Buy a mobile phone and get BONK virtual currency for free. What are the legal risks of combining virtual and real marketing?

Source: Lawyer Liu Honglin

Note: Since Token issuance is strictly prohibited in mainland China, this article is developed in the context of relevant overseas laws and regulations. Industry legal education and information exchange.

Due to the recent surge in BONK coins, the originally slow-selling Web3 mobile phone Solana SAGA has been sold out, and the price on the second-hand platform eBay has soared to 10 times the official website price (official website sales Price: US$599), US$5,000, 5 times that of the iPhone 15 pro. In this regard, Solana Mobile's official tweet could not hide its excitement, saying that "although the past few days will become our history, we are excited about the future."

In addition to getting BONK coins when you buy a SAGA phone, according to Solana official recommendation, you can also get Obtain related Solana ecological chain game rights, Sol coins and related NFT exclusive casting rights, etc. Kyle Samani, founder of Multicoin Capital, further stated on the tweet that he believes SAGA users will be able to receive more airdrops from the Solana ecosystem in the future. Therefore, everyone has speculated that SAGA mobile phone prices may continue to rise. Solana’s entry into mobile phone manufacturing is most likely due to its own ecological layout. Lawyer Mankiw Kim speculated that hardware distribution may also be beneficial to certain applications of Depin in the future.

Leaving these aside for the moment, the marketing method of “buy a mobile phone and get a token for free” has also made some project developers use their clever little minds. Is the marketing method of “buying physical goods and getting tokens free” legally feasible? If possible, what should be paid attention to in order to seek legal compliance.

01 Risks brought by the determination of the legal nature of Token

If the airdropped Tokens are recognized as securities, according to the current regulatory policies of major countries and regions, the act of airdropping Tokens may be classified as the issuance or sale of securities, and prior permission or exemption from the competent authorities is required. For example, in Hong Kong, if a Token has the characteristics of a traditional security (such as the right to share profits or obtain debt repayment), the product is subject to the supervision of the Securities and Futures Ordinance as a security, and issuance or sale to the public requires approval from the Hong Kong Securities and Futures Commission. permission or exemption. Another example is in Singapore, if Token is determined to be a Capital Markets Products (CMP) stipulated in the Securities and Futures Act (SFA), such as securities, bonds, derivatives contracts, collective investment plans , capital market products (CMP), etc., will be regulated by the Monetary Authority of Singapore, and issuance or sales require prior permission or exemption from the competent authority.

If the airdropped Token is not a security, its issuance and sales will not be regulated by securities-related laws and regulations, but this does not mean that there are no restrictions by laws and regulations in other fields.

02 Risks posed by advertising content

< p>No matter what kind of marketing it is, it is ultimately to attract consumers. Therefore, no matter what kind of marketing method it is, you need to pay attention to consumer-related laws and regulations, and "buy physical goods and get tokens" is no exception. Generally speaking, the marketing method of buying physical goods and getting tokens for free requires attention in terms of advertising and consumer rights protection laws and regulations. The marketing content must be true, accurate and not misleading to consumers, otherwise it may constitute fraud.

Specifically, if the marketing method of giving away tokens involves descriptions or statements about the token itself, then these descriptions or statements must also be true and provable, and cannot be exaggerated or exaggerated.It cannot be implied or directly stated that the Token has investment value, can be exchanged for cash or other currencies, can be traded on any platform, can be used to purchase any goods or services, etc. These may be regarded as advertisements that mislead consumers and cause unnecessary trouble in the future.

In the case of SAGA, the price of the BONK coins it gave away once exceeded the selling price of SAGA mobile phones. When the price of Token is higher than the real thing, especially when the real thing is related to the Token issuer. When there is an interest relationship, the relevant departments may be involved in investigating whether there is unfair competition involving "market manipulation"

03 Mankiw's lawyer suggests

In the future, buy Giving away tokens in kind may be used as a marketing tool for blockchain technology applications. It may involve multiple legal risks, requiring companies and users to conduct compliance analysis and operations based on the legal environments of different countries.

Mankiw Jinjianzhi lawyers suggest that before launching similar marketing activities, companies should fully understand the legal regulations and regulatory attitudes of the target market, formulate reasonable compliance strategies and risk control measures, and communicate with relevant departments in a timely manner coordination. At the same time, it is also recommended that users should carefully read the relevant agreements and terms before participating in similar activities, understand their rights and obligations, and avoid blindly following the trend and being deceived.