Chinese Police Bust $1.5-Billion Bitcoin Betting Operation

Chinese police have arrested more than 540 individuals for their alleged involvement in an illegal online betting operation that accepted bitcoin only to avoid regulatory and legal pitfalls. The case was labeled China’s first major one to involve the provision of illegal gambling services using bitcoin.

The operation of gambling services is illegal in China with very few exceptions. Legal sports betting services are only provided by the country’s state-run sports lottery. However, China has seen a surge in illegal betting activity in the months ahead of and during the World Cup, which is now days away from its finale.

Police in the southern Chinese province of Guangdong said Wednesday that they came across an illegal online betting operation using bitcoin to accept bets from customers back in May and have been monitoring its activity throughout the major football championship currently under way in Russia.

More than 540 people, six of whom were believed to be leaders of the ring, were arrested in relation to the gambling operation. Officers said yesterday during a press event that the detained individuals were associated more than 20 different criminal gangs.

Police also seized computers and other equipment used for the operation of betting services as well as multiple bank cards and virtual currency worth over CNY10 million (approximately $1.5 million). It was announced that the illegal business might have netted more than CNY10 billion (approximately $1.5 billion) worth of bitcoin.

Details about the Illegal Operation

According to reports from local media citing police officers, the illegal business began targeting both Chinese and international bettors eight months ago. Its servers were based offshore to avoid a regulatory crackdown. It is believed that the betting operation managed to accumulate more than 330,000 bettors. It accepted only bitcoin.

Police also found that the business advertised its services across 70 promotional websites and 250 different chat groups it had itself created and administrated. All these were shut down over the course of the clampdown.

Messaging apps have become a popular channel among illegal providers of betting services across the Asia-Pacific region to promote and conduct their operations. News emerged earlier this week that popular Chinese app WeChat has closed more than 50,000 accounts and deleted over 8,000 group chats that were related to illegal gambling activities since the beginning of the World Cup.

Earlier this month, Beijing police busted an illegal betting ring that used WeChat and other popular messaging platforms to provide its services. The operation was believed to have netted more than CNY320 million (approximately $48 million) since the beginning of the World Cup.

China’s state-run sports lottery has, too, seen a substantial increase in betting activity during this year’s edition of the football tournament. It said earlier this month that sales amounted to $3.9 billion during the first two weeks of the World Cup, eclipsing the total sales of $1.9 billion recorded over the entire 2014 Brazil World Cup.

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