Photo: AP

Chinese authorities have busted what they said was one of the world’s largest online betting operations involving cryptocurrency, with over $1.5 billion in illicit bets allegedly on the line.

According to the South China Morning Post, police in southern Guangdong province said late this week that they had nabbed “six major suspects of the syndicate,” seizing about five million yuan ($748,000) and an additional 10 million yuan ($1,495,000) in crypto. Authorities claimed that the syndicate operated on the dark web, the portion of the internet that can only be accessed via special software or configuration settings, and involved hundreds of thousands of users as well as a small army of digital pit bosses:

The gambling platform ran on the so-called dark web, which isn’t indexed by traditional search engines, and only accepted cryptocurrencies such as bitcoin, ethereum, and litecoin, according to Guangdong police. During the eight months of the gambling platform’s operation, the site attracted 330,000 registered users from numerous countries, and built an army of over 8,000 agents who earned commissions for recruiting new members through a pyramid scheme, the police said.

The gambling syndicate “used the loophole that virtual currency is not effectively regulated in our country” to make huge profits, said the police statement.

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While the ring was allegedly worth $1.5 billion, the take in the bust pales in comparison to others involving hard currency in the province. Chinese authorities also cracked down on World Cup betting in Guandong, arresting 540 and freezing 260 million yuan ($39 million) in assets, the Post wrote.

The Chinese government has long sought to clamp down on cryptocurrency, which it views as a possible way for citizens to evade the authority of the state (particularly tax collectors) and thus a potential threat to its power. In 2017, regulators ordered the shutdown of all cryptocurrency exchanges, causing a crash in what was formerly the biggest exchange market on the planet. It subsequently went even further, launching a crackdown on “online platforms and apps that offer exchange-like services” earlier this year. China also declared a ban on initial coin offerings, a complicated form of investment vehicle in which investors receive digital tokens rather than traditional securities.

After these measures proved partially ineffective, the Post wrote, China took one step further and clamped down on domestic access to foreign exchanges and ICOs in February 2018.

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[South China Morning Post]