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Chinese police cracks down on $1.5 billion cryptocurrency World Cup gambling ring
As the World Cup finals near many are eagerly anticipating the game between Croatia and France but in China, the police are playing their own game of cat and mouse with online crypto gambling dens. Guangdong police have cracked down on an online gambling platform hosting over RMB 10 billion ($1.5 billion) worth of cryptocurrency bets, the Guangdong Provincial Public Security Department announced today (in Chinese).
The gambling platform promised that all bets support and only accept Bitcoin, Ether, and Litecoin, the announcement states. Different from other gambling sites, its profitability model set up a multi-tier pyramid-scheme that encourages staff (or “agents” as they call them internally) to bring in members which can increase commission and membership fee gains, and to acquire more cryptocurrency to hedge the platform’s loss risks by leveraging coin prices and other crypto-financial features.
In 8 months since the launch, the gambling business attracted more than 8,000 agents and over 330,000 gambling members. With 611 cryptocurrency wallets in hand, the platform operated worldwide and offered cash-out channels for Chinese users to balance their account in RMB.
The police action was not random. It is part of the provincial police Project 9 from the special police action series Clean and Secure Net 2018 (净网安网). Project 9 targets online gambling cases during the World Cup period.
In July 2017, a similar series of police actions called Secure Net Project 7 (安网7号) uncovered over 40 cases of illegal user data theft and trading that involved over 10 million pieces of private data. In the same month, during the Secure Net Project 11 (安网11号), the police arrested over 130 suspects caught trading over 100 million pieces of private user data including hotel records, delivery destinations, ride-hailing routes, car ownership information, IP addresses, and more.
This time, knowing that regular tech cannot hide the gambling site from police eyes, the gambling platform built its server abroad and encrypted external access with dark web technologies that require professional code deciphering techniques to locate and track.
“[This case] is the most representative of the new-type of online football gambling [so far],” the official announcement said. It is probably just a start of the high-tech crimes in China targeting the country’s rich user resources.