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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.

Going by the name “Broken Tooth” in triad circles, Wan partnered with an undisclosed cryptocurrency firm based in Beijing to supplement chess and poker tournaments in Mainland China. 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. The company states 50 percent of its one billion HB tokens are available for public sales, with the remaining for private institutions and development.

While the company’s details remain a secret at the time of writing, local reports suggest Zhonggong Xin Cosmos (Beijing) 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.”

Zhonggong Xin is said to be backed by China’s Management of Financial and Energy Resources and Capital with business interests in Russia. The website explicitly mentions its core business interests to be online chess and poker games, alongside revealing plans to launch “10,000 brick and mortar games halls” in the next five years.

Guo Jia, a staff of Zhonggong Xin, stated the company’s tournaments run for the whole year, inclusive of qualifying matches. The total prize is 10 million yuan, $11.7 million, approximately $15 million, which is wholly funded by Zhonggong Xin and its partners.

Now, Jia suggests the prize money may be equally split in “half cash, half HB,” although the “big bosses” would reveal concrete details soon.

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.”

However, this remains a grey area, and the Far Eastern superpower may swiftly introduce relevant rules. Su Guojing, the founder of the China Lottery Salon, further elaborates:

“When chess and poker games are paid with tokens such as cryptocurrencies that can be converted to fiat currencies, it becomes a disguised form of gambling in China. There’s a legal loophole on this issue.”

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

Yongfeng observed only one “vague” reference to blockchain in HB’s document, with a marked absence of source code and verification protocol. This aspect makes it difficult to accurately track the total amount of HB tokens, apart from a lack of technology.

Li added:

“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.”

The entrepreneur made the statement about HB’s exchange obscurity. It trades only on A.Top – a Hong Kong-based exchange listed as an electronics store on Google.

The post Despite Crackdown, Ex-Chinese Mafia Raises $750 Million via Mysterious ICO appeared first on CryptoSlate.

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