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Technically, hosting an offline-mode server is allowed by Mojang's EULA. Distributing the Minecraft client is illegal. Hosting the server is just software. You are safe.

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Absolute beginners and large friend groups.

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This is the critical step that non-premium players miss.

Note: When running a cracked server, it is highly recommended to install a login plugin like to prevent players from impersonating each other's usernames. Safety and Performance Tips You are safe

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Easily toggled via the built-in file manager or dashboard settings.