Chinese Police Seize $1.5B in Crypto Gambling Crackdown

Police in Southern Guangdong province in China conducted a successful raid on what they termed the world’s largest cryptocurrency-based online gambling platform. The raid, which was conducted late last week, saw authorities seize more than $1.5 million in assets, as well as arrest several key suspects.

Exploiting Regulation Loopholes

Xinhua, the Chinese state-run media outlet, reported authorities noticed the gambling platform in May. The unnamed platform ran advertisements in which it claimed that it would take internationally accepted cryptocurrencies, including Bitcoin, Etherum, and Litecoin. Authorities described this as a move to avoid regulation by the government, while, at the same time, make exponential profits since these cryptocurrencies are rather volatile.

Cryptocurrencies are deregulated and decentralized, unlike traditional currencies. This puts them beyond the control of the government and poses threats, such as tax evasion and money laundering. It is for these reasons the Chinese government has decided to clamp down on the use of cryptocurrencies in the country.

In a bid to stop the proliferation of the virtual currencies, the Chinese government shut down all cryptocurrencies exchanges in the country in 2017. It further tightened the noose earlier this year when it began cracking down on applications and online platforms that facilitate the exchange of cryptocurrencies. It has also been taking measures to ban initial coin offerings both domestically and internationally. All these measures have led to the collapse of what was once the biggest cryptocurrency exchange market in the world and, consequently, has given rise to a growing black market for virtual currencies.

Operating on the Dark Web

The said gambling platform further sought to escape the authorities’ watch by operating on the dark web. The dark web is a portion of the Internet that can only be accessed through special software programmed to mask users’ identities and actions, thus facilitating illegal activities, such as drug trades. The platform operated successfully for about eight months before authorities completed their investigation and nabbed those behind it.

The site’s owners recruited hackers to run the platform and hide it from the authorities. They also offered rewards for their clients to recruit others in a system that was described as a pyramid scheme.

Millions Confiscated, Bets Worth More Than $1.5 Billion on the Line

Authorities reported the illegal gambling platform attracted more than 330,000 customers over the course of eight months. These customers placed bets worth more than $1.5 billion in cryptocurrencies, making the platform the biggest of its kind. However, authorities managed to seize only a fraction of this amount.

The police confiscated about $1.5 million worth of cryptocurrencies from the site. They also claimed about $750,000 in renminbi (China’s official currency) from the suspects’ bank accounts. So far, six suspects have been taken into custody. Authorities claim they were the masterminds behind the platform. It is not yet clear what will happen to the $1.5 billion held in illicit bets, but authorities may eventually confiscate whatever can be salvaged as investigations come to a halt.

Cracking Down on Gambling in General

The Chinese government has always had a negative attitude toward gambling, and its latest raid ranks among the most notable. However, authorities have conducted many similar raids in the past, with one of the most recent ones targeting the World Cup craze. The raid, which was also conducted in Guangdong province, led to the arrest of 540 people, as well as the freezing and confiscation of more than 260 million yuan (about $39 million).

A spokesperson for the police department said authorities would not relent in their crackdown on illegal gambling and urged soccer fans to watch the game “responsibly and rationally.”

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