Chinese police arrested 15 people for their involvement in an online gambling operation built on the EOS blockchain network. Among those arrested are the developers of the illegal platform titled Biggame. Police also seized over $3.8 million in EOS and BTC, reported CoinGeek.
The gambling platform was reportedly founded in 2018 and earned approximately $10m for its operators. The police revealed it was the first case in China where criminals used smart contracts to operate illegal business.
The operation was conducted in Yancheng city, in Jiangsu province, with police starting the investigation in October 2020. Police reportedly analysed millions of transactions and gained 26 smart contract addresses, used for betting and prize distribution, that were associated with the Biggame gambling platform. Police conducted raids in December 2020, focusing on major cities where operators were said to reside. The Yancheng police previously broke up a digital currency scam called PlusToken and seized $4.2bn worth of virtual coins, including BTC, Ether and EOS.
Online gambling is illegal in China and gambling platforms like Biggame are being used to access the market, and digital currency makes transactions easier. However, since China launched its ban on cross-border gambling, monitoring against illegal activities increased.
The government also introduced virtual yuan, a blockchain-powered digital currency controlled by China’s central bank, which would allow authorities to trace the movement of money. The currency will also be disconnected from the global financial system. Some professionals in the gambling industry are concerned that the introduction of digital yuan could negatively impact junket operations, but experts say it’s still too early for predictions, as the currency is only available at a limited capacity.