As the most influential token public offering platform in the crypto world, CoinList’s “hitting newbies” wave triggered by major communities this year has become a phenomenon event in the domestic crypto industry. …

Behind this phenomenon is the crazy wealth effect of CoinList public offerings. In the case of Flow, the project token was listed on CoinList in September last year at a price of just $0.10, and up to 10,000 can be purchased. The price reached $6 after the launch of the exchange in January this year, and peaked above $40 in early April. The highest return was over 400 times, and the return is still over 100 times.

Now, CoinList can be thought of as one of the few reliable sources for ordinary investors to accessearly investment opportunities for high quality project. These early investment opportunities under the catalysis of bull market has brought considerable returns for investors multiples, then more and more cryptocurrency investors participate in the “dozen new” CoinList project.

However, due to the platform’s policy that CoinList does not support mainland Chinese residents to register (they can choose Chinese nationality, but they need formal documents of overseas residence) and the limited and random snapping mechanism, a number of professional “newbie-hitters” who are specialized in buying overseas CoinList accounts came into being. At the same time, there is a complete grey industrial chain from KYC data supply, account production and maintenance.

In the sale of finished product number, a KYC certification usually flows to multiple roles such as KYC certification provider, intermediate channel provider, final account seller and so on, and each link is extracted and divided. KYC is obtained from different sources. Some of them are “benefit-seekingparties” from overseas Internet platforms and citizens who accept the promotion, others that obtaininformation in bulk are from more mysterious sources, and privacy leaks and transactions may occur on the premise that the identity of the owner is unknown. When the project became popular, it was not uncommon for participants to say that the selling of invalid accounts, multiple resale of accounts and resale of accounts were common.

Account delivery is not the end. The CoinList platform has its own risk control measures for account registration and multiple account usage, making account maintenance critical. Account buyers typically pay a fixed monthly server rental fee to do so. Once the account is invalid, some accounts and their assets are permanently lost, and some sellers provide the so-called after-sales service of KYC traceability and help to recover the account, which is also a selling point for these merchants. However, due to the length of the chain involved, the actual effect cannot be verified in advance.

Account demanders and suppliers, together with CoinList official risk management form a game. Faced with a batch of blocked accounts, “newbie-hitters” can only guess the reason for its risk control, and then upgrade the maintenance strategy.

In the eyes of professional “newbie-hitters”, having dozens or hundreds of accounts is the current threshold to participate in the CoinList project and get a chance to win the lottery.

More broadly, CoinList’s public offering of a single, multi-account purchase has raised questions among overseas users about the fairness of the platform. CoinList officials have issued a statement warning of this, and participants say that centralized account closures have occurred from time to time, but there are still large numbers of controls.

01

“Making the account” : KYC information is mostly flowing in through grey channels

“To tell the truth, five or six out of ten have to be lied to.” Buyer Lin Fei thinks which seller is reliable is tested out with money.

Lin Fei considers himself to be a professional CoinList public offering participant. In March this year, he bought more than 300 CoinList accounts in a large scale for the first time through a foreign seller on Telegram, and the accounts were actually verified as overseas citizens.

When trading, Fei Lin placed a new order for hundreds of accounts each time, and the other party delivered the accounts in batches, each time delivering 10 or 20 login email and password of the accounts. Usually there are two hours between the last batch and the next batch. Fei Lin is not clear about the source of the account and the production process, guessing that “either they have a big organization, he stocks the supplies himself, or it’s finding “ground promotion.”

CoinList’s new account business is usually divided into agent registration and finished product number transaction. Agent registration means that CoinList supports mainland citizens to register accounts with overseas IP address and residence proof. Buyers can provide their identity information, sellers can provide overseas IP address and residence proof and other materials to complete the agent registration process. The number of the finished product is mostly the account that the citizens of the United States, the Philippines and other overseas countries have registered and verified. Among professional “newbie-hitters“, finished product numbers account for the majority of transactions.

According to “making account”’s different way of operation, finished accounts’ creation can be divided into one-to-one registration, obtaining KYC information in batch, etc., within which registered one-on-one way in the demand side and vendors are more recognized, namely having ways of contact with KYC owners, bulk registration is unable to find any KYC owner, follow-up maintenance is more troublesome.

A seller in the team responsible for “account creation” members told the Chaincatcher reporter that the team creates batches of accounts through similar “internet promotion”, usually involving sellers, advertising alliance and other intermediary channels, “promoters,” and account actual authentication and other links. Account sellers release account demand to the intermediary channel, then the channel contacts “promoters”, who eventually find group members in the operating community to complete the registration.

Intermediary channels are mostly platforms or community organizations called “advertising alliances”. The AD Alliance, the member said, was a comprehensive term that would allow any demand to be posted on its platform for the right price. When such organizations receive a request, they will further post the specific information to the task-oriented “benefit seeking” website, or contact the “promoters” to further find the appropriate actual certification.

“Promoters” is the bottom link in the industrial chain. They operate their own groups on overseas social software such as Telegram and Whatsapp. A community can reach thousands of people. According to the member, “promoters” will advertise part-time jobs on social media and other online platforms to attract overseas “benefit seekers” to join.

“A copy of KYC information may be worth tens of yuan to the benefit seeking party, but the price to the user will be hundreds.” The price the team can sell a CoinList account can fluctuate from 100 yuan to 300 yuan, the member said, with intermediary channels and “promoters” each taking a commission of about 30 percent.

Bear Eagle from the retailer “Bear Eagle Community,” said that there are also a small number of fake accounts circulating in the market, which use PS software to modify the ID information and then use AI-generated image to complete face recognition. This kind of account has no actual corresponding person. Once invalid, it is difficult to recover.

Real person KYC data may also flow in through grey channels. As a buyer, the reporter consulted an account seller, who introduced his account, KYC, as being from Yunnan province’s “ground promotion,” which helps local social security bureaus get cards for residents while secretly doing KYC business, often without the residents’ knowledge. The team used the identity information of local residents in Yunnan, overseas IP, residence proof and other materials to produce accounts.

(The seller sent a video of a table lined with resident IDs.)

In addition, the seller also said that one of the “benefits” of these accounts is that after the more valuable accounts are banned, the local promotion team can find a real person to help submit identification and retrieve the accounts by “making connections” with relevant personnel.

02

“Maintaining account” : buyers, sellers and the official “risk control” game

After account trading, “Same day free exchange” is a common rule in the circle.

Fei Lin introduced, the seller delivery is usually the account of the login email and password, after receiving the account as soon as possible to change the above information and standby email to their own email and password. Otherwise there is a big chance that the account will be lost. The reason is that the original owner or the seller may inadvertently resell during the period. Once the login information is modified successfully, the account will be successfully attributed to the buyer.

But that’s just the beginning. In March, player Lu Meng and his colleagues bought 50 CoinList accounts for amateur buying, but the batch numbers were all blocked, he guessed, because the account IP did not match the authentication address.

In May, he bought 100 accounts again. This time, he rented an overseas server to match each account with the IP address of the corresponding region. However, due to the large number of accounts and complicated operation, he wrote a script and used a computer program to complete the steps automatically, such as opening the server, logging in the account and snapping up the account.

All 100 numbers are still invalid.

Subsequently, Lu Meng again bought 100 numbers and using the “semi-artificial semi-automatic” mode — two computers each hung 50 numbers, 50 accounts hung on 25 servers, each server login 2accounts. Script run only for open server, the rest of the operation are manual. Lu Meng said that “I gain experience slowly”, so far the third batch of accounts have not been “risk controlled”.

Risk control is a word that is frequently used by both players and sellers. After the account encounters “risk control”, you can still log in, but you have no right to snap up project tokens. According to Bear Eagle, common factors that trigger CoinList to implement risk control include non-compliance with registration information and IP, frequent IP use changes, serial email, robot or script buying and queue jumping.

CoinList officials don’t typically specify the reasons for the closures, but when a group of accounts are blocked, buyers often use community communication to summarize the underlying factors for themselves.

In fact, CoinList makes it clear in the terms of its user agreement that opening multiple accounts, transferring account access to third parties, buying accounts, and using bots or scripts to snap them up are considered “abusive practices.” In this case, CoinList reserves the right to cancel outstanding orders in the account and to deactivate or cancel the corresponding account. The user can transfer the assets in the wallet within 90 days after the account expires, but the project tokens and the right to snap up the account will be recovered.

CoinList said the decision to restrict access, suspend or close accounts was based on confidentiality standards that are critical to CoinList’s risk management and security protocols, and that CoinList does not disclose details of its risk management and security procedures to users.

“Newbie hitters,” account sellers and CoinList officials are playing an opaque game. CoinList officials issued statements on Twitter in March and April warning of account buying and selling and bot buying, but have said little since. Both Fei Lin and Bear Eagle said there had been a large area of “risk control” in May.

“It’s very loose in early March, it’s a little tight in April, it’s almost very tight in May, it’s just the average person ‘big’, if you don’t have a server and you can’t manage it, you can’t play it,” Fei Lin said.

Players and sellers concluded that an account must correspond to an IP address of the authentication place in order to ensure that the IP address is fixed and not “risk controlled”. The added cost of participation is a fixed monthly fee for renting overseas servers. In addition, some players consider snapping up efficiency, but also increasing hardware equipment investment, improving computer configuration.

As a result, the cost of participating in a CoinList public offering on a scale often includes account purchases, hardware investments, server leases, and project token investments. Lu Meng rent a server monthly cost of 248 yuan, a server hung two, each month to raise the cost of more than 10,000.

In addition, due to the time difference, most of the domestic participants in the public fundraising project need to carry out in the early morning. For those with a large number of accounts, the operation can only be completed at 5 am or 6 am, which also requires a certain amount of time and energy.

03

Chosen account got high resale, market heat has fallen sharply

After CoinList’s public offering of project tokens, the paper rate of return often reaches tens or even hundreds of times, which is a wealth myth attracting investors in the past year.

However, according to CoinList’s public offering mechanism, successful project tokens purchased by investors usually require lock-in for 6–12 months and a long linear release period, which means that such a high paper rate of return is difficult to quickly cash out.

Given the uncertainty in the secondary market, many successful investors prefer to resell their CoinList accounts at a discount, with the seller getting the future futures at a discounted market price and the seller getting the certainty of high returns through the discount. As a result, the over-the-counter market surrounding these successful CoinList accounts has been hot so far this year.

The winning accounts that Lu Meng’s team grabbed were usually resold ten times. In June, the decentralized storage protocol Swarm project token BZZ was popular in Coinlist’ public offering. More than 10 of the 100 numbers of Meng Lu’s team were successful, and 10 of them were eventually sold. The investment cost of each account was $500, and the number was sold at 7900U, increasing the price by nearly 16 times.

Lu Meng to hold grabbed the token is relatively indifferent, he thinks should try not to leave their unstable factors, “Sell whenever you can”. “Can I see what’s going to happen next year or the second half of this year? You never know.” He said.

Recently, with the decline of the market, the price of tokens of most CoinList public offering projects has fallen by more than half from the peak, among which the CSPR has fallen by more than 95%, which has significantly reduced the demand for CoinList’s number in the market and further widened the discount. Of course, this also means that most of the people who bought CoinList accounts at high prices have already suffered big losses.

According to the reporter, the price of resale CoinList number has fallen from 10–50 times the cost price to 1–2 times the cost price.

At the same time, the token market price of some public offering projects has fallen back to the public offering price, or even lower than the public offering price. According to CoinMarketCap, the price of Covalent token CQT, which went public in late April, has dropped to $0.34, slightly below the $0.35 maximum offering price. Social token platform Rally, which went public at $0.60 in early April, has lost nearly half its RLY to $0.37.

Given the current state of the market, professional “newbie hitters” are increasingly demanding more enthusiasm for projects, rather than snapping them up as CoinList hits.

Fei Lin said that CoinList would not participate in the recent two public offerings. “As you know, it is not possible to grab one for each number. If you grab one for ten, or even one for 20, your cost for 20 will be several thousand.

Before the sale of the project, Lin does not exchange the forecast price of a project token with large customers, so as to decide whether to participate in the snapping up, and its core indicator is to see the current market conditions and project heat. “Some coins can be stolen, and some coins can’t be stolen. Both issues are not very profitable.” Fei Lin said.

Several sellers told reporters that a significant number of CoinList accounts are now controlled by mainland investors, some of which are personal accounts registered with overseas IP addresses and proof of residence, while the rest are “newbie hitters” buying accounts in bulk and snapping them up on a large scale.

They have made a lot of money from this approach, but it has also raised questions from overseas CoinList users, many of whom have complained on CoinList’s official Twitter account that the “multi-account” buying undermines the fairness of the platform. So far, CoinList has made no official statements about the situation.

In the whirlpool of wealth, for a long time, gray production and the development of the crypto industry, but also damaged the fairness and normal order of the industry, how to minimize the impact of gray production will be a long-term proposition and challenge that the entire industry needs to face.