Recently, a small game called Hamster Kombat has attracted widespread attention and controversy in Iran. This click game based on the Telegram platform has attracted a large number of users through the "click to earn money" mechanism. Since its launch in March this year, the number of users of Hamster Kombat has grown rapidly, and has now reached 200 million. The number of subscribers to the project's X platform and YouTube account is 9.8 million and 28.7 million respectively. In just a few months, Hamster Kombat has quickly become a phenomenal project.
However, as Hamster Kombat became popular in Iran, the game also sparked considerable controversy.
In recent years, Iran has adopted a series of strict regulatory measures on virtual currencies. In particular, the Iranian government has adopted a dual strategy for crypto mining. In short, you can mine, but you cannot trade cryptocurrencies mined abroad, and you must sell cryptocurrencies mined domestically to the central bank. Against this policy backdrop, the rapid rise of Hamster Kombat has also attracted criticism from the Iranian government and experts.
Criticism 1: Information security threats
Hamster Kombat makes full use of the fission principle and gives play to the subjective initiative of users, that is, "invite friends and earn XX immediately". Although this mechanism has promoted the rapid expansion of the user base, it also brings serious information security risks. Once hackers invade the server where the project data is located, it is easy to obtain users' personal data and their social relationships (who you invited to play the game). In this regard, Hossein Delirian, a spokesman for the Iranian National Cyberspace Center, warned that many Iranian users discussed using this game for cryptocurrency mining in Telegram super groups. This method has become a hotbed for hacker crimes, and users' personal information and account security are facing great threats.
Criticism 2: Risks of value investing
Unlike Bitcoin or ETH, whose prices and values have stood the test of time, various popular projects and virtual currencies represented by Hamster Kombat this year have not shown their stability or scarcity. Their market performance is often linked to FOMO, speculation, etc., which is manifested in the fact that prices/market capitalizations change drastically with changes in market heat. Therefore, Esmail Qamari of the Ilam Provincial Department of Justice pointed out that the value of Hamster Kombat is more hyped by the community and external investors. Investors who participate in such projects are very likely to have their funds flow into a virtual investment bubble. At the same time, the famous scholar Ayatollah Nasser Makarem Shirazi also believes that cryptocurrencies have many disadvantages. From the perspective of value investment, users may face the risk of losing funds.
Criticism 3: Social and cultural risks
Whether it is the early Play2Earn of Web3, or the current Tap2Earn, as well as the invitation rewards, the essence is to make users think that they can easily make money or "win without doing anything". This is why Dr. Alireza Chabkeru of the University of Tehran and Habibollah Sayyari, Deputy Chief of Staff of the Iranian Army, both believe that such games may have a more profound negative impact on society - it not only distracts the public from major events (such as elections), but may also lead to the degradation of ideological culture and encourage a culture of laziness, which may affect the stability of society and the continued development of culture.
The above criticisms reflect the Iranian government's concerns about a series of social, cultural and economic problems that will arise in the future. They also highlight that when developing and promoting Web3 projects, project owners must consider the complexity of regulatory policies and attitudes of various countries and assume their legal and social responsibilities as project owners. So the question is, as a Chinese Web3 entrepreneur, in the domestic Web3 entrepreneurial environment, if you also want to get a share of this "click to make money" wave, what legal compliance points should you pay special attention to?
Mankiw Law Firm’s attorney Liu Honglin specifically reminds you: Remember the following compliance points and follow the corresponding solutions.
Personal Information Protection
In fact, with the awakening of personal privacy awareness, personal information protection has become a global principle and consensus. In China, according to the provisions of the "Cybersecurity Law of the People's Republic of China" and the "Personal Information Protection Law", Chinese Web3 entrepreneurs need to ensure the security of users' personal information and data. Therefore, if Hamster Kombat is launched in China, in order to avoid information security issues, entrepreneurs should take the following measures:
Data encryption: Ensure that user data is encrypted during storage and transmission to prevent data leakage.
Multi-factor authentication: Introduce a multi-factor authentication mechanism to enhance account security.
Regular security audits. Conduct regular security audits to identify and fix potential security vulnerabilities.
User education: Strengthen user security awareness education and remind users to protect their personal information and account security.
Compliant token issuance
One topic that Web3 projects cannot avoid is token issuance. However, the Securities Law of the People's Republic of China and the Notice on Preventing the Risks of Token Issuance and Financing clearly stipulate that token issuance and financing activities are illegal financial activities. Therefore, if Web3 entrepreneurs want to launch a game similar to Hamster Kombat in China, they must avoid any form of token issuance and financing to prevent it from being identified as illegal fundraising. Don't ignore the following "life-saving" suggestions:
Avoid token financing. Avoid raising funds through ICOs and consider other legal financing methods, such as equity financing or debt financing.
Legal consultation. Consult a professional lawyer before starting the project to ensure that all operations comply with Chinese laws and regulations.
Compliance operation. Ensure that all activities and transactions of the project are carried out within the legal framework and avoid any form of illegal fundraising.
Anti-Money Laundering and Counter-Terrorist Financing
Once a Web3 project issues virtual tokens, it will also start the "offensive and defensive battle" of money laundering and anti-money laundering. According to the Anti-Money Laundering Law and the Notice of the People's Bank of China on Strengthening the Anti-Money Laundering and Anti-Terrorist Financing of Virtual Currency, Web3 projects must strictly abide by the regulations on anti-money laundering and anti-terrorist financing. To avoid money laundering risks as much as possible, Web3 entrepreneurs need to:
Establish KYC process. Know your customers and ensure that each user provides real identity information when registering on the platform to prevent anonymous transactions.
Monitor and report suspicious activities. Set up monitoring systems to detect and report suspicious transaction activities to prevent money laundering and terrorist financing.
Train employees. Provide employees with anti-money laundering and counter-terrorist financing training to enable them to identify and respond to potential risks.
Cultural and ideological policing
Whether it is memecoin or Web3 games, it is easy to create a subculture circle and form a unified cultural ideology in the community. In the context of the Chinese government's high attention to cultural and ideological security, the content of Web3 games and communities should avoid involving politically sensitive topics, spreading negative social values or content that is inconsistent with the core socialist values, and avoid touching the regulatory red line. Common operations include:
Content review: Strict content review is conducted before the game goes online to ensure that the game content complies with the country's cultural and ideological requirements.
Compliance publicity. In the process of publicity and promotion, avoid using content that is not in line with the core socialist values and ensure that the publicity is compliant.
Establish a feedback mechanism. Establish a user feedback mechanism to promptly adjust and correct content that does not meet cultural and ideological requirements.
The legal and socio-cultural controversy caused by Hamster Kombat in Iran provides an important warning for Chinese Web3 game entrepreneurs - entrepreneurs not only need to consider investment risks, money laundering prevention, token issuance, etc., but also need to maintain user data security and cultural ideology, strictly abide by Chinese laws and regulations, and ensure that Web3 game projects operate in compliance with regulations.
References
[1] PANews, Zen, “Petit Fun or Software War? TON Ecosystem Game Hamster Kombat Becomes Popular in Iran and Causes Criticism from Politicians”
[2] Cybersecurity Law of the People’s Republic of China
[3]Personal Information Protection Law of the People’s Republic of China
[4] Anti-Money Laundering Law of the People’s Republic of China
[5] Announcement on Preventing Risks of Token Issuance and Financing
[6] Shanghai Mankiw Law Firm, “Web3.0 Entrepreneurship Legal Risk Prevention Handbook”
