Chinese Crypto Trader Stands Trial in Online Gambling, AML Case

A prominent crypto trader stands trial in China as the country is prosecuting the “Paofen platform” crew which allegedly laundered over $7 billion. 

Trial against Paofen Platform Crew Begins 

China has been determined to crack down on illegal gambling and has pursued various means to do so, from massive raids on its territory to projecting soft power on neighboring states to downright opening trials against individuals and companies the country believes have been complicit with unlicensed gambling operations.

To this end, Chinese prosecutors finally launched an official trial against RenrenBit head Zhao Dong who is accused of playing an undefined role in the laundering of billions of dollars linked to online gambling. Zhao has denied all allegations since his arrest in May 2020.

Prosecutors claim in their lawsuit that Zhao was complicit as a “transactional counterparty” and helped an organization operating out of Hangzhou to process money that wasn’t properly registered or obtained. 

The organization allegedly operated the “Paofen platform,” where consumers signed up by providing various financial data for payment accounts such as WeChat Pay and AliPay, the two most popular payment options in China. 

The people behind the operation would then use those accounts and start shifting transactions around so that the origin of the money was concealed, and that effectively constituted “money laundering,” according to Chinese prosecutors. 

Zhao’s Role Not Clear at the Time Being 

Last year, the police arrested 85 people in relation to this operation. They are accused of having laundered $7 billion through 70,000 registered user accounts since 2019, Chinese state media agency Xinhua reported. 

While the broader accusations against the apprehended parties imply criminal liability, Zhao’s own involvement is not entirely clear, but it probably has to do with those transactions that involved Tether. 

Delving into the specifics, Xinhua argued that there had been 1,900 cases of online gambling fraud, and some $4.6 billion has been sent overseas. China has been adamant about abolishing illegal gambling.

The country even launched a campaign in which it encouraged citizens to report on each other if they suspected that someone they knew was participating in or facilitating gambling operations in any capacity.

Cross-border gambling operations and junkets have come into the cross-hairs of Chinese authorities who have been looking to stem the outflow of capital in the country, waging war on junket operators and other gambling operators.

Zhao’s role in the case will probably become clearer later in the trial, but for the time being, he has denied all wrongdoing from what little information there is available publicly.