Xterio TGE Controversy: Many players have lost their investments, what happened to the once-star project?

Author: Arain, ChainCatcher

Editor: Nianqing, ChainCatcher

"I met someone who lost everything for the first time." Crow (pseudonym) commented in the Xterio rights protection group.

The Web3 game development and operation platform Xterio was once a star project in the market, attracting many investors with its strong team background and substantial capital support. A netizen named "Little Person" wrote on X about the reasons for initially investing in Xterio: "Suddenly I remembered why the people around us lost an average of 1 million in this project. Half a year ago, when this project announced investment from Binance, I had a meal with someone from Xterio, and then we both FOMOed into our positions. That meal was so expensive, I want to cry."

However, what awaited investors was the harsh reality of widespread losses. On January 8, Xterio launched its Token Generation Event (TGE), and dissatisfaction among investors due to losses continued to rise. As KOLs participating in Xterio kept exposing and showcasing loss data, the community's discontent flared up, and various Xterio rights protection groups were fervently brewing.

Losses, fraud, humiliation… the dream of wealth shattered, and the once dazzling star project seemed to have fallen from grace.

Clouds of Doubt Over TGE, Community Strikes at Xterio

The founding team of Xterio consists of members from top game developers like FunPlus, EA, and NetEase, and it has also received investments from well-known institutions such as Binance Labs, FunPlus, and FTX.

Compared to many Web3 native projects, Xterio can be said to have been "born with a golden spoon." On August 30, 2022, it completed a $40 million financing round at a valuation of $300 million, led by prominent institutions such as FunPlus, Makers Fund, FTX Ventures, and XPLA, with many industry giants participating, making it the talk of the town. Shortly after, on July 13, 2023, Binance Labs injected another $15 million to support its game development and token launch plans in the AI and Web3 fields.

Based on the past sluggish performance of the NFT market, investors had already incurred losses on Xterio. An investor told ChainCatcher that they had purchased the small dinosaur NFTs (from the self-developed game Age of Dino) at an average price of 1-1.2 ETH, but according to data from Opensea, the floor price of the small dinosaur NFTs had been below 0.3 ETH for a long time over the past three months.

It is evident that losses were not the main factor triggering community emotions; the real spark was the TGE event on January 8, which completely ignited the powder keg between the community and the project:

On January 2, Xterio officially released its tokenomics plan, planning to issue 1 billion XTER tokens: 28% for community allocation, with 20 million tokens fully unlocked at TGE; 26% for ecosystem allocation, with 20 million tokens fully unlocked at TGE; 15% for investor allocation; 12% for team allocation; 9% for marketing, with 15 million tokens fully unlocked at TGE; and 4.25% for treasury, with 5.75% for providing liquidity and staking at TEG.

After announcing the tokenomics plan, Xterio also released rewards for Age of Dino during the TGE event, promising that Age of Dino would receive a 2% XTER token ecosystem subsidy during TGE. Additionally, at least 8% of Age of Dino tokens would be fully unlocked and distributed to NFT holders and players at AoD's TGE.

After the TGE, many investors reported that the actual airdrop ratio of tokens differed from what was claimed. ChainCatcher conducted centralized interviews with investors after the TGE event.

Little Tao (pseudonym) is one of the many losers; he is a personal player of Age of Dino. In an interview with ChainCatcher, Little Tao stated: "If you airdrop the normal share, I can accept it if the token price is low, but airdropping only 0.5%—isn't that fraud? This is a complete insult to investors!"

Little Tao showed ChainCatcher a screenshot of the airdrop contract address during the project's TGE period, stating, "The total number of tokens for the airdrop contract is 20 million, and after a day, only 5 million airdrop tokens were claimed." Little Tao also told ChainCatcher that he invested 50,000 USDT in the Xterio project, eagerly expecting substantial returns, but reality hit him hard, and he only recovered 4,000 USDT, with a loss rate of up to 92%.

Investor Pengpeng stated: "From the token claiming situation, the team only airdropped 0.5% to the community and embezzled the remaining 1.5%. Moreover, with so many activities and thousands of NFTs, only 2% was airdropped to the community. The project team took the liquidity they should have provided to the exchange for staking." Pengpeng showed ChainCatcher another set of screenshots.

Siemens (pseudonym) calculated that the aforementioned airdrop should have had 80% taken by the project party: "Not counting AI points (last year, Xterio collaborated with Bybit Wallet on an Xterio AI Agent points activity), community players received about 3 million tokens. This 3 million also includes the project party's wash trading; the project party took at least 1,000 dinosaur NFTs, of which over 85% are rare NFTs, taking up a large share. So, overall, considering the AI players, the community only received less than 4 million tokens, accounting for about 3.5% of the initial circulation of 112.5 million."

Little E (pseudonym) pointed out another issue, that Xterio inflated data during the TGE, leading to the dilution of player rights. He shared a screenshot of his chat with Xterio's business personnel Kelly on Telegram with ChainCatcher, where he asked Kelly if all the scores would exceed 100 million, to which Kelly replied, "Not likely." However, Little E found that during the airdrop, the points had turned into 270 million, claiming this equated to an increase of at least 170 million points out of thin air.

It is understood that the points Little E referred to are the points rewards that Xterio distributed in some past activities, which the official had promised would be exchanged for airdrop rights in the future. Users could earn Xterio ecosystem points through activities like Meet your Anima (Palio), Overworld Arena, and Dinoski (Age of Dino).

In addition to individual investors, other roles in the Xterio interest chain also experienced varying degrees of losses. Previously, there were reports that a game studio was promised a gas refund by the project party, and this studio used over 10,000 accounts to brush data, with each mint of an NFT requiring $3 in gas, which was never fulfilled. During the interview, a staff member from the game studio told ChainCatcher that they incurred a loss of 80,000 USDT (dollars) on Xterio, but the specific reasons for the loss were not disclosed.

Crypto KOLs have been continuously criticizing the project during the Xterio TGE, becoming a significant group in this turmoil.

Ice Frog, who has nearly 60,000 followers, claimed to have exchanged every $30 for 1 token, with an expected return rate of -97%, accumulating losses of up to $300,000 (note: possibly unrealized losses).

A major influencer with over 110,000 followers, "Aussie Lion Brother," directly criticized, claiming that the project party had been manipulating the community for over a year, with the community spending time and money on tasks, yet everyone only received 20 million in airdrops, while the project party released 15 million airdrops to themselves on the first day of TGE through the marketing share. "Now this airdrop has left me with a significant psychological shadow regarding so-called Web2 entrepreneurs coming to Web3." While accusing the TGE event of being unfair, he expressed dissatisfaction with the team behind the project, reminding market participants to "de-mystify" the halo of entrepreneurs.

Siemens stated that the project's founder, Dong Ruibao, often uses "unreasonable" as his motto, and whenever issues arise, he continues to manipulate the community with "I do things unreasonably."

KOL statements have been continuously "squeezing" each other, and negative emotions in the community have been spreading. Xterio's reputation during the TGE has plummeted.

The True Nature of the Crisis and Internal Chaos

In addition to unfair distribution, internal chaos within Xterio has also surfaced during the crisis.

0xkunkun pointed out that Kelly, who is responsible for Xterio's listing and business negotiations, crazily hinted in the Telegram group that they would list on Upbit before TGE, causing the floor price of the small dinosaur NFTs to be raised to 0.6 ETH, but after the TGE was announced, the small dinosaurs were directly smashed down to 0.15 ETH by the community.

Mr. D (pseudonym) stated that project staff openly called for purchases in Discord, offering to buy points at $0.3 (dollars) per point, creating a false impression of high value for the points.

"Calling for purchases to oneself is completely against the rules; it's like a listed company calling for purchases and its own employees personally buying outside, which is illegal." Mr. D expressed excitedly during the interview. However, what troubled Mr. D the most was the project party's unfulfilled promises, "The project party promised to return the acceleration cards, which cost $30 each. I got a few, but when the promised time came, they just refused to refund. When I asked them, they acted dead, pure fraud!"

Some investors pointed out that there might be a communication gap in decision-making within the project party. Little Tao stated: "The official released the tokenomics, and they (project staff) knew at the same time as us, indicating that the decision-makers never discussed it with other colleagues, acting dictatorially!"

Within two days after the TGE, the Xterio official Discord channel was completely flooded with negative comments from the community, lacking official staff to calm community members' emotions. It wasn't until the evening of January 10 that the conflict began to ease with a new announcement.

It is worth mentioning that regarding the issues of general concern among investors and the community (the 2% airdrop not being fulfilled), ChainCatcher sent an interview invitation to Xterio on the afternoon of January 10, and as of the time of publication, no official response had been received. However, on the evening of January 10 (the same day the interview invitation was sent), Xterio released a new announcement on X addressing Age of Dino players, providing more detailed information about the 2% XTER ecosystem allocation:

• 1% of XTER (10,000,000 tokens) will be distributed to Dinosty (small dinosaur) NFT holders, with the airdrop based on NFT holdings and a snapshot taken 36 hours after the announcement;
• 1,550,898 XTER from the 777 NFTs in the treasury will reward users of the new game version launching in about 4 weeks.
• Game rewards: 0.5% (5,000,000 XTER) will be based on a snapshot taken within 36 hours after this announcement for Roar holders.
• 0.4% (4,000,000 XTER) will be based on your skin collection points, with a snapshot taken 36 hours after the announcement.
• 0.1% (1,000,000 XTER) will be allocated based on in-game strength rankings to the top 200 players. We will collect the top 100 players from Zone 1 and Zone 2 and merge them into an overall ranking.
• Claiming period: January 14, 8 AM - February 13, 8 AM UTC (30 days). Any unclaimed tokens will go directly into the NFT pool.

After this announcement, the confrontational emotions of Age of Dino players were largely alleviated. According to ChainCatcher's interviews, most Age of Dino players found the announcement helpful, but also "just barely breaking even." Participants in Xterio's other two games, Meet your Anima (Palio) and Overworld Arena, still had no resolution and remained hopeful for rights protection—however, the speed of expansion of the rights protection group had clearly slowed down.

"Let's see what happens with the small dinosaurs on the 14th." a community member stated.

"AI points will also be distributed on the 14th." Little E added.

It is difficult to explore the true nature of the crisis, but based on the Xterio team's reactions before and after the TGE event, the team did not conduct crisis public relations in a timely manner, leading to this trust crisis and a rift between the community and the project.

Whale Dong Ruibao's Centralized Power, AOD Suspected of Wash Trading

Many investors told ChainCatcher reporters that the initial reason they were attracted to Xterio was because of its use of FunPlus's team. FunPlus is a video game developer and publisher based in Switzerland, with games including "King of Avalon," "Survival State," and "Gun of Glory."

FunPlus provides the technical stack for Xterio. On the other hand, Xterio is FunPlus's exclusive partner for the issuance and deployment of non-fungible tokens (NFTs) for all current and future FunPlus games.

In 2022, Xterio announced it raised $40 million, led by FunPlus, FTX, Makers Fund, and XPLA. At the same time as announcing the investment, Xterio stated that FunPlus provides the technical stack for Xterio, and Xterio serves as FunPlus's exclusive partner for the issuance and deployment of NFTs for all current and future FunPlus games—indicating a close relationship between FunPlus and Xterio.

According to Xterio's official website, the platform currently lists multiple games, with self-developed games including "Age of Dino," "City Shadows," "Overworld," and "Palio," covering genres such as FPS, MMO, sandbox, and casual.

A relevant person from Xterio pointed out to ChainCatcher that the current core team of Xterio is mostly from Hong Kong and relatively exclusive, and only the core team has the right to Tokenshare, while other employees do not have token distribution rights. Token distribution rights are firmly controlled by Dong Ruibao and Ryan Cheung, while Jeremy is basically sidelined.

"If it were Jeremy, such things wouldn't be allowed to happen. The Overworld rewards were casually dismissed at $80, with no bottom line." the insider stated.

Who is Jeremy?

Jeremy Horn is a co-founder of Xterio and "Overworldplay." Earlier, he participated in the production of Web2 games such as "Harry Potter: Hogwarts Mystery," "Star Wars: Smuggler," "Family Guy: Quest for Stuff," and "Marvel: Avengers Academy," possessing rich game development experience.

"Jeremy Horn at least understands token economics." Little Tao stated.

"Although Jeremy is also bad, at least he would find professional consultants to help him design." other community members commented.

At the end of 2024, former FunPlus Chief Strategy Officer and CEO of Qujia Entertainment, Dong Ruibao, suddenly announced his departure from FunPlus, taking some members with him and fully committing to the Web3 startup project Xterio, becoming the actual leader of Xterio. He published an article about this matter, which was shared by FunPlus founder and CEO Zhong Yingwu (Andy), expressing support for Dong Ruibao's entrepreneurship. Interestingly, around the time Dong Ruibao announced his departure, FunPlus also faced significant layoffs.

The aforementioned Xterio insider pointed out that on the day of the TGE, Dong Ruibao set up a 6 million yuan fund for AOD NFTs, "I suspect this is to whitewash wash trading. Because the scores in the main fortress are just data."

Multiple community members expressed doubts to ChainCatcher regarding the existence of wash trading in several self-developed games by Xterio.

When ChainCatcher reporters asked why Dong Ruibao would do this and whether there was behavior of robbing Peter to pay Paul between Web2 and Web3 businesses, the aforementioned Xterio insider responded that it was unnecessary, "I've seen Dong Ruibao's wallet; he is a whale. He doesn't lack money and actually doesn't need financing."

In fact, Dong Ruibao has a glamorous resume in Web2. He served as the Chief Operating Officer of NetEase, and according to his own recollection, the game "Fantasy Westward Journey," which he led during his time at NetEase, is currently the longest-running game globally. In addition to his achievements in the gaming industry, Dong Ruibao also crossed into the financial sector, with over 7 years of investment banking and investment management experience, managing nearly $100 million in venture capital. Prior to this, Mr. Dong worked at Softbank China Fund Management, Nomura Group, and the investment banking department of EFG Bank, as well as serving as an auditor at Ernst & Young.

"This is Dong Ruibao." the insider commented.

"He probably never researches the activities he launches; let alone making money, real players are losing everything. He should only look at those false data, perhaps just to get listed on Binance, but unfortunately, it still didn't happen." Little Tao said.