China Police Busts Huge Bitcoin Gambling Ring

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China has always been at the center of cryptocurrency events, most prominently during the period of 2009-2017 when the country was repeatedly cited as a major contributor to Bitcoin’s rapid growth. But after China’s ban on ICOs and foreign exchanges in 2017, cryptocurrency transactions in the country went down to a reported 1% last month, diminishing China’s role in the global market to being a very small player.

However, as newer reports show, that number may be taking only legal transactions into consideration. Namely, a few days ago the Chinese authorities just finished with one of the largest cryptocurrency-related busts which showed that more exchange of digital coins was taking place than noted. At the center of their operation was an illegal betting ring that allowed members to use cryptocurrencies to gamble online, under the radar of Chinese authorities.

$1.5 Billion in Illegal Transactions

As reported by Xinhua, China’s media agency, authorities in the Guandong province have just finished a huge cryptocurrency gambling sting operation in the area. The target of the operation was an illegal betting ring that operated on the dark-web and provided opportunities for internet users to enjoy sportsbetting  with cryptocurrencies on the World Cup. And the arrests came just as the illegal ring was preparing to have one of its most profitable weekends during the World Cup finals.

Arrests were made of six alleged members of the crime syndicate that devised the scheme and a significant amount of money was seized. Personal bank accounts estimated to be worth a total of $750,000 were frozen and the authorities seized more than $1.5 million in cryptocurrency assets.

The anonymous gambling operation was reportedly run for eight months, during which it attracted over 330,000 users. The amount handled by the betting ring is estimated to be worth $1.5. billion, most of which was transferred in Bitcoin, Litecoin, and Ethereum coins. As detailed by the authorities, the operation had more than 8,000 individuals involved as “affiliate” agents who banked in commissions for bringing new members in.

Illegal gambling during the world cup in Asia isn’t a new fad. Illegal online betting rings were also active during the World Cup 2014, only the local authorities had a tougher time cracking down on them then due to limited technological resources. But as new ways to track dark-web operations were devised, China’s police was able to make its biggest online gambling bust thus far.

WeChat Closes Over 50,000 Accounts

One of the channels that facilitated illegal online gambling in China was the country’s most used mobile app – WeChat. WeChat is actively used by nearly a billion people each month, with Chinese residents making up for 90% of the users. It’s one of the biggest communication channels across the globe and it can also be used as a payment service. And it is this second function of the app that made illegal betting online possible.

For a country that doesn’t tolerate any form of gambling, WeChat was a great tool to bypass local restrictions through the use of proxies. As reported, Chinese locals used the app to communicate their betting requests and send money to third parties offshore who bet on their behalf. But it wasn’t long before the scheme was uncovered and the WeChat team responded by closing approximately 8,000 groups and 50,000 accounts during the World Cup

July 18, 2018: • No Comments

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