Founder of GXChain sentenced for operating illegal gambling platform
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Founder of GXChain sentenced for operating illegal gambling platform
According to Paragraph 2, Article 303 of the Criminal Law of the People's Republic of China, whoever operates a gambling house shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention, or public surveillance, and shall also be fined; if the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than ten years, and shall also be fined.
Navigating Web3 tides with focused insightsAccording to recently disclosed legal documents, Gongxinbao founder Huang Minqiang, former VP Tu Guojun, and executive Xu Qi from partner company Bide have been sentenced for operating a gambling den.
Defendant Huang Minqiang was found guilty of operating a gambling den and sentenced to one year in prison with a two-year reprieve and fined RMB 3,000;
Defendant Tu Guojun was found guilty of operating a gambling den and sentenced to two years and ten months in prison and fined RMB 60,000;
Defendant Xu Qi was found guilty of operating a gambling den and sentenced to one year and ten months in prison and fined RMB 50,000.
The Xihu District People's Procuratorate of Hangzhou accused that between April 2018 and September 12, 2019, Zheng (at large, legal representative and actual controller of a Hangzhou technology company) and others established a tech company at Room XX, Building X, No. XX, XXX Road, Xihu District, Hangzhou, with the purpose of illegal profit, developing the "Bide" mini-program. Gambling activities were conducted within the Bide mini-program’s treasure-hunting, PK, and prediction games using GXChain tokens as betting chips, and the company profited by collecting service fees.
Zheng met Huang Minqiang, the actual controller of Hangzhou XXXX Data Technology Co., Ltd., through a schoolmate. After negotiation, they decided to list the Bide mini-program on BlockCity app developed by Huang's company. Starting November 2018, Huang's company began charging a 1% handling fee on every GXChain token top-up transaction made via BlockCity to Bide.
Electronic examination revealed that the total amount of GXChain tokens recharged from BlockCity amounted to approximately RMB 2.8631 million, of which about RMB 1.1592 million occurred after December 2018. The handling fees collected by Huang's company totaled approximately RMB 10,654.52.
Defendant Tu Guojun, knowing that the company was profiting from operating an illegal gambling platform via the Bide mini-program, invested in the company and received dividends. Defendant Xu Qi, serving as vice president of the company, participated in management and operations despite being aware of the gambling activities, provided technical support for the development of the Bide mini-program, and received compensation. Electronic examination showed that the total stakes involved in the treasure-hunting, PK, and prediction games within the Bide mini-program database amounted to approximately RMB 5.3732 million, and the company's profits extracted from PK and prediction games totaled approximately RMB 1.0459 million.
In addition to sentencing the three executives, illicit funds have also been lawfully confiscated. A total of RMB 1,338,654.52 in illegal gains, along with RMB 260,000 in returned illicit funds frozen in an Agricultural Bank of China card under Cheng (wife of defendant Tu Guojun), account number 6228××××6870, as well as computers, memory cards, online banking tokens, USB drives, and other tools seized from the tech company's office used in the commission of the crime, have all been confiscated.
According to Wu Shuo Blockchain, in September 2019, media reported that the premises of Cunxin Data Technology Co., Ltd., the operating entity of Gongxinbao in Hangzhou, had been sealed with police tape from Gudang Police Station. Rumors circulated linking this incident to its web-crawling data business.
In March 2020, Gongxinbao founder Huang Minqiang announced his return via WeChat Moments, posting: "Once a commitment is made, no mountain can block the way—resuming work and production, continuing to pursue our dreams."
In response, officials stated that the 2019 "September 11 investigation incident" was unrelated to Gongxinbao's core businesses such as blockchain and data services. Both the team and founder Huang Minqiang continued normal operations, actively advancing the development of GXChain.
According to Article 303(2) of the People's Republic of China Criminal Law, the crime of operating a gambling den refers to objectively gathering people for gambling, establishing or managing a gambling venue, or making gambling a profession. The offense is considered complete once the gambling den commences formal operation and is actually used by participants, regardless of whether the operator has actually profited. If the operator personally participates in gambling as a profession, both this offense and the crime of gambling may be punished concurrently.
Under Article 303(2) of the People's Republic of China Criminal Law, anyone convicted of operating a gambling den shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention, or public surveillance, and shall also be fined; if circumstances are serious, the sentence shall be between three and ten years of fixed-term imprisonment, with a fine.
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