Meteor/Marco, ChainCatcher

Edited by/Marco, ChainCatcher

The news of the $80 million financing did not bring the expected publicity effect to Freechat, but instead triggered doubts among some Web3 practitioners, because after announcing the completion of two rounds of financing, Freechat has never disclosed any investors, and there have been no rumors within the industry about which capital invested in it.

The high-profile "half-covered pipa" style of publicity sowed the seeds of doubt in the industry, and on the same day, it was questioned as "false financing."

ChainCatcher's investigation found that Freechat, a social platform for overseas Web3, was founded by Jack Long, whose Chinese name is Long Yujiang. He is from Sichuan, China, and was an early Bitcoin miner. In 2013, the "Huaxi Metropolis Daily" reported Long Yujiang's mining experience, stating that he once mined 55 bitcoins in a day, when the price of Bitcoin was about 4000 yuan per coin.

On January 17, a Freechat spokesperson, in an interview with ChainCatcher, still did not directly respond to the information about the investors. "The financing is mainly in the form of equity, and tokens are only a part of it. Most of them bought Freechat's equity," "They are investors who followed along in the early stages of entrepreneurship."

On January 18, Long Yujiang, in an interview with ChainCatcher, stated that the seed round of Freechat was funded by him and another investor, Lao Li, and that the $80 million financing would need to be disclosed by the investors themselves.

ChainCatcher's investigation shows that Long Yujiang founded Chengdu Tairuiya Technology Co., Ltd. in Chengdu in 2017. In June 2021, the company was listed as a "dishonest executor," and Long Yujiang has been subject to court orders restricting his consumption due to labor arbitration with employees and lawsuits with other companies.

Regarding these debt issues, Long Yujiang responded, "Intentionally not dealing with it."

Who Invested $80 Million?

The previously unknown Freechat became one of the most eye-catching companies in the Web3 industry on January 8 due to the news of receiving a huge investment.

On that day, a well-known Chinese venture capital media outlet published an article stating that the blockchain social platform "Freechat" had recently completed an $80 million financing, with a post-investment valuation of $800 million; the investors were not disclosed.

The article stated that Freechat was founded in 2022 and completed a $2 million seed round of financing in August 2022.

Coincidentally, both rounds of financing news for Freechat were first reported by the same media outlet, and the investors were not disclosed in either round.

The above report became the source of information for various industry media outlets and quickly spread within the industry.

However, the lack of disclosure of investors, coupled with the project's lack of fame within the industry, led to suspicions when suddenly announcing a huge financing, with some media outlets suspecting that this was false information released by the project.

According to the Freechat official website, it is a Web3.0 social application that uses end-to-end encrypted communication to ensure anonymity and privacy, enabling free communication. The company was founded in 2020, headquartered in Los Angeles, and conducted an IEO on a blockchain exchange in 2023.

In the white paper, Freechat's business includes social, e-commerce, NFT, value-added services (virtual value-added services such as membership and premium membership), advertising, content, payments, DeFi, games, etc.

The mobile application interface of the product is similar to that of Feishu, with added features such as Douyin short videos, Xiaohongshu graphics and text, WeChat chat, and Weibo posts. Users can set up the function to add friends, and the app supports paying a custom amount of FCC to add friends, and after successful payment, they can chat with the target friend.

FCC is the token issued by Freechat, with a total supply of 1 billion. On November 3, 2023, Freechat announced on social media that it had initiated a token burning plan, burning 100 million tokens, reducing the total supply to 900 million.

On December 12, 2023, FCC was listed on the BitMart exchange and began trading. As of January 18, FCC has only been listed on this exchange.

On January 19, CoinMarketCap data shows that the price of FCC is $0.04, with a 24-hour trading volume of $751. Based on this price, the market value is $36 million.

On social media platforms, some users questioned the amount of financing.

On January 8, a user commented on Freechat's official account, stating that the $80 million financing was conducted through token delivery, but the current market value of all tokens is less than $70 million, and asked if it was convenient to disclose the specific investor information.

Freechat replied to this comment, stating, "It is not convenient. Relevant institutions will disclose it at the appropriate time," and indicated that there is still 10% equity, and tokens are only a part of it.

On January 17, a Freechat spokesperson told ChainCatcher that the financing mainly involved the company's equity, and tokens were only a part of it. They refused to disclose specific information about the investors, stating, "They are investors who followed along in the early stages of entrepreneurship."

On January 18, Long Yujiang, in an interview with ChainCatcher, also refused to disclose detailed information about the investors, explicitly stating that he could not disclose it, and that "the institutions will disclose it on their own."

As of the time of publication, no institution has announced participation in Freechat's financing.

Long Yujiang also revealed that the $2 million seed round financing for Freechat was mainly funded by him and another investor, Lao Li, with each contributing $1 million.

Founder Subjected to High Consumption Restrictions, Company Equity Frozen

ChainCatcher's investigation shows that in 2017, Long Yujiang founded Chengdu Tairui. Tianyancha shows that the company is mainly engaged in the software and information technology services industry, with a registered capital of 1.25 million RMB. The company completed a seed round of financing in 2017, with a transaction amount of 1 million RMB, and the investor was Shenzhen Chuangyuan Mofang Investment Enterprise (Limited Partnership), which was established in 2015 with a registered capital of 6.1 million RMB.

Chengdu Tairui's main product is the QAQGame game accelerator, which is a speed-up product for problems such as lag, disconnection, and high latency in online games.

Long Yujiang stated that QAQGame is involved in game acceleration, game props, and traffic business, and used to have high revenue of tens of millions of RMB per year, but was shut down due to policy reasons.

Since 2020, Chengdu Tairui has encountered a series of troubles.

On June 31 and July 15, 2020, due to failure to fulfill two effective legal documents related to labor arbitration, Long Yujiang was issued a high consumption restriction order by the Sichuan Pilot Free Trade Zone People's Court.

A ruling document from the China Judgments Online website shows that Chengdu Tairui and an employee had a labor dispute, and the court filed an enforcement case for an effective arbitration award on August 12, 2020, with an enforcement target of 33,500 RMB.

However, the ruling document stated that the court did not find any executable property clues for Chengdu Tairui through the online execution control system and on-site investigations, and Long Yujiang was subject to a high consumption restriction by the court.

In 2020, Chengdu Tairui faced several similar cases of unpaid labor arbitration, and the ruling documents all showed that Chengdu Tairui had no executable property.

Tianyancha shows that on September 21, 2023, due to a network contract dispute with Alibaba Cloud, Chengdu Tairui failed to fulfill effective legal documents, and Long Yujiang was issued a high consumption restriction order by the Hangzhou Internet Court.

In March 2023, the equity of Chengdu Luliluli Technology Co., Ltd. held by Long Yujiang was frozen by the court, with him holding 90% of the company's equity.

Regarding the above disputes, Long Yujiang responded that he "intentionally did not deal with it."

Founder Mined 55 Bitcoins in a Day Ten Years Ago

In the above report on Freechat's financing, Jack Long (Long Yujiang) revealed that in the early stages of the project development, the team bought 78 bitcoins as reserves for $16,000, spending $1.248 million. Based on the current bitcoin price of $44,000, the project's bitcoin reserves have reached $3.432 million, with a profit of nearly $2.2 million.

Long Yujiang told ChainCatcher that it was after he and Lao Li invested $2 million that the team used the money to buy bitcoins.

Long Yujiang's involvement with bitcoin first appeared in the media in 2013 when, as a bitcoin miner, he was featured in an article by the "Huaxi Metropolis Daily."

On November 21, 2013, the "Huaxi Metropolis Daily" published an article titled "Chengdu Bitcoin Miner: Mining 55 Coins Worth 240,000 Yuan in a Day," which focused on Long Yujiang.

At that time, bitcoin experienced a 74% single-day increase, with the price of each coin approaching 6,000 yuan, bringing bitcoin into the mainstream media's view.

The article stated that Long Yujiang began mining bitcoin in July 2009, making him one of the earliest bitcoin prospectors in China. "Long Yujiang told reporters yesterday that he owns 60 mining machines hosted in a data center, consuming 9,000 yuan in electricity per day. The output is also quite astonishing. According to the recent market conditions, the bitcoins mined in a month can be exchanged for several million yuan."

In the article, Long Yujiang mentioned that he owned 60 mining machines with a total computing power of 300TH/s. Over the years, the average daily mining output was 69.2175 bitcoins, and currently, he can mine 55 bitcoins per day.

Long Yujiang told reporters at the time, "There are still three or four years of good market for mining, so I am mining while selling mining machines."

In this article from 10 years ago, Long Yujiang also mentioned several key players in the Chinese bitcoin scene at the time, including Li Xiaolai, the founder of Jia Nan Yunzhi "Pumpkin Zhang" (Zhang Nangeng), and "Roasted Cat."

In the article, Long Yujiang mentioned that he was mainly active in the foreign bitcoin community, and people called him "Mr. Long."

On January 18, Long Yujiang told ChainCatcher that his mining farm was shut down in 2015 due to low output. He mentioned that he withdrew from the circle in 2017 due to personal reasons and returned to the cryptocurrency circle at the end of 2022. He usually only monitors the Freechat product iteration and provides some resources, but is not involved in other aspects. The core team consists of his former subordinates.

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