Chinese Authorities Freeze Boyaa Funds, Suggest Seizure Forthcoming
Hong Kong-based Boyaa Interactive International, Ltd., one of the leading developers of the Texas Hold’em mobile apps that were targeted in a major Chinese crackdown targeting illegal gambling, has acknowledged in an announcement to shareholders that a healthy chunk of its liquid assets have been frozen by China pending continuing investigation into how much profit the company earned in connection with the underground gambling activity.
According to a Boyaa statement, the company learned in March that authorities had frozen RMB 635 million (about US $88.6 million) in bank accounts it described as “idle cash reserves,” which it used for short-term investments and other management projects. The company petitioned a Chinese court in August to have the funds released, and received a reply less than a week later that the funds would remain frozen, as investigations into Boyaa executives and employees implicated in connection with the widespread underground-poker operations continue.
Boyaa Interactive’s Chairman and CEO, Zheng Wei, was sentenced last September to 12 months in prison (with an additional 18 months’ time deferred) after being found guilty of “bribes by an entity” in connection with the operation of the scheme. Zheng Wei and others at Boyaa Interactive were found to be knowingly promoting the use of the poker apps for their use as proxies supporting the underground gambling rings. Boyaa also used the games as a one-off to promote its own growing land-based tours of poker and other gambling forms in the region.
The live Boyaa Poker Tour went on hiatus last year, but resurfaced this past June as a Taiwan-based gathering. Though that event was held outside mainland China’s jurisdiction, it likely did nothing to soothe relations between Hong-Kong based Boyaa and Chinese authorities.
Boyaa’s recent statement acknowledges that the frozen funds are being held as China’s investigators determine how much income the company derived while tacitly promoting its poker apps’ use as gambling proxies. The inference is clear in that an expected fine or forfeiture is forthcoming, even though the company pleads in its announcement that current operations are unlikely to be materially affected by the seizure.
The disclosure by Boyaa Interactive two days ago also declares that neither the company nor its current roster of executives and employees are under investigation in connection with the poker-related crackdown. The company has never named its execs and workers who were charged; those identities have emerged through third-party sources. Zheng Wei, the former Boyaa Interactive CEO, was forced to resign in May 2018 after being convicted of the charge(s) brought again.
Boyaa’s poker apps, including one called Texas Hold’em Poker, were among the leading app titles being utilized as proxy gambling devices by widespread rings of Chinese poker players. The players purchased a set amount of credits within the game while also depositing an equivalent amount of real funds with agents who controlled the underground games. The agents then monitored game play on the apps and transferred funds among participating players according to wins and losses logged during the games. The widespread underground games continue, even as China continues to search for ways to close the electronic pipelines that make the underground gambling possible.