Hamster Kombat, the viral game in the TON ecosystem, sparks controversy—what does this mean for GameFi compliance?
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Hamster Kombat, the viral game in the TON ecosystem, sparks controversy—what does this mean for GameFi compliance?
Hamster Kombat, popular in Iran but criticized.
Navigating Web3 tides with focused insightsBy ManQin Blockchain Legal Services
Recently, a mobile game called Hamster Kombat has sparked widespread attention and controversy in Iran. This clicker game, built on the Telegram platform, attracts users through a "tap-to-earn" mechanism. Since its launch in March this year, Hamster Kombat has seen rapid user growth, reaching 200 million users. Its X (formerly Twitter) and YouTube channels have amassed 9.8 million and 28.7 million subscribers respectively. Within just a few months, Hamster Kombat has become a phenomenon.
However, as Hamster Kombat gained popularity in Iran, it also triggered significant controversy.
In recent years, Iran has implemented a series of strict regulatory measures regarding virtual currencies. Particularly targeting cryptocurrency mining, the Iranian government has adopted a dual strategy: mining is allowed, but profits from overseas mining cannot be traded freely, while domestic mining output must be sold to the central bank. Against this policy backdrop, the rapid rise of Hamster Kombat has drawn criticism from Iranian authorities and experts.
Criticism One: Information Security Threats
Hamster Kombat fully leverages viral growth mechanics, encouraging users to actively invite others—commonly framed as "invite friends, instantly earn XX." While this mechanism accelerates user acquisition, it also introduces serious information security risks. If hackers breach the servers hosting project data, they could easily access users' personal information and social connections (e.g., who invited whom). Hossein Delirian, spokesperson for Iran's National Cyber Space Center, warned that many Iranian users discuss using the game for cryptocurrency mining within Telegram supergroups, creating fertile ground for cybercrime. Users’ personal data and account security face significant threats.
Criticism Two: Investment Risk
Unlike established cryptocurrencies such as Bitcoin (BTC) or Ethereum (ETH), whose value has been tested over time, projects like Hamster Kombat that surged in popularity this year have not demonstrated stability or scarcity. Their market performance is often tied to FOMO (fear of missing out) and speculation, with prices and valuations fluctuating dramatically based on hype. Esmail Qamari from the Isfahan Provincial Judiciary pointed out that Hamster Kombat’s perceived value is largely driven by community and external investor speculation. Investors participating in such projects risk pouring funds into empty investment bubbles. Additionally, prominent scholar Ayatollah Nasser Makarem Shirazi stated that cryptocurrencies carry numerous drawbacks and pose financial loss risks from an investment standpoint.
Criticism Three: Socio-Cultural Risks
Whether early Web3 Play-to-Earn models, current Tap-to-Earn games, or referral reward systems, these mechanisms fundamentally promote the idea of easy money or "passive earning." This is precisely why Dr. Alireza Chabkeru from Tehran University and Habibollah Sayyari, Deputy Chief of Staff of the Iranian Armed Forces, believe such games may have deeper negative societal impacts—they not only divert public attention from critical events (such as elections), but could also lead to cultural degradation, encourage laziness, and ultimately undermine social stability and cultural development.
These criticisms reflect the Iranian government's concerns about potential future social, cultural, and economic issues arising from such projects. They also highlight the complexity developers must consider when launching Web3 initiatives—navigating diverse regulatory environments and fulfilling legal and social responsibilities. This raises an important question: For Chinese Web3 entrepreneurs operating under China's unique ecosystem, who also wish to ride the "tap-to-earn" trend, what key legal compliance considerations should be prioritized?
Lawyer Liu Honglin from ManQin Law Firm offers a special reminder: remember the following compliance essentials and follow the recommended solutions.
Personal Information Protection
With growing awareness of privacy rights, personal data protection has become a global principle and consensus. In China, according to the Cybersecurity Law of the People's Republic of China and the Personal Information Protection Law, Web3 entrepreneurs must ensure the security of users’ personal information and data. Therefore, if a project like Hamster Kombat were launched in China, entrepreneurs should take the following steps to prevent information security issues:
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Data Encryption: Ensure encryption of user data during storage and transmission to prevent data leaks.
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Multi-Factor Authentication (MFA): Implement MFA mechanisms to enhance account security.
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Regular Security Audits: Conduct regular security audits to identify and patch potential vulnerabilities.
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User Education: Strengthen user awareness training, reminding them to protect their personal information and account security.
Compliant Token Issuance
Token issuance is an unavoidable topic for any Web3 project. However, the Securities Law of the People's Republic of China and the Announcement on Preventing Risks Associated with Token Issuance clearly state that token issuance and fundraising activities constitute illegal financial operations. Therefore, Web3 entrepreneurs aiming to launch a game similar to Hamster Kombat in China must avoid any form of token-based fundraising to prevent being classified as engaging in illegal fundraising. The following survival tips should not be ignored:
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Avoid Token Fundraising: Do not raise funds via token offerings (ICO); instead, consider legal alternatives such as equity or debt financing.
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Legal Consultation: Seek advice from qualified legal professionals before launching the project to ensure full compliance with Chinese laws and regulations.
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Compliant Operations: Ensure all project activities and transactions operate within the legal framework, avoiding any form of illegal fundraising.
Anti-Money Laundering and Counter-Terrorist Financing
Once a Web3 project issues virtual tokens, it inevitably enters the battlefield between money laundering and anti-money laundering efforts. According to the Anti-Money Laundering Law and the People's Bank of China’s Notice on Strengthening Anti-Money Laundering and Counter-Terrorist Financing Work Related to Virtual Currencies, Web3 projects must strictly comply with AML/CFT requirements. To minimize money laundering risks, Web3 entrepreneurs should:
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Implement KYC Procedures: Know Your Customer—require real identity verification during user registration to prevent anonymous transactions.
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Monitor and Report Suspicious Activities: Set up monitoring systems to detect and report suspicious transactions, preventing money laundering and terrorist financing.
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Train Employees: Provide AML/CFT training to staff so they can recognize and respond to potential risks effectively.
Cultural and Ideological Compliance
Whether meme coins or Web3 games, they often foster subcultures and unified ideological communities. In China, where the government places high importance on cultural and ideological security, Web3 game content and communities must avoid political sensitivities, negative social values, or anything contrary to socialist core values to stay clear of regulatory red lines. Recommended practices include:
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Content Moderation: Conduct rigorous pre-launch content reviews to ensure alignment with national cultural and ideological standards.
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Compliant Marketing: Avoid using messaging that contradicts socialist core values during promotion and advertising campaigns.
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Establish Feedback Mechanisms: Create channels for user feedback to promptly adjust or remove non-compliant content.
The legal and socio-cultural controversies surrounding Hamster Kombat in Iran serve as a crucial warning for Chinese Web3 game entrepreneurs. Founders must not only assess investment risks, prevent money laundering, and navigate token issuance challenges, but also safeguard user data and uphold cultural and ideological integrity. Strict adherence to Chinese laws and regulations is essential to ensure compliant operation of any Web3 gaming initiative.
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