Written by: Arain, ChainCatcher

Editor: Nianqing, ChainCatcher

"This is the first time I've seen someone lose money by playing poker." Crow (pseudonym) commented in the Xterio rights protection group.

Web3 game development and operation platform Xterio was once a star project in the market. With its strong team background and abundant capital support, it attracted many investors to invest with real money. A netizen named "Little Man" wrote on X to recall the reason for building a position in Xterio: "I suddenly remembered why the people around us lost 1 million yuan per person on this project. Half a year ago, when this project was in its heyday and announced Binance's investment, I had a meal with Xterio people on an occasion, and then came back to Fomo each other's positions. This meal was so expensive, I wanted to cry."

However, what awaits investors is the reality of widespread losses. On January 8, Xterio launched a token generation (TGE) event, and investors’ dissatisfaction with losses continued to rise. As KOLs involved in Xterio continued to expose and display loss data, the community’s dissatisfaction was suddenly stirred up, and various Xterio rights protection groups were brewing vigorously.

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

Xterio TGE incident: fraud, injustice, zeroing out...what happened to the former star project?

TGE is full of doubts, and the community is hammering Xterio

Xterio's founding team members come from top game developers such as FunPlus, EA, and NetEase. 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 be born with a silver spoon in its mouth. On August 30, 2022, it completed a $40 million financing with a valuation of $300 million. Well-known institutions such as FunPlus, Makers Fund, FTX Ventures, and XPLA led the investment, and many industry giants participated in the investment. Then on July 13, 2023, Binance Labs injected another $15 million into it to support its game development and token launch plans in the fields of AI and Web3.

Based on the sluggish performance of the NFT market in the past, investors have already suffered losses on Xterio. An investor told ChainCatcher reporters that he had purchased the small dinosaur NFT (from the self-developed game Age of Dino) launched by Xterio at an average price of 1-1.2 ETH. According to data from the Opensea website, the floor price of the small dinosaur NFT has been below 0.3ETH for a long time in the past three months.

Xterio TGE incident: fraud, injustice, zeroing out...what happened to the former star project?

It can be seen that losses are not the main factor triggering community sentiment. The real fuse was the TGE event on January 8, which completely ignited the powder keg between the community and the project:

Xterio officially released its token economic plan on January 2, planning to issue 1 billion XTER: 28% for the community, 20 million tokens will be fully unlocked at TGE; 26% for the ecosystem, 20 million tokens will be fully unlocked at TGE; 15% for investors; 12% for the team; 9% for marketing, 15 million tokens will be fully unlocked at TGE; 4.25% for the treasury, and 5.75% for liquidity and staking during TEG.

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

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

Xiao Tao (pseudonym) is one of the many losers. He is an individual player of Age of Dino. In an interview with ChainCatcher, Xiao Tao said: "You airdropped normal shares. I admit that the price of the currency is not good. But issuing 0.5% airdrop, what else is this if not a scam? This is a complete insult to investors!"

Tao showed ChainCatcher a screenshot of the airdrop contract address during the project’s TGE. “The airdrop contract had a total of 20 million tokens, but only 5 million airdrop tokens were claimed in one day.” Tao also told ChainCatcher that he invested 50,000 U in the Xterio project, expecting a huge return. However, reality dealt him a heavy blow, and he only got 4,000 U back, a loss of 92%.

Xterio TGE incident: fraud, injustice, zeroing out...what happened to the former star project?

Investor Peng Peng said: "From the perspective of coin collection, the team only airdropped 0.5% to the community and embezzled the remaining 1.5%. Moreover, with so many activities and tens of thousands of NFTs, only 2% was airdropped to the community. The project team took the liquidity that should have been provided and pledged it on the exchange." Peng Peng showed another set of screenshots to ChainCatcher.

Xterio TGE incident: fraud, injustice, zeroing out...what happened to the former star project?

Siemens (pseudonym) did some calculations and said that 80% of the aforementioned airdrop should have been taken away by the project party: "Not counting AI points (Xterio and Bybit wallet cooperated on an Xterio AI Agent points event at the end of last year), the community players received less than 3 million tokens. This 3 million also includes the insider trading of the project party. The project party took at least 1,000 dinosaur NFTs, of which more than 85% were rare NFTs, accounting for a large share. So comprehensively speaking, including the AI players, the community actually received less than 4 million tokens, accounting for about 3.5% of the initial circulation of 112.5 million."

Xiao E (pseudonym) pointed out another problem, that is, Xterio inflated the data during the TGE, resulting in the dilution of players' rights. He showed ChainCatcher a screenshot of his chat with Kelly, a business person from Xterio, on Telegram. It can be seen that in the screenshot, he asked Kelly whether all the points would exceed 100 million, and Kelley replied that it was "unlikely". In the end, Xiao E found that the points became 270 million during the airdrop. Xiao E claimed that this was equivalent to adding at least 170 million points out of thin air.

Xterio TGE incident: fraud, injustice, zeroing out...what happened to the former star project?

It is understood that the points mentioned by Xiao E refer to the points rewards issued by Xterio in some activities in the past. The official has promised that these points rewards will be exchanged for airdrop rights in the future. Users can obtain Xterio ecosystem points through activities such as Meet your Anima (Palio), Overworld Arena and Dinoski (Age of Dino).

In addition to individual investors, other roles in the Xterio interest chain have also suffered losses to varying degrees. Previously, it was revealed that the game studio was promised a Gas refund by the project owner. The studio used more than 10,000 accounts to brush data, and each mint of an NFT required 3 dollars of Gas, but it was not actually fulfilled. During the interview, a staff member of the game studio told ChainCatcher that they lost 80,000 U (US dollars) on Xterio, but the specific reason for the loss was not disclosed.

During the Xterio TGE, crypto KOLs successively denounced the project and became a prominent group in this turmoil.

IceFrog, which has nearly 60,000 fans, said that he exchanged 30 U for 1 coin, and the expected rate of return was -97%, with a cumulative loss of up to 300,000 US dollars (note: it may be a floating loss).

The big V "Tu'ao Dashixiong" with over 110,000 fans directly cursed, claiming that the project party PUA community for more than a year, the community spent money and time to complete tasks, and everyone only received 20 million airdrops, and the project party released 15 million airdrops to itself through Maketing shares on the first day of TGE. "Now this airdrop has caused me a huge psychological shadow on the so-called successful Web2 entrepreneurs coming to Web3." While accusing the TGE incident of being unfair, he expressed his dissatisfaction with the team behind the project, reminding market participants to "demystify" the halo of entrepreneurs.

Xterio TGE incident: fraud, injustice, zeroing out...what happened to the former star project?

Siemens said that the project's founder Dong Ruibao often used "irrational" as his motto, and when encountering problems, he would use the excuse of "my actions are unreasonable" to continue PUAing the community.

With KOLs making negative comments one after another and negative emotions spreading in the community, Xterio’s reputation plummeted during the TGE.

Xterio TGE incident: fraud, injustice, zeroing out...what happened to the former star project?

The true face of the crisis and the internal chaos

In addition to unfair distribution, chaos within Xterio also emerged during the crisis.

0xkunkun pointed out that Kelly was responsible for Xterio's listing and business negotiations, but frantically hinted in the Telegram group that it would be listed on Upbit before TGE, causing the floor price of the Little Dinosaur NFT to be raised to 0.6ETH. After TGE was announced, the community directly dropped the price of the Little Dinosaur to 0.15ETH.

Mr. D (pseudonym) said that project staff openly called orders in Discord and purchased points at 0.3U (US dollars) per point off-market, creating the illusion that the points were of high value.

"It is completely against the rules to call orders for yourself. It is like a listed company calling orders and then having its own employees collect orders outside the market. This is illegal." Mr. D said excitedly in an interview. However, what bothered Mr. D was the fact that the project party promised but could not fulfill its promise. "The project party promised to return the acceleration cards to everyone. The cost of one number is 30U. I got a few, but when the promised time came, they just didn't return it. When I asked them, they pretended to be dead. It was pure fraud!"

Some investors pointed out that there may be a problem of inconsistent decision-making within the project. Xiao Tao said: "When the official token economics was released, they (the project staff) knew about it at the same time as us, which means that the decision maker did not discuss it with other colleagues at all and was a dictator!"

In the two days after TGE, Xterio's official Discord channel was completely flooded with negative comments from the community, and there was a lack of official staff to calm the emotions of community members. It was not until the evening of January 10 that the conflict began to ease with a new announcement.

Xterio TGE incident: fraud, injustice, zeroing out...what happened to the former star project?

It is worth mentioning that in response to the general concerns of investors and the community (the 2% airdrop has not been implemented), ChainCatcher sent an interview invitation to Xterio on the afternoon of January 10. As of press time, no official response has been received. However, on the evening of January 10 (the day the interview invitation was sent), Xterio released a new announcement in X to make up for Age of Dino players. The announcement gave a more detailed introduction to the 2% XTER ecosystem allocation:

  • 1% of XTER (10,000,000 tokens) will be distributed to Dinosty NFT holders, the airdrop is based on NFT holdings and a snapshot will be taken 36 hours after the announcement;
  • 1,550,898 XTER out of the 777 NFTs in the treasury will be rewarded to users of the new version of the game, which will be released in about 4 weeks.
  • Game Rewards: 0.5% (5,000,000 XTER) for Roar holders via a snapshot within 36 hours of this announcement.
  • 0.4% (4,000,000XTER) is collected based on your skin points and is snapshotted 36 hours after the announcement.
  • 0.1 % (1,000,000 XTER) will be distributed to the top 200 players based on their in-game power ranking. We will collect the top 100 players from both Zone 1 and Zone 2 and combine them into one overall ranking.
  • Claim period: January 14th 8am - February 13th 8am UTC (30 days). Any unclaimed tokens will go directly into the NFT pool.

After this announcement, Age of Dino players’ hostility was basically eliminated. According to an interview with ChainCatcher, most Age of Dino players thought the announcement was helpful, but they “just made back their investment.” Participants of Xterio’s other two games, Meet your Anima (Palio) and Overworld Arena, still have no whereabouts and are still hoping to defend their rights—but the speed at which the rights protection group expands has obviously slowed down.

"Let's wait and see what happens to the little dinosaur on the 14th," said a community member.

“AI points will also be distributed on the 14th,” Xiao E added.

It is difficult to explore the true face of the crisis, but judging from the response of the Xterio team before and after the TGE incident, the team did not conduct crisis public relations in the first place, which led to this crisis of trust and a rift between the community and the project.

Dong Ruibao, the giant whale, highly centralized AOD and was suspected of insider trading

Many investors told ChainCatcher that they initially chose Xterio because it used the team of FunPlus, a video game developer and publisher based in Switzerland that has released games including King of Avalon, State of Survival, and Guns of Glory.

FunPlus provides Xterio with its technology stack. Xterio, on the other hand, is FunPlus’ exclusive partner for issuing and deploying non-fungible tokens (NFTs) for all current and future FunPlus games.

In 2022, Xterio announced that it had raised $40 million, led by FunPlus, FTX, Makers Fund, XPLA, etc. At the same time as announcing the investment, Xterio stated that FunPlus provided Xterio with a technology stack, and Xterio, as the exclusive partner of FunPlus, issued and deployed non-fungible tokens (NFTs) for all current and future FunPlus games - it can be seen that FunPlus has a close relationship with Xterio.

Xterio’s official website shows that many games are currently available on the platform, including four self-developed games: “Age of Dino”, “City Shadows”, “Overworld” and “Palio”, covering FPS, MMO, sandbox, casual and other categories.

Xterio TGE incident: fraud, injustice, zeroing out...what happened to the former star project?

People related to Xterio pointed out to ChainCatcher that the core team of Xterio is basically composed of Hong Kong people and is relatively xenophobic. Only the core team has the right to Tokenshare, and other employees do not have the right to Token allocation. The Token allocation right is firmly controlled by Dong Ruibao and Ryan Cheung, and Jeremy has been basically sidelined.

"If it was Jeremy, he would not allow the above to happen. The Overworld reward was just 80U, with no bottom line," the source said.

Who is Jeremy?

Jeremy Horn is the co-founder of Xterio and Overworldplay. He has previously participated in the production of Web2 games such as Harry Potter: Hogwarts Mystery, Star Wars: Smugglers, Family Guy: Find the Stuff, and Marvel: Avengers Academy, and has rich experience in game development.

“Jeremy Horn at least understands token economics,” said Xiao Tao.

“Although Jeremy sucks, at least he finds a professional consultant to help him design it,” said other community members.

At the end of 2024, Dong Ruibao, the former Chief Strategy Officer of FunPlus and CEO of FunPlus Interactive Entertainment, suddenly announced his departure from FunPlus, poached some members of FunPlus, and fully invested in the Web3 startup project Xterio, becoming the actual head of Xterio. He also published an article on the matter, which was forwarded by FunPlus founder and CEO Zhong Yingwu (Andy), who said he supported Dong Ruibao's entrepreneurship. Interestingly, before and after Dong Ruibao announced his resignation, FunPlus also broke the news that it was currently undergoing a large-scale layoff.

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

Several community members expressed to ChainCatcher their suspicions about the existence of insider trading in many of Xterio’s self-developed games.

When ChainCatcher reporter asked Dong Ruibao why he did this and whether there was any behavior of borrowing from Peter to pay Paul between Web2 and Web3 businesses, the above-mentioned Xterio related person responded that it was unnecessary, "I have seen Dong Ruibao's wallet, it is a giant whale. He is not short of money, and actually does not need financing."

In fact, Dong Ruibao has a brilliant resume in Web2. He once served as the chief operating officer of NetEase. According to his own recollection, the "Fantasy Westward Journey" he led to release during his time at NetEase is currently the longest-running game in the world. In addition to his achievements in the gaming industry, Dong Ruibao has also crossed over to the financial circle, with more than 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 Co., Ltd., Nomura Group, and the investment banking department of Evergrande Securities Co., Ltd., and served as an auditor at Ernst & Young.

"This is Dong Ruibao." A relevant person commented.

“He probably never did any research on the activities he launched. Not to mention making money, real players all lost all their money. He probably only looked at the fake data, perhaps just to get listed on Binance, but unfortunately it didn’t go up in the end,” Xiao Tao said.