Despite Crackdown, Ex-Chinese Mafia Raises $750 Million via Mysterious ICO

Despite China's widespread crackdown on the burgeoning cryptocurrency sector, an influential, organized crime syndicate member seemingly circumvented strict regulations to issue digital tokens- which local reports estimate raised $750 million "In less than five minutes."

On July 15, 2018, South China Morning Post reported on the cryptocurrency activities of Wan Kuok-Koi, a Macau-based gangster formerly part of a criminal "Triad" outfit.

The so-called "HB tokens" raised $750 million, with reports noting its launch at a star-studded event with government officials, celebrities, and businessmen in attendance.

Over 450 million HB tokens were sold at three events in Philippines, Cambodia, and Thailand and the Philippines, with the final event scheduled for July 18, 2018.

While the company's details remain a secret at the time of writing, local reports suggest Zhonggong Xin Cosmos Internet Technology Limited signed a deal with Wan's investment company in July 2018, primarily to "Work together on a chess and poker game contest in Hainan."

The total prize is 10 million yuan, $11.7 million, approximately $15 million, which is wholly funded by Zhonggong Xin and its partners.

Despite China's stance on cryptocurrencies, the company exploited a regulatory loophole.

There is currently no legislation on using cryptocurrencies as prize money, and Jia notes the company is "Hosting the competition according to the law."

Li Yongfeng, the founder of Shubei, an investor-centric social forum exclusively meant for cryptocurrencies, expresses his concerns about HB's underlying technology.

"Normally, if a cryptocurrency is traded in top exchanges, the possibility of price manipulation is less likely. When it can reflect the actual market price, it will be more likely to be accepted by investors."