Chinese Police Bust Illegal Gambling Ring, Seize $160M in Cryptocurrency

Posted on: July 19, 2023, 08:27h. 

Last updated on: July 19, 2023, 10:36h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Authorities in China have dismantled another colossal gambling network that operates internationally following an investigation that reportedly lasted two years. At the same time, they seized $160 million worth of cryptocurrency. However, there may be much more to the story.

Chinese police officers conducting an exercise
Chinese police officers conducting an exercise. The police busted a major gambling ring that hid its activity through cryptocurrency transactions. (Image: Pinterest)

Chinese media outlet Toutiao reported that the police had to use a court order to seize the crypto. While it’s a huge haul, investigators believe they only cut out a small part of the illegal gambling organization.

As pointed out by the authorities, the investigation revealed that there may be plenty of other branches participating in the illegal gambling network. It’s so big, they said, that the group may be moving as much as CNY400-billion (US$56 billion).

Citizen Tip Uncovers Illegal Gambling

The police launched their inquiry following a tip in July 2021 by Xiong Xong, a Chinese national residing in the Hubei province.  Xiong allegedly stepped forward and admitted that he gambled online. But he decided to approach the police only after witnessing large crypto transactions others were making.

With that information in hand, investigators started digging into the activity. Because of the intricacies associated with this particular case and the technology the group used to try to cover its tracks, the investigation posed challenges for law enforcement officials.

In the course of their inquiry, which repeatedly revealed one secretive layer after another, Chinese law enforcement discovered a vast global network.  They mostly used cryptocurrency as a shroud for their operations and to keep financial transactions away from banks.

By the time the police moved in, they had plenty of evidence to support their case. When they launched their joint actions in different provinces, they broke up 14 groups and arrested more than 130 people.

Since 1949, the People’s Republic of China has declared gambling illegal, consequently leading to a series of arrests and an increase in triad-led gambling in neighboring countries. Following a previous prohibition in 2019, Chinese officials declared cryptocurrency trading illegal in September 2021.

Nevertheless, it still remains popular in the country, as it’s difficult to control. At the same time, China has been developing a central bank digital currency for the past few years.

Macau is currently the only China-controlled territory where gambling is legal. It also once tried to delve into digital currency offerings, but had to back off after China intervened.

Crypto Developers in the Loop

Toutiao reported that the authorities didn’t seize the cryptocurrency directly. Instead, in the media outlet’s words, they requested assistance from the “digital currency issuer.”

Last October, Chinese police busted a criminal organization running online gambling operations. At the time, it was one of the biggest to be uncovered, having reportedly laundered as much as $5.6 billion through cryptocurrency.

Slightly more than a year earlier, they broke up another gang. It was much smaller, but also used cryptocurrency to facilitate online gambling. The authorities seized more than $3.8 million in crypto during the raids.