Police in Guangdong busted the first major sports betting gang in China using bitcoin and other cryptocurrencies.
They reported breaking-up an illegal World Cup gambling syndicate hosting more than $1.5 billion (RMB10 billion) worth of cryptocurrency bets. They also arrested six major suspects running the syndicate. Seized were over $1.5 million worth of cryptocurrencies owned by the syndicate and $750,000 in their bank accounts.
The gambling platform used by the syndicate exists on the "Dark Web," which isn't indexed by traditional search engines. It only accepted cryptocurrencies such as bitcoin, ethereum, and litecoin, said police. Police said the crypto case "is the most representative of the new-type of online football gambling so far."
In total, Guangdong police said they arrested 540 suspects from over 20 gambling rings and seized $39 million related to the criminal activities in a special campaign to crack down on World Cup gambling.
The Dark Web exists on darknets, which are overlay networks that use the internet but require specific software, configurations or authorization to access.
During its eight months in operation, the gambling platform drew 330,000 registered users from many countries and assembled an army of more than 8,000 agents who earned commissions for recruiting new members through a pyramid scheme, according to police.
The gambling syndicate "used the loophole that virtual currency is not effectively regulated in our country" to make huge profits, reported the police.
In September 2017, the Chinese central government shut down all local cryptocurrency exchanges and banned initial coin offerings (ICOs), a crowdsourced fundraising involving cryptocurrencies amid fears they might trigger financial instability.
The People' Bank of China last week announced that the yuan-bitcoin trading pair fell to less than one percent of the world's total bitcoin trading, indicating the success of their crackdown. Chinese authorities have shut down a string of gambling syndicates since the start of the 2018 FIFA World Cup in Russia.
