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Chinese Police Crack Down on Bitcoin Online World Cup Betting

Map of China

We've noticed that many of our readers have twin interests in online gambling and crypto-currency. It appears that the Chinese authorities share their passions – but not in the way we would like! The police in Guangdong province have broken up an online Bitcoin sports betting ring according to a statement released on July 12. This is claimed to be the first enforcement action taken by the Chinese government against crypto-currency internet betting sites.

About the Gambling Activities

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The gambling site in question was set up specifically to handle bets on the recently concluded World Cup. It accepted deposits only in crypto coins, like Bitcoin, Ethereum, and Litecoin, and conducted business in several countries besides China. It operated over the “dark web” – that is, the portion of the 'net that's not crawled by search engines and requires the use of special anonymizing browsers to access.

The organizers of the enterprise recruited agents to pull in customers. These agents were arranged in a multi-tier system reminiscent of a typical MLM pyramid scheme. It total, the website boasted more than 8,000 agents and 330,000 customer accounts. Its revenues were estimated at RMB 10 billion ($1.5 billion).

China busts an illegal World Cup betting conglomerate.

Police Raids

After investigating the online gaming setup as part of its Project 9 initiative against online gambling, provincial police stepped into action. During their raids, they confiscated servers, PCs, smartphones, and other IT infrastructure. Also captured were more than RMB $5 million in cash ($740K) and over RMB $10 million ($1.5 million) in crypto-currency. Six people were arrested in connection with this case.

Additional Crackdowns

The crypto online gambling ring was just a single one of the illicit gambling schemes brought to their knees by the Chinese police this year. Officials state that they have destroyed more than 20 criminal ventures involving betting on the Russia World Cup. More than 540 suspects were detained, and more than RMB 260 million ($38.3 million) was seized. The facilities for hosting the sports betting included more than 70 apps and websites and in excess of 250 chat groups. These internet resources have been shut down.

These results were achieved by 21 public security authorities, which centrally coordinated their activities to perform simultaneous raids. They took place in Guangdong and several other provinces.

About Chinese Gambling Law

Law Book

Apart from state-run lotteries, all gambling is illegal in China except for special administrative regions, like Macau and Hong Kong. Poker had a partial exemption from this prohibition because it was classified as a “mind sport,” but this changed at the beginning of June when the Chinese government banned all poker apps, including play money social games.

Most of the detentions for gambling infractions occur when people who have been managing gambling businesses are caught. Individual players are also at risk, but the punishments for them tend to just be small fines. Still, the possibility of jail time for ordinary players exists, and those who are in the bad books of local bigwigs might find themselves in hot water for even minor rule-breaking.

One also wonders if being caught participating in such an activity could result in a lowering of a citizen's Orwellian "social score". Yes, that's right, China has implemented a social scoring mechanism that can result in you having everything from your passport to your bus pass revoked for things as simple as jaywalking!

China and Bitcoin

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Although China was one of the early hubs for both Bitcoin mining and trading, the situation has worsened for both traders and miners in the past five years. In 2013, financial institutions were barred from handling crypto-related transactions. In 2017, many crypto exchanges suspended their services in China although this wasn't a consequence of written directives but rather of pressure applied behind the scenes. In January 2018, the authorities ordered Bitcoin miners to make an “orderly exit” from the business. They cited concerns about overconsumption of electricity and the susceptibility of crypto markets to speculation.

Old Website of ViaBTCHome Page of ViaBTC Exchange in October 2017 After It Was Ordered to Close
Screenshot Courtesy of Internetarchive.org
ViaBTC Continued Existence As a Mining Pool

It's not currently illegal for individual Chinese citizens to hold or trade BTC. But with the disappearance of exchanges and other financial infrastructure for facilitating crypto coin trading, the utility of Bitcoin in the country has declined substantially.

China is not anti-bitcoin per se. In fact, anything that undermines the US dollar hegemony is definitely something China wants to explore in their quest for a new multi-polar world order. However, the problem with crypto currencies like Bitcoin is that it allows Chinese citizens to circumvent China's strict capital controls. You see, Chinese citizens are only allowed to remove the equivalent of $50,000 USD per year from the country, whether one is a pauper or a billionaire. Until more control of crypto is garnered by the Chinese government, cryptos will be unlikely to be welcomed with open arms, even if cryptos do ultimately offer an alternative to the dollar.

Online Gaming Still Available in China

Devices

Despite the closure of quite a few underground betting groups, it's still possible to bet online from China, and most of the top operators are compatible with Bitcoin. The Hong Kong-based PaiWangLuo Network and its Asian-facing site Bodog88 is one of them. It has a sportsbook, casino section, and the largest online poker room open to Chinese citizens. Click on our Bodog88 signup link to get started today!