Legal Risks That Meme Token Issuers May Face

Recently, a news story about the issuance of virtual coins involving a criminal case has sparked widespread discussion. This case involves a post-2000 university student who was convicted and punished for fraud by our judicial authorities after issuing meme tokens on an overseas public chain. Although similar cases are not uncommon, it is still worth our in-depth exploration of whether the issuance of meme tokens constitutes a crime and what possible charges may be involved.

Case Overview

In May 2022, a senior college student named Yang issued a meme token called BFF on a certain overseas public blockchain. He then injected 300,000 BSC-USD and 630,000 BFF to create a liquidity pool for the project. At the same time, another user named Luo exchanged 50,000 BSC-USD for a large amount of BFF coins. Just 24 seconds later, Yang withdrew the liquidity, causing the value of BFF coins to plummet. Luo immediately reported to the police, claiming to have been scammed out of over 300,000 yuan.

Does it constitute fraud?

The prosecutorial authorities accused Yang of creating counterfeit coins with the same name as the virtual coin issued by a certain DAO, using his own funds as bait to lure victims into investing, and then quickly withdrawing his investment, constituting the crime of fraud. However, this accusation is controversial.

From another perspective, this case may not fully meet the constitutive elements of the crime of fraud:

1. The victim may not have fallen into a subjective error of perception. The transaction records show that Luo completed the purchase in the same second that Yang added liquidity, suggesting that this speed of operation resembles automated trading programs rather than manual operations.

2. Mr. Luo's trading behavior is highly professional, possibly a professional "trader" or "coin circle sniper". This indicates that he is likely well aware of such high-risk trades.

3. The act of disposing of property may not be directly carried out by Luo himself, but rather executed automatically by the program he set up in advance.

Based on the above analysis, whether Yang's behavior constitutes the crime of fraud is still open to discussion.

Other Potential Legal Risks

Although Yang's actions in this case may not constitute fraud, the issuance of meme tokens is still a high-risk behavior that may involve the following offenses:

1. Illegal Business Operation
2. Illegal fundraising crimes
3. Gambling-related crimes

It is particularly noteworthy that, under the current regulatory environment, regardless of whether the project party conducts ICO activities domestically or abroad, as long as the entity is domestic, it may constitute the crime of illegal absorption of public deposits.

Conclusion

Although innovation is active in the cryptocurrency field, participants still need to act cautiously and fully understand the related legal risks. Whether they are issuers or investors, they should conduct activities under the premise of compliance to avoid unnecessary legal disputes.