CoinList Account Gray Market Investigation: Account Creation, Maintenance, and Resale

This article is an original piece by Chain Catcher, authored by Richard Lee and edited by Gong Quanyu.

As the most influential token public offering platform in the crypto world, CoinList has sparked a "new project subscription" craze in various communities this year, which has become a phenomenal event in the domestic crypto industry. Almost every new public offering project launched attracts a rush of investors.

Behind this phenomenon is the insane wealth effect of CoinList's public offering projects. Take Flow as an example: the project's token was publicly offered on CoinList last September at a price of only $0.1, with a maximum purchase limit of 10,000 tokens. After being listed on exchanges in January this year, the price reached $6, and by early April, it peaked above $40, yielding a maximum return rate of over 400 times, with the current return rate still above 100 times.

At present, CoinList can be considered one of the very few reliable channels for ordinary investors to access early investment opportunities in high-quality projects. These early investment opportunities, catalyzed by the bull market, have indeed brought considerable returns to investors, leading to an increasing number of cryptocurrency investors participating in CoinList's "new project subscriptions."

However, due to CoinList's platform policy that does not support registrations from residents of mainland China (one can choose Chinese nationality but needs formal overseas residency proof), along with limited and random purchase mechanisms, a group of professional "new project subscribers" has emerged in China, specializing in purchasing overseas CoinList accounts. At the same time, a complete gray industrial chain has emerged, covering KYC data supply, account production, and maintenance.

In the sale of finished accounts, a single KYC certification usually circulates among multiple roles, including the KYC certifier, intermediary channel parties, and the final seller of the account, with each link taking a cut. The sources of KYC acquisition vary; some come from overseas online platforms' "wool party" participants and overseas citizens accepting ground promotion, while another portion of the information is obtained in bulk from more obscure sources, potentially involving privacy leaks and transactions without the knowledge of the identity holders. When projects are hot, participants report that the phenomenon of invalid account reselling and multiple transfers of accounts is not uncommon.

Account delivery is not the end point. CoinList has its own risk control measures for account registration and multi-account usage, making the subsequent maintenance of accounts crucial. Account buyers typically need to pay a fixed monthly server rental fee for this. Once an account becomes invalid, some accounts and their assets may be permanently lost, while some sellers offer KYC tracing and assistance in recovering accounts as so-called after-sales services, which has also become a selling point for such merchants. However, due to the long chain involved, the actual effectiveness cannot be verified in advance.

The demand for accounts and suppliers forms a game with CoinList's official risk governance. When "new project subscribers" face a batch of banned accounts, they can only speculate on the reasons for the risk control and subsequently upgrade their maintenance strategies.

In the eyes of professional "new project subscribers," holding dozens or hundreds of accounts is currently the threshold for participating in CoinList's public offerings and obtaining winning opportunities.

A broader issue is that the phenomenon of single individuals using multiple accounts to purchase CoinList public offerings has raised doubts among overseas users about the fairness of the platform. CoinList's official has previously issued warnings regarding this, and participants have reported that concentrated account bans occur from time to time, but the status of many controlled accounts still persists.

1. "Creating Accounts": KYC data mostly flows in from gray channels

"To be honest, out of ten, five or six will definitely be scammed." Buyer Lin Fei believes that determining which seller is reliable is something he has "learned through spending money."

Lin Fei considers himself a professional participant in CoinList public offerings. In March of this year, he made his first large-scale purchase of over 300 CoinList accounts through a foreign seller on Telegram, with the actual certifiers of the accounts being overseas citizens.

During the transaction, Lin Fei placed orders for hundreds of new accounts at once, with the seller delivering accounts in batches, providing login emails and passwords for 10 or 20 accounts each time, usually requiring a two-hour wait between batches. Lin Fei is unclear about the source and production process of the accounts, speculating that "either they have a big organization sourcing them, or they are finding ground promoters."

The business of new CoinList accounts typically falls into two categories: agent registration and finished account trading. Agent registration refers to the process where CoinList allows mainland citizens to register accounts using overseas IP addresses and residency proof. Buyers provide their identity information, while sellers provide overseas IPs and residency proof, completing the agent registration process; finished accounts are usually those that have been registered and certified by citizens of overseas countries such as the United States and the Philippines. In the realm of professional "new project subscribers," finished account trading constitutes the majority.

Depending on the method of "creating accounts," the production of finished accounts can be divided into one-to-one registration and bulk acquisition of KYC information for registration. The one-to-one registration method is more recognized by both demanders and merchants, as it involves having a contact channel with the KYC owner, while bulk registration cannot identify any KYC owner, making subsequent maintenance more troublesome.

A member responsible for "account production" in a seller team told Chain Catcher that the team produces accounts in bulk through a method similar to ground promotion, usually involving multiple links such as sellers, advertising alliances, "promoters," and actual certifiers of the accounts. Account sellers publish account demands to intermediary channel parties, who then contact "promoters," who ultimately find group members in the communities they manage to complete the registration.

The intermediary channel parties are often platforms or community organizations known as "advertising alliances." This member stated that advertising alliances are a comprehensive term; as long as the price is right, any demand can be published on their platform. Once these organizations receive a demand, they further publish the specific information on task-oriented "wool gathering" websites or contact "promoters" to find suitable actual certifiers.

"Promoters" are the grassroots links in the industrial chain. They operate their groups on overseas social software like Telegram and Whatsapp, with a community size reaching thousands. This member noted that "promoters" post part-time job advertisements on social media and other online platforms to attract overseas "wool gatherers" to join.

"A piece of KYC information in the hands of a wool gatherer might be worth only a few dozen yuan, but the price in the hands of the user can reach hundreds." This member stated that the price for selling a CoinList account can fluctuate from 100 yuan to 300 yuan, with intermediary channel parties and "promoters" each taking about 30% of the commission.

Xiong Ying from the merchant "Eagle Community" mentioned that there are also a few counterfeit accounts circulating in the market, which are modified using Photoshop software to alter identity document information, then completed with AI-generated images for facial recognition. Such accounts do not correspond to any actual person, and once they become invalid, recovery is very difficult.

Real KYC data may also flow in from gray channels. A reporter, posing as a buyer, consulted an account seller who claimed that their account KYC came from ground promotion in Yunnan, where these promoters help local social security bureaus issue cards to residents while secretly conducting KYC business, and these residents are usually unaware. The team produces accounts using the identity information of local residents in Yunnan along with overseas IPs and residency proof.

(The seller sent a video showing a table filled with residents' identity cards)

Additionally, this seller stated that one major "advantage" of these accounts is that if a high-value account is banned, it can be recovered by "establishing connections" with relevant personnel, allowing the ground promotion team to find a real person to assist in submitting identification proof to retrieve the account.

2. "Account Maintenance": The "risk control" game among buyers, sellers, and the official

After the account transaction, "same-day replacement" is a common rule within the circle.

Lin Fei explained that the seller usually provides the login email and password for the account, and upon receiving the account, the buyer must quickly change the aforementioned information and backup email to their own, or else the account is likely to be lost, as the original owner may reclaim it or the seller might inadvertently resell it again during that time. Once the login information is successfully modified, the account successfully belongs to the buyer.

But this is just the beginning. Player Meng Lu bought 50 CoinList accounts with colleagues in March for amateur subscription, but that batch of accounts was all banned. He speculated that the reason was that the account IP did not match the certified address.

In May, he purchased another 100 accounts, this time renting overseas servers to match each account with the corresponding regional IP. However, due to the large number of accounts and cumbersome operations, he wrote a script to automate the entire process—opening servers, logging into accounts, and making subscriptions.

All 100 accounts still became invalid.

Subsequently, Meng Lu purchased another 100 accounts and used a "semi-manual, semi-automated" method, with two computers each running 50 accounts, 50 accounts connected to 25 servers, with two accounts logged in on each server. The script was only used to open servers, while all other operations were done manually. Meng Lu stated, "Slowly, I gained experience," and so far, the third batch of accounts has not been "risk-controlled."

Risk control is a term frequently mentioned by both players and sellers. After an account encounters "risk control," it can still be logged into, but the user is not authorized to subscribe to project tokens. Xiong Ying explained that common factors triggering CoinList's official risk control include: registration information and IP not meeting regulations, frequent IP changes, consecutive number emails, bot or script subscriptions, and queue jumping.

Typically, CoinList does not specifically inform users of the exact reasons for account bans. After a batch of accounts is banned, buyers usually communicate through communities to summarize potential factors.

In fact, CoinList explicitly states in its user agreement that opening multiple accounts, transferring account access rights to third parties, purchasing accounts, and using bots or scripts for subscriptions are considered "abuse." In this case, CoinList has the right to cancel any unfulfilled orders within the account and suspend or cancel the corresponding account. Users can transfer assets within their wallets within 90 days after their accounts become invalid, but the project tokens obtained and the right to subscribe to accounts are revoked.

CoinList states that the decision to restrict access, suspend, or close accounts is based on confidentiality standards that are crucial to CoinList's risk management and security protocols, and CoinList will not disclose the details of its risk management and security procedures to users.

"New project subscribers," account sellers, and CoinList officials form a non-transparent game. CoinList officials issued statements on Twitter in March and April this year warning against account buying and selling and bot subscriptions, but have rarely spoken since. Both Lin Fei and Xiong Ying reported a large-scale "risk control" incident in May.

"In early March, it was quite lenient; in April, it became a bit strict; by May, it was almost very strict. If an ordinary person has a 'large account' (i.e., holding a certain number of accounts), if you don't have a server and can't manage it, you won't be able to play this." Lin Fei said.

Players and sellers summarize that an account must correspond to an IP of the certified location to ensure a fixed IP address and avoid "risk control." The increased participation cost includes the fixed monthly server rental fee. Additionally, some players consider subscription efficiency and may increase hardware investment to improve computer configurations.

Therefore, the cost of large-scale participation in CoinList public offerings often includes four major components: account purchases, hardware investment, server rental, and project token investments. Meng Lu rents a server for 248 yuan per month, and with two accounts on one server, the monthly maintenance cost exceeds ten thousand yuan.

Moreover, due to time zone differences, most project public offerings require domestic participants to operate in the early morning. For those with a large number of accounts, operations may not conclude until five or six in the morning, consuming a significant amount of time and energy.

3. High multiple resale of winning accounts, market heat has significantly receded

After the project tokens are publicly offered on CoinList, the paper return rates often reach dozens or even hundreds of times, creating a wealth myth that has attracted investors over the past year.

However, according to CoinList's public offering mechanism, the project tokens successfully purchased by investors usually need to be locked for 6-12 months, along with a long linear release period, making it difficult to quickly realize such high paper return rates.

Considering the uncertainty of the secondary market trends, many investors who successfully subscribed prefer to resell their CoinList accounts at a discount, with sellers obtaining future futures at market discount prices, while buyers gain a certain high return through discounted sales. Therefore, the over-the-counter market surrounding these successful CoinList winning accounts has also been quite active this year.

The winning accounts obtained by Meng Lu's team are typically resold at ten times the price. In June of this year, the decentralized storage protocol Swarm's project token BZZ was hotly offered on CoinList. Among the hundred accounts held by Meng Lu's team, more than ten won, and they ultimately sold 10 accounts, each with an investment cost of $500, while the winning accounts were sold for $7900, yielding nearly a 16-fold increase.

Meng Lu is relatively indifferent to holding the obtained tokens; he believes in minimizing unstable factors, stating, "If I can sell it, I will sell it." "Can I predict how the market will be next year or in the second half of this year? No one knows." he said.

Recently, as the market has cooled, the prices of most CoinList public offering project tokens have fallen by more than half from their peaks, with CSPR dropping by over 95%. This has led to a noticeable decline in market demand for CoinList winning accounts, with discount rates further expanding. Of course, this also means that many buyers who previously purchased CoinList accounts at high prices have suffered significant losses.

According to reports, the current market for reselling CoinList winning accounts has dropped from the previous 10-50 times cost price to 1-2 times cost price.

At the same time, the market prices of some public offering project tokens have fallen back to or even below the public offering price. According to CoinMarketCap data, the Covalent token CQT, which was publicly offered at the end of April this year, has now dropped to $0.34, slightly below the highest public offering price of $0.35; the social token platform Rally was publicly offered at $0.6 in early April, and its token RLY has now dropped to $0.37, losing nearly half.

Considering the current market conditions, professional "new project subscribers" have increasingly high requirements for project heat, rather than rushing to subscribe as soon as a project is launched on CoinList.

Lin Fei stated that he would not participate in the recent CoinList public offerings, "You know that one account can't win one subscription. If you have ten accounts for one win, or even twenty accounts for one win, the cost of your twenty accounts is several thousand, and if you win one subscription with a $500 investment, if the off-market premium is only 2 times, recouping $1000 means a loss."

Before a project is released, Lin Fei decides whether to participate in the subscription by discussing the predicted price of a project token with large holders, with the core indicators being the current market conditions and project heat. "Some tokens can be subscribed, while others cannot. These two recent offerings are not very cost-effective." Lin Fei said.

Multiple sellers have told reporters that a considerable number of accounts on the CoinList platform are currently controlled by mainland investors, some of which are personal accounts registered using overseas IPs and residency proof, while the remaining portion consists of bulk-purchased accounts for large-scale subscriptions by "new project subscribers."

They profit handsomely through this method, but it has also raised doubts among overseas CoinList users. Many overseas users have complained under CoinList's official Twitter, believing that the phenomenon of "multiple accounts" undermines the platform's fairness. As of now, CoinList has not issued any targeted statements regarding this situation.

In the whirlpool of wealth, the long-standing gray market has been closely intertwined with the development of the crypto industry, while also undermining the fairness and normal order of the industry. How to minimize the impact of the gray market will be a long-term proposition and challenge that the entire industry needs to face.

(At the request of the interviewees, Lin Fei and Meng Lu are pseudonyms.)