A Chinese video site copycat raised $2.1 million via an initial exchange offering in August 2019 – but it appears this last resort wasn’t enough to save the company from falling apart.

On Sept. 24, the Shanghai Yangpu District Court disclosed an Aug. 31 ruling that video streaming company Dilidili has infringed the trademark of Nasdaq-listed Bilibili and must pay a fine of nearly $500,000.

The ruling followed a separate notice by the Shanghai Minhang District Prosecutor in July, which ordered the arrest of Dilidili’s founder for copyright infringement.

The years-long case has drawn widespread attention  among Chinese mainstream media given Dilidili’s outright copy-and-paste from Bilibili, which is China’s hit video site for streaming licensed Japanese anime content.

The episode is also an example of a failed attempt by Chinese companies to use the concept of cryptocurrency and blockchain decentralization to rejuvenize their businesses.

Founded in 2010, Bilibili.com has grown into one of the top video sites in China. It specializes in streaming licensed Japanese animation that targets China’s Generation Z population. Bilibili reportedly has some 170 million monthly active users.

Bilibili went public on Nasdaq in March 2018 with a raise of $483 million. Earlier this year, Sony invested another $400 million in Bilibili and bought over 4% of its shares.

The dispute between Bilibili and Dilidili started in 2015, when Dilidili was created with a name that appeared to be mimicking the incumbent.

Soon after its creation, Dilidili had allegedly downloaded more than 3,000 episodes of Japanese animation from Bilibili and then uploaded it to its own platform for free viewing so that it could monetize the traffic, according to the Shanghai prosecutor’s arrest order.

In January 2019, Bilibili brought a lawsuit against Dilidili and demanded some $4.3 million as damage claims due to Dilidili’s alleged trademark and copyright infringement. 

In a notable pivot, Dilidili tapped into the 2019 frenzy of cryptocurrency initial exchange offerings (IEO) in order to build a blockchain-based community governance ecosystem.

Dilidili launched its token, DILI, on the ethereum platform and did the IEO on Chinese exchange Gate.io in August 2019.

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According to Gate.io’s announcement on Aug. 28, Dilidili achieved its goal of raising $2.1 million by selling 1.5 billion DILI, although the total subscription orders it received from Gate.io users were worth over $70 million. The trading started on the same date with a starting price of $0.00143 per DILI.

But soon after trading began, several news reports emerged online with accusations of Dilidili running an illegal fundraise becaause China had banned token-based fundraising activities.

The price of DILI on Gate.io has since plunged by over 90% to just $0.000253. 

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