Chinese Gamblers Illegally Bet Crypto of $1.5 Billion for World Cup
Chinese government’s fight against illegal gambling got a shot in the arm with the busting of a gambling ring in Guangdong province, where wagers were in cryptocurrency for a total value of $1.5 billion.
The Chinese police were successful in bringing to book six suspects believed to be hosting the World Cup gambling ring, with crypto worth $1.5 billion on the outcome. The illegal betting was syndicated and was conducted in the dark web. The bets they received was in the form of Ethereum, litecoin as well as bitcoin. The syndicate was operating for over eight months before they were found out by the police. The syndicate had attracted over 300,000 players located across the world and included 8,000 agents who were paid a commission for recruiting members to the scheme. The syndicate used a classic Pyramid-like business model, wherein every member introduced more players and benefited from their membership.
World Cup – high stakes
The world cup is known to be popular event and gambling about winners at the different knock-out stages is rampant. In China, authorities have been enforcing strict gambling laws in line with its national policy that, gambling in any form is illegal in any part of the country. The only two lotteries in the country are legalized and monitored by the Chinese government.
The advantages the gamblers had been that the platform for gambling was located in the ‘dark web,’ a term used for non-indexed traditional search engines. The number of suspects arrested was six, and the busting of the syndicate resulted in over 10 million Yuan value of cryptocurrency. The bank accounts used for these transactions were blocked.
The gamblers syndicate used a key loophole in the Chinese virtual currency system. Since these currencies are not effectively regulated in China, the suspects were able to exploit and make huge profits from it.
In 2017, China had cracked down strongly on local crypto exchanges and brought to close all types of banned Initial Coin Offerings (ICOs). The government feared that the virtual currencies would create instability in the economy. The Central Bank in China had last week announced that the trading pair of yuan-bitcoin had dropped to lower than one percent of the total bitcoin trading in the world.
Criminal activity on the increase
Observers believe the increase in the incidences of gambling in recent times has forced the government to intensify its campaign against gambling. With the Football World Cup considered to be world’s largest sporting event after the Olympics, gambling was expected. It appears the Chinese government was well prepared to arrest the gambling activities in this regard.
However, gamblers had outsmarted authorities by switching to the cryptocurrency medium to place their bets. Theoretically the advantages of cryptocurrency, in terms of anonymity and the decentralized database have been helpful in gamblers to maintain a low profile and get away with gambling activities.
Unfortunately, it appears that the Chinese police were able to identify the nefarious activities and bust the illegal activity.