The Trapped Digital Collectibles Players

Lost savings and fell into debt, a pile of images stuck in their hands

Parents' 500,000 yuan in savings turned into electronic junk

31-year-old programmer delivers food to repay online loans

At his most desperate, Zhang Hui borrowed from every loan app and credit card he had, and even maxed out the 160,000 yuan limit on Alipay's Jiebei. What truly crushed Zhang Hui was a "secret" he was ashamed to speak of: within a year, his parents' 500,000 yuan in savings had all turned into a pile of worthless images on a digital collectibles platform.

This was the savings Zhang Hui's parents had accumulated over many years. His mother, in the countryside, didn't dare keep the money in a mobile banking app and thought it would be safer in his hands. Zhang Hui is 31, a "code monkey" in Beijing who has been drifting in the capital for 12 years. On a digital collectibles platform called "Shiba," two generations of the family's 500,000 yuan in savings went down the drain, along with over 100,000 yuan in external debt. That money was equivalent to 50 months of Zhang Hui's salary. "Digital collectibles have degenerated into a speculative game of passing the parcel—it's all about who runs fastest." Sudden riches, then an instant crash, are battering players' sense of money.

Digital collectibles platforms set up secondary trading channels

Creating room for speculation

Zhang Hui first encountered the Shiba digital collectibles platform in October 2022. A colleague told him that Shiba's founder, Bai Song, had previously been the operations head of IBOX, a platform with tens of millions in volume, and was exceptionally capable—so Shiba, which he was running, surely couldn't be bad.

Abroad, digital collectibles are called NFTs, or non-fungible tokens. Overseas markets generally support secondary-market trading and have strong financial attributes. In 2021, the NFT concept entered China, and internet giants such as Alibaba and Tencent launched trading platforms like Jingtan and Huanhe. Due to strict regulation, Jingtan, Huanhe and others successively stripped out their financial features, focusing on the "digital collectibles" concept and avoiding building secondary markets. By contrast, a new batch of digital collectibles trading platforms represented by **Art, iBox and Shiba set up secondary trading channels and even directly took transaction fees from them—a model that created room for speculation.

Shiba is a product of Beijing Shenyuan Culture Technology Co., Ltd. Tianyancha shows the company was founded in April 2022, with legal representative Li Guozhi and two insured employees. After tracing the equity structure, the actual controller is Jiyi Enterprise Management (Hangzhou) Partnership, in which Bai Song holds 55%.

Take you through a firsthand experience of a game of passing the parcel

2022 was a year of rapid growth for digital collectibles platforms, with over a thousand emerging in China that year. Unlike cumbersome financial trading procedures, a player could register an account, verify a phone number, bind a bank card, and then directly buy and sell virtual images on the platform.

Getting in:

The image doubled overnight once bought—"money came too easily"

On Shiba, the first collectible Zhang Hui bought was a Picasso image. This image earned him an airdrop and priority purchase eligibility; by spending another 100 yuan, he could get a second Picasso image at a low price. When the image rose to 10,000 yuan, Zhang Hui felt it had peaked and decided to sell.

In the trading process, digital collectibles platforms have two channels: "primary issuance" and "consignment." Primary issuance is mostly released by the platform in partnership with various IP copyright holders, with low prices and limited quantities, distributed to users via airdrops, and most people can't get them. Consignment is the secondary trading market among buyers, where users can list or buy on their own. On every transaction in the secondary market, the platform takes a comprehensive service fee of 4% to 5%.

Three or four days later, the image was hyped up to 15,000 yuan. A shock hit Zhang Hui; he regretted selling too early and missing out on a full 5,000 yuan.

"My chance has finally come." Zhang Hui clung to his fantasy. He then began buying virtual images on a large scale.

"Betting"—that's how Zhang Hui described his gambler's mentality at the time: as long as you bought low-priced images, it was like striking treasure, and you just sat waiting for the platform to run an event for them. "For example, I'd buy 20 low-priced images, betting that 10 of the 20 would get an event, and then I'd make money and sell off the rest."

"The moment you buy an image, it doubles overnight, sometimes doubling in units of ten thousand. Money came too easily, and it came for no reason at all." The密集 surge created for Zhang Hui and other digital collectibles players the illusion that "gold was everywhere."

The turning point:

A halving gimmick that intervenes in prices

"Many players' money simply evaporated"

Tan Yisheng, born in 1997, is a construction cost estimator in Guangzhou. At the end of September 2022, he entered Shiba. The most expensive image Tan Yisheng bought was 30,000 yuan apiece; the cheapest, an Arhat image, was fifty or sixty yuan. On the eve of the Qatar World Cup, his returns peaked: 100,000 yuan invested turned into 300,000 in two months.

After two months of "gold rush fever," the turning point arrived. At the end of November 2022, Shiba launched a new event during the World Cup: based on holding designated collectibles, users received a certain number of "football baby" collectibles, with each team's image corresponding to odd or even tail numbers. Players placed bets by buying; if the odd-numbered team won, all the collectibles of the losing even-numbered teams were destroyed. "This was a turning point. From this wave of events onward, many players' money simply evaporated."

Intervening in prices through events is a gimmick many digital collectibles platforms use to hype the secondary market. Many players generally report that whether an image rises in price depends entirely on whether the platform runs an event for that image.

Zhang Hui also sensed something was off about this halving gimmick, but still decided to keep buying. Every month when his salary came in, he poured it all into Shiba, and even found ways to get money from elsewhere. By the end of 2022, Zhang Hui had already lost over 200,000 yuan, and his only thought was to earn back the losses. By then, the platform showed collectibles had been hyped to 185,000 yuan, with a total circulating market value of 1.448 billion yuan across the platform.

Deeply trapped:

Joining image "consensus groups"

"Everyone was clinging to fantasies"

Last June, Shiba entered its 2.0 era. All virtual images were uniformly replaced, in proportion to their value, with small images titled "Beyond the Green Hills, Pavilions Beyond Pavilions"—over 8 million of them, equivalent to a complete restart. "Another wave of frenzy, and an image started being hyped from a few hundred yuan to tens of thousands." Tan Yisheng recalled that in August of the same year, the platform entered a so-called 3.0 era, setting up different zones and playing by sub-district: "After the Journey to the West zone ran out of profit and no one would buy, they switched venues to the wuxia zone. Starting the hype from just a few images, there was always profit to be made, and there were always people continuously buying."

Each image might have its own "consensus group." In the group, you could gauge how high everyone's expectations for the image were, and then decide whether to buy or sell. "Playing alone is like walking on thin ice, but the cheering in the chat groups dissolved that tension—everyone unanimously believed the platform would keep taking off." Mo Wei said.

Mo Wei is just over 30 this year and works in the automotive mechanical engineering industry in Shanghai. Besides Shiba, he has moved through several platforms (i.e., digital collectibles platforms), lurking in dozens of chat groups. A new Shiba image had a primary issue price of 198 yuan, and the group immediately had "inside information" saying "this image will definitely rise tomorrow!" Mo Wei followed along and bought one, and the next day it indeed rose by 800 yuan.

During big drops, so-called "whales" would be pulled into the consensus groups to share experience and instill in Mo Wei and other players the logic of holding long-term—"it's only a temporary drop," "make friends with time," "believe in the power of time, we'll meet at the peak," "the later you sell, the more you earn." To steady the players, the "whales" would also share how big their positions were and how much money they'd put in: "Follow the whales' logic and you surely won't lose, right?"

Mo Wei felt that in the group chats, people suffering the same fate would temporarily forget their pain: "Once you compare, it feels okay. Everyone is clinging to the fantasy that it'll come back up later, right?"

The crash:

From tens of thousands to a few hundred

"It's all about who runs fastest"

"Digital collectibles have degenerated into a speculative game of passing the parcel—it's all about who runs fastest." An industry insider explained that many digital collectibles platforms issue through "rat trading," i.e., the platform issues and buys up its own offerings, continuously driving up market prices at high levels, occasionally throwing players a little "benefit" to absorb more funds and create the appearance of a booming market, and finally harvesting the secondary market or absconding.

Mo Wei is not a greedy person; sometimes he'd sell an image the day after buying it on Shiba. He followed the "inside information" and bought a few more, making over 3,000 yuan. At the peak, Mo Wei bought an image for 20,000 yuan and sold it for 30,000 or 40,000: "My mindset inflated—making 10,000 yuan a day, my head was no longer clear."

Mo Wei witnessed with his own eyes how, at the peak, an image was hyped to 80,000 yuan, and then a few days later the crash began. Although he ran faster than others, he still lost over 100,000 yuan. Today, he still has a few images worth 10,000 or 20,000 yuan stuck in his hands; at current market prices, they'd fetch only a few hundred yuan. He doesn't plan to sell them—he keeps them there as a reminder to himself.

Sudden riches, then an instant crash, are battering players' sense of money. Before becoming a programmer, Zhang Hui worked as a chef in Beijing earning less than 6,000 yuan a month. After finishing a training course in 2016, he switched to programming, and the money he earned went to repaying training-course loans for several years; he lived frugally. Only the year before last did he have surplus money—and then he plunged headlong into digital collectibles.

Before losing money, Zhang Hui was immersed in the dream of sudden wealth, watching the value of his collectibles multiply several times over. Back then, he looked down on the small money earned by delivering food. Last July, debt-ridden Zhang Hui registered for Meituan Zhongbao and also took on Sam's Club supermarket deliveries, delivering food on weekends and working his day job on weekdays, basically with no days off all year. "Now I basically wear as little as I can and eat as little as I can."

Like Zhang Hui, Tan Yisheng in the end also failed to "run away" successfully: the 500,000 yuan in demolition compensation his family gave him turned into a pile of worthless electronic images, while in real life 150,000 yuan in online loans awaited repayment. Last August, none of the platforms Tan Yisheng held could be sold, his loans couldn't be rolled over, and he received debt-collection calls every day. He thought about ending his life, but his family finally talked him down.

Actual controller listed in the business abnormality directory

Platform legal counsel: "We just collect a service fee"

Last October, because it could not be reached at its registered address or place of business, Shiba's actual controller, Jiyi Enterprise, was listed in the business abnormality directory by the Market Supervision Administration of Yuhang District, Hangzhou. Over the past year, Mo Wei, Zhang Hui and others made multiple trips to the registered and actual office addresses in Beijing of the company behind Shiba, but never saw any Shiba staff. They reported to the police multiple times, "but the police said it was only suspected fraud, with no solid evidence."

Li, the legal counsel for Shiba, told reporters that the platform mainly operates the consignment market; most collectibles in the primary market are airdropped to users, who then trade them in the consignment (secondary) market. Collectibles in the consignment area are priced by users themselves, and transaction funds go directly into users' accounts, not the platform: "We just collect a service fee."

Li explained that laws and regulations for the digital collectibles industry currently lag behind, and the company has tried to introduce compliance measures, such as setting a minimum age of 21 and capping the maximum price of collectibles to prevent speculation. Li said the platform also provides risk warnings: "He (the user) knows there are risks and keeps playing anyway—we can't control that, we can only warn and fulfill our own compliance obligations."

Recently, Mo Wei met another young man who had lost everything on Shiba, with over 1 million yuan in debt he couldn't repay, and who urged Mo Wei to keep "firing bullets" this year: "He said he'd made 90,000 yuan and was about to win it all back, and wanted to pull us in again."