act in a low-key manner in terms of publicity and distribution, and not promote them in China.
04At the promotion and distribution level, we need to be vigilant about the risks of pyramid schemes!
Whether you build the Web3 game server at home or abroad, at the promotion and traffic level before and after the game is launched, you must prevent the risk of pyramid schemes in the process of promoting new developments.The common new-new model is that users A can generate their own exclusive QR code or link in the product poster. By sharing the QR code or link, if user B registers, A can receive relevant rewards from the platform.This reward (or the commission income of old players) is generally based on the consumption of new players after entering the market.In the order of joining the game, a pyramid-like hierarchy structure is formed.
According to my country’s laws, pyramid schemes refer to the organizer or operator developing personnel, by calculating and paying remuneration for the developed personnel based on the number of personnel directly or indirectly developed or sales performance or requiring the developed personnel to pay a certain fee as a condition. Behaviors that obtain the qualification to join and other means to obtain illegal benefits, disrupt economic order, and affect social stability.If there are more than 30 people participating in pyramid schemes within the organization and the level is above 3, the organizers and leaders shall be held criminally responsible.
05Gambling is the most important legal risk that Web3 game entrepreneurs need to pay attention to
In a press conference held by the Supreme People’s Procuratorate on November 29, 2021, it was clearly stated that “the application software suspected of gambling has a distinctive feature, which is that it has related withdrawal functions.” Web3’s game-making model naturally involves gambling.risk.
For example, Fomo3D is a gambling game on Ethereum. The gameplay is that it sets a 24-hour countdown. As long as someone buys KEY (in-game tokens), the countdown will increase by 30 seconds. The price of KEY will be as followsThe larger the prize pool, the more expensive it will become, and the last player to buy KEY can win huge bonuses at the end of the game.In addition, players holding KEY will also receive corresponding dividend returns.
If there is a probability gameplay in the game, players can obtain game props or token rewards by playing the game, which can be cashed in some way, such as trading in a virtual currency exchange, and game manufacturers can directly or indirectlyIf you recycle game props/tokens from the gameplay, you will have the characteristics of gambling crimes.
06Domestic Web3 games, legal risks of opening secondary trading markets for players
As mentioned in the previous article, if the platform provides direct/indirect help for the final monetization of the player’s game tokens and props, the game has the risk of gambling.So many entrepreneurs will ask, can they open a secondary market and let players trade on their own?
First, ifIn-game virtual currency, whether it is the “Regulations on the Management of Online Games (Draft Draft for Comments)” on December 22, 2023 or the relevant provisions of the previous Game Law, it all mentions that users are not allowed to exchange online game coins for legal currency.In addition, the 2017 announcement of 94 also clearly stipulates that ICOs are prohibited in China, so token trading will also have the legal risk of being deemed to be issued in disguised form.
Secondly, if it is the NFT asset of players in the game, can the second level (consignment market) be opened for transactions between players?From the perspective of legal compliance, we can refer to the provisions of the two documents, Guofa [2011] No. 38 (hereinafter referred to as Document No. 38) and Guobanfa [2012] No. 37 (hereinafter referred to as Document No. 37), and centralized bidding or electronic bidding shall not be used.Standardized contract transactions are carried out through centralized trading methods such as matchmaking, anonymous trading, and market makers.From the perspective of judicial practice, the Web3 game platform can refer to the digital collection platform for legal risks in the secondary market related to NFT. Lawyer Shao has handled many criminal cases of digital collection platforms.If the platform is opened at a second level, it will cause user complaints and the public security department will launch an investigation, resulting in the operator being detained.
07Web3 gaming platform has become a money laundering tool?
In the eyes of criminals, the Web3 gaming platform can also become its criminal tool.Let’s take the first Roblox platform in the metaverse (an online gaming platform for children and teenagers) as an example.
In 2021, the meta-universe platform Roblox was listed on the New York Stock Exchange. It was previously discovered in a class action lawsuit on the platform that more than 300 users on the platform may be suspected of using the Roblox platform for money laundering.These users “seem to use the Roblox platform to transfer money to each other, which is achieved by purchasing fake items. This is a very inefficient and expensive way to transfer money.” For example, a user uses Robux, a virtual currency in the platform within one month (about 12,500 yuan).USD) to buy the same item from the same seller, and a user spends $6,250 in one day to buy the items they sell.
If the platform has serious regulatory flaws, it will harm the interests of the majority of users and will have adverse effects on the long-term development of the platform itself.
If the platform is established in China, according to the provisions of the “Cybersecurity Law” and the “Blockchain Information Service Management Regulations”, Internet users need to provide real identity information when registering, logging in and using Internet services on the Internet.According to the “Anti-Money Laundering Law of the People’s Republic of China”, “Regulations on the Management of Payment and Clearing Institutions”, Internet companies need to establish and implement an effective KYC system (Know Your Customer) when providing financial transaction-related business to ensure customer identity verification and risksEvaluation, transaction monitoring and other links have been effectively implemented.
08When Web3 game entrepreneurs are accused of “scam”
As a criminal defense lawyer who is deeply involved in the Web3 industry, the criminal cases involved in the platform I represent often occur from user complaints.Players who lose money on the platform often have several ways to protect their rights:
(1) A small number of radical rights protection users often make sense that you are not able to reason normally.I lost money on your platform, the platform is a fraud, and I will report the case if I cheat.
(2) Some rational users will choose to file a civil lawsuit in court, but there are generally problems with difficulty in filing a case, and these users will also go to the police station to report the case.
(3) Most users will choose to file 12345 for complaints to the Market Supervision Bureau and other administrative departments.If the number of above users accumulates, it will attract the attention of the public security department, and platform operators will most likely receive an invitation from the police to “drink tea”.
Therefore, during the operation of the platform, it is necessary to establish an effective user complaint handling mechanism to improve customers’ satisfaction with platform services, effectively soothe user’s emotions, actively communicate, and provide customers with effective solutions.
09Web3 gaming platform needs to prevent illegal fundraising
According to the 2022 “Risk Warnings on Preventing Illegal Fundraising in the Name of “Metaverse” mentioned above, some criminals fabricated concepts such as game production in Metaverse, publicly publicly advertise high returns, and take the opportunity to absorb public funds.It has the characteristics of illegal fundraising.Illegal fundraising crimes under the criminal law are generally the crime of illegally absorbing public deposits and the crime of fundraising fraud.
The economic model of early Web3 games has a major flaw, and the profits of old players are maintained by the entry of new players.Once old players sell in-game tokens in large quantities, users in the market fall into “fomo sentiment”, which will cause users to shrink continuously, and eventually lead to the game to fall into a “death spiral”. If the project party from the player’s perspective “shows up” or “”If you have no regulatory measures, based on Lawyer Shao’s case handling experience, some judicial organs will file a case on criminal charges such as fundraising fraud.
10Risk of infringement of intellectual property rights in the game in Web3
For registered works, the copyright registration certificate and copyright certificate should be obtained. For unregistered works, the platform should obtain the copyright statement signed by the original rights holder and related commitment letters, etc., to avoid infringement of works on the chain..If the platform uses other people’s works to cast NFTs for business without the permission of the copyright owner, according to the Copyright Law, it is necessary to bear civil liability such as stopping infringement, eliminating the impact, apologizing, and compensating for losses.In more serious cases, depending on the case situation, it may also involve criminal charges such as copyright infringement and sales of infringement of replicas.
11Written at the end
With the market recovering, Web3 games have begun to gain new popularity, and new development teams are constantly emerging.But for Web3 game entrepreneurs, in our country, they will be subject to dual constraints by game legal norms and blockchain-related policies.Lawyer Shao sorted out these ten high-frequency legal issues that may be encountered during the entrepreneurship of Web3 games, hoping to be helpful to friends in the industry.
