"Making Fund Tracking Difficult"... 1.4 Billion KRW Illicit Gambling Profits Embezzled Using Developed App

1 Person Detained, 627 Referred Without Detention

A group involved in developing a non-face-to-face currency exchange application (app) and collecting gambling participation fees and commissions has been collectively handed over to the prosecution.

Game chips. Provided by Seoul Metropolitan Police Agency

On the 15th, the Seoul Metropolitan Police Agency’s Criminal Mobile Unit announced that they had sent Mr. A, a man in his 50s and the CEO of the currency exchange app company, to prosecution under detention on charges of establishing a gambling venue and gambling, while 627 others including Hold'em pub owners, employees, and gambling participants were sent to prosecution without detention.

They are accused of receiving approximately 7.1 billion KRW in participation fees from about 8,000 gambling participants between October 4 last year and May 3 this year to play the 'Texas Hold'em' game, then exchanging the game chips won in the game for cash worth about 5.7 billion KRW. They are also charged with collecting 4% of the exchanged amount as commission, pocketing about 228 million KRW in fees. The total profit earned by the group through this method, including commissions, is estimated to be about 1.4 billion KRW.

Police investigations revealed that Mr. A and others developed an app that allowed Hold'em pub franchisees and gamblers to exchange currency non-face-to-face without direct transactions, thereby evading the investigation net. Gambling participants who installed the app charged points usable at Hold'em pub franchises by depositing cash into virtual accounts, and received 'game chips' by deducting points through QR codes. The group converted the game chips won by gamblers back into E-coupons, then exchanged those coupons for cash after deducting a 4% commission, making it difficult to trace the funds.

In particular, Mr. A installed a dedicated stadium of 3,305㎡ (1,000 pyeong) in Bucheon, Gyeonggi Province, and from November last year to February this year, held six exclusive tournaments (LCT) for the currency exchange app with total prize money worth about 1 billion KRW, attracting gamblers. The LCT was open only to those who passed preliminaries at 104 franchise stores nationwide, which held preliminary rounds or lured gamblers by charging about 100,000 KRW participation fees under the pretext of selecting LCT qualifiers, thereby conducting illegal operations.

Since March this year, the police have conducted raids on the currency exchange app headquarters and servers and cracked down on Hold'em pub sites, securing ledgers, contracts, and accounting documents. Subsequently, Mr. A was detained on May 29. Currently, the app is also suspended from use.

A police official stated, "Illegal gambling that reduces the risk of crackdown from cash transactions and allows easy participation and currency exchange through mobile phone apps is spreading," and added, "As the number of covert illegal gambling venues targeting young people who perceive Hold'em as a simple recreational culture is increasing, please be cautious if you encounter places that charge participation fees and provide seed money and prize money."