Uncovering Mixin: OG Gathering, Li Chao's Strong Support, Fans' Hard Work

Author: Jessy, Maxwell, Climber, Jinse Finance

On September 25, MistTrack announced on social media that the Mixin Network cloud service provider's database had been attacked, with an estimated amount involved of about $200 million. The news sparked heated discussions in the cryptocurrency community, mainly because well-known KOL Li Xiaolai is one of the early investors in Mixin Network. Additionally, Mixin Network is also a typical example of quietly making a fortune, consistently ranking in the top ten of the DeFiLlama TVL leaderboard.

The news was later confirmed, with Mixin Kernel's official account stating on X (formerly Twitter) that in the early hours of September 23, 2023, the Mixin Network cloud service provider's database was hacked, resulting in the loss of some assets on the mainnet. The team has contacted Google and the MistTrack team for assistance in the investigation. Preliminary verification indicates that the amount involved is approximately $200 million. Mixin Network's deposit and withdrawal services have been suspended. After discussions among all nodes and reaching a consensus, these services will be reopened once the vulnerabilities are confirmed and fixed.

On September 25 at 1 PM, Feng Xiaodong responded in a live stream, stating that the damaged assets mainly consisted of core Bitcoin assets, and that assets like BOX and XIN had not experienced severe theft. The specific details of the attack could not be disclosed at that time. Regarding the stolen assets, the official statement indicated that a maximum of 50% would be compensated, with the remaining portion to be compensated in the form of bond tokens, and that the official team would use profits for buybacks in the future. Additionally, Feng Xiaodong mentioned that Mixin would launch a new system for user asset migration, but the assets that could be transferred would temporarily only be half of the user's balance.

Friends' Entrepreneurship

It is understood that Mixin Network is a foundational blockchain cross-chain protocol aimed at providing users with a more convenient and secure all-currency wallet, safeguarding the security of users' assets. It positions itself as a free and fast peer-to-peer trading network for digital assets.

According to Mixin Network's official website, its ICP filing entity is Feigeman (Beijing) Technology Co., Ltd. According to information from Tianyancha, this company was established in 2014, with Feng Xiaodong as the legal representative. The current shareholders are Feng Xiaodong (holding 94%), Li Xiaolai (holding 5%), and Tieling (holding 1%). Previously, Luo Yonghao also held shares in this company. Feigeman's wholly-owned subsidiary is Fig Adventure (Beijing) Technology Co., Ltd., where Li Xiaolai is also a shareholder. Public information about this company shows that it is dedicated to providing seamless leading video services in the mobile internet field.

According to an interview with Li Lin, the chief scientist of the Mixin Network project, Feng Xiaodong dropped out of the computer science program at Shandong University in 2009 and later joined Google Play, becoming one of the early developers of Android applications in China.

Public records indicate that during his student years, Feng Xiaodong earned his first $1 million through Android and SDK development. In 2011, he was invited to join Yixia Technology as a technical partner, a leading mobile video technology service provider in China.

According to Li Lin's interview, in December 2014, Feng Xiaodong left to start his own business and founded Fig Adventure, creating an app focused on the overseas mobile game live streaming market. In December 2014, Feng Xiaodong began his entrepreneurial journey, establishing Fig Adventure, which focused on the overseas mobile game live streaming market, receiving joint investments from Li Xiaolai and his friend Luo Yonghao.

Subsequently, he began his entrepreneurial journey in the blockchain field, with the blockchain team being formed in November 2017, consisting of fewer than 20 people. By December, Mixin Messenger was launched, featuring encrypted social networking and peer-to-peer transfer functions.

On the Mixin official website, the project claims its mission is to provide convenience, security, and privacy for digital assets and messages, with its open-source software always prioritizing security, privacy, and decentralization. Ironically, the project itself has been hacked, resulting in potential losses of up to $200 million.

Additionally, the core support team for Mixin Messenger consists of senior engineers and business experts from well-known technology and financial industries such as Weibo, Cheetah, and Kingsoft. When Vitamio SDK was released, Koo6 had authorized its use.

The behind-the-scenes team of Mixin also includes veterans from the cryptocurrency space, such as Mint and Coin Capital partner Lao Mao.

However, in early August 2019, Mixin COO "Mint" announced her resignation from the position due to personal reasons, and according to her Zhihu article, she had assumed the role of Mixin COO in June 2018.

Li Xiaolai's Multiple Endorsements as an "Early Investor"

Li Xiaolai has previously endorsed the project multiple times in public, marking his first return to the cryptocurrency space after claiming he would no longer endorse cryptocurrency projects. He clearly considers Mixin as his home ground.

He claims to be "one of the earliest investors" in Mixin, where he engages with the community and teaches, promoting the "Blockchain ETF product" BOX he initiated to his audience. In August 2019, Li Xiaolai announced on his WeChat public account that he had sold 2.8 million BOX. Initially, BOX was composed of three underlying assets: BTC, EOS, and XIN, with XIN issued by Mixin Network.

On November 10, 2017, XIN began trading on Li Xiaolai's exchange, BigONE, with an opening price of 917 yuan on its first day. In January 2018, XIN's price surged to 15,000 yuan, but currently, XIN is priced at around 1,400 yuan.

At the end of 2019, the sign-in event launched by Mixin Messenger, which rewarded users with BTC for signing in, attracted a large number of users. Signing in would grant Bitcoin, and after a year of signing in, users could receive 0.066 BTC. According to the rules, the longer the sign-in duration, the more BTC one would receive. Based on the official data, signing in for 10 years could yield 6.6 BTC, which, at current prices, would exceed 300,000 yuan.

Not long after, Mixin Messenger raised the sign-in threshold, requiring users to complete KYC verification, answer questions, invite users, and even purchase certain specified products. Mixin's frequent changes to the sign-in rules and increasing thresholds sparked dissatisfaction among some users, leading to claims that "the so-called sign-in activity by Mixin is just a scam."

The criticism was not only directed at Mixin's rule changes; the 10-year sign-in period was also deemed unrealistic. In November 2019, Li Xiaolai stated on Weibo that Mixin had 60,000 daily active users. Based on this data, if these users signed in continuously for five years, Mixin would need to provide 100,000 Bitcoins, amounting to around 500 million yuan at current prices.

Jerry recalls that the answer to the questions required users to stake assets. If they answered questions daily and signed in continuously, the weight of the dividend pie would increase, but this dividend project was halted after a year. Moreover, some of the questions were absurdly misleading, such as asking where the safest place to store coins is, with the correct answer being the Mixin wallet.

These marketing tactics are very "Li Xiaolai-esque." A large number of Li Xiaolai's fans followed him to invest regularly in Mixin. Jerry told Jinse Finance that for the BOX fund, Li Xiaolai specifically created a "BOX regular investment practice group" on Mixin, aiming to achieve asset appreciation through regular investments in blockchain assets. Li Xiaolai livestreams daily in the group, covering topics related to blockchain assets, investment, growth, and life. He also joined Li Xiaolai's "Regular Investment Life" paid group, with an annual fee of 0.012 Bitcoin. Currently, there are over 7,000 fans in the group, who follow Li Xiaolai to invest regularly in BOX. In the first two years, he also followed Li Xiaolai to invest in BOX, doubling his returns. However, during the same period, Bitcoin and Ethereum increased by 20 times and 50 times, respectively. Later, he realized that the purpose of this paid group was essentially to listen to the various courses offered by Li Xiaolai.

In 2019, Jerry noticed something was off with Mixin and Li Xiaolai, as Li Xiaolai did not participate in the platform's governance, and the choice of investment targets for the BOX ETF was also flawed, including many personal interests, such as XIN.

Where Did the Lost Money Come From?

According to Defillama data, Mixin's TVL is $394 million, ranking 8th among all public chains, surpassing Baase and Solana. Moreover, Defillama only counts the TVL of 10 protocols.

The main TVL comes from Bwatch, which alone accounts for $264 million. Jerry analyzed for Jinse Finance that the money in Bwatch is all from fans, and it has been hovering around this amount. The amount involved in this incident is approximately $200 million.

Bwatch is the community for BOX, which is an open-source regular investment fund for digital assets designed by Li Xiaolai. BOX accepts investment injections in Bwatch.

According to Bwatch's official website, the current BOX components consist of 7 underlying assets: BTC, ETH, EOS, DOT, MOB, XIN, and UNI. Each BOX contains 0.0001 BTC, 0.0001 ETH, 0.03 EOS, 0.005 DOT, 0.01 MOB, 0.0008 XIN, and 0.01 UNI. Li Xiaolai has set up two courses on Bwatch: Xiaolai Public Class and Regular Investment Life.

BOX Token is the proof of rights for participating in BOX investment. It is an ERC20 Token, with the contract address: 0x045414e728067ab3da4bceafc0d992d59183463a. After the issuance of BOX Token, all transfers are made to Mixin Network.

The rights of BOX follow the BOX Token, and BOX must be stored in Mixin Network (Mixin Messenger or other services within the Mixin ecosystem) without being withdrawn to the Ethereum main chain.

Mixin has its own unique ecosystem. According to the Mixin official website, there are currently 47 Dapps on Mixin Network.

These Dapps include DeFi (Pando), exchanges (4swap, Exin One, ExinSwap, Ocean One), Staking (ExinPool), wallets (MVG Bridge, Mixin Messenger, Mixin Wallet), bots (Mixin Bot, Trading Bot), social (Rum Weibo Square), tools (Ahr999 Index, Mixchat, Mixin Data), and other applications.

On September 25 at 1 PM, Feng Xiaodong responded in a live stream, stating that the damaged assets mainly consisted of core Bitcoin assets, and that assets like BOX and XIN had not experienced severe theft. The specific details of the attack could not be disclosed at that time. Regarding the stolen assets, the official statement indicated that a maximum of 50% would be compensated, with the remaining portion to be compensated in the form of bond tokens, and that the official team would use profits for buybacks in the future. Additionally, Feng Xiaodong mentioned that Mixin would launch a new system for user asset migration, but the assets that could be transferred would temporarily only be half of the user's balance.

Upon hearing Feng Xiaodong's response, Jerry recalled an old incident: Mixin had a financial management section, and previously, Mixin had moved users' assets to Fcoin for high interest. However, Fcoin later collapsed, and the compensation received by financial management users was also in the form of bonds.