Casino operators with ties to Tether, Wirecard busted for money laundering

Ji Xiaobo, the executive who oversaw Imperial Pacific, has been ruled guilty of operating a “criminal syndicate” by Chinese courts, according to reporting from Inside Asian Gaming. 

The syndicate allegedly operated by setting up casinos outside of China, extending debt to gamblers, and then using violence to collect repayment on those debts.

Fifteen individuals, including Ji’s aunt Cui Limei, were sentenced. Cui received eight and a half years behind bars and a $28,000 fine. Ji’s case will reportedly be tried separately.

Ji’s mother, Cui Li Jie, is an executive director and the largest shareholder in Imperial Pacific. The pair previously operated as parts of Heng Sheng Group, a Macau-based junket operator. 

The ruling by Chinese courts against Imperial Pacific are noteworthy for its ties to US agencies, Tether, and even Wirecard.

What was Imperial Pacific?

Imperial Pacific was an unusually successful Saipan-based casino. While the permanent casino was under construction and it could only rely on a smaller temporary location in a shopping mall, it was managing more than $2 billion per month in bets, according to reporting from Businessweek. This number dwarfed other operations, apparently nearly six times more than the fanciest tables in Macau. 

These efforts were aided in part by its “President of Global Capital Markets,” Shen Yan, a former Managing Director at Credit Suisse and Deutsche Bank in Hong Kong, according to his LinkedIn. In 2016, after it was reported that the United States was investigating Imperial Pacific regarding potential money laundering-related issues, Yan was quoted as saying, “This is not possible. Of course we are not doing it.” He also made sure to emphasize that they had a robust anti-money laundering (AML) system and were fully compliant. 

In 2019, Imperial Pacific executives were indicted in a 71-count indictment, which alleged a variety of crimes, including criminal labor violations and money laundering. 

Imperial Pacific followed this by distancing itself in its own statement, where it claimed that “one of the persons indicted by the United States Department of Justice was a former employee of the group who was non-managerial staff and left in 2017.” 

Read more: China bans 80 top crypto influencers on Weibo

More recently, a forfeiture complaint targeting accounts connected to Imperial Pacific has alleged wire fraud and money laundering as part of an investigation into the relationship between Imperial Pacific and Governor Ralph Torres. 

Eugene Sullivan, a Ronald Reagan nominee to the United States appellate courts, was a director for Imperial Pacific, and after resigning that role, he was on the Advisory Board for the firm. Louis Freeh, the former director of the Federal Bureau of Investigations, was also on the advisory board for Imperial Pacific. Imperial Pacific’s Board also included James Woolsey, former director of the Central Intelligence Agency. 

The Tether connection

Sullivan also briefly served on the Board of Advisors to Noble Bank, an International Finance Entity based in Puerto Rico. Noble Bank was founded by Brock Pierce, a founder of Tether, and John Betts. Betts and Pierce had previously worked together at Sunlot Holdings in their bid to revitalize Mt. Gox. Sunlot Holdings was advised by Louis Freeh, a former Federal Bureau of Investigations director.

Sullivan and Freeh are both partners in Freeh Sporkin & Sullivan. Freeh Sporkin & Sullivan was the firm that provided Tether with “a review of bank account documentation, Tether’s relevant policies and procedures, and a randomized inspection of the numbers of Tethers in circulation and the corresponding currency reserves.” 

Tether’s settlement with the New York Attorney General details how, in the months following this ‘verification’, Tether began lending hundreds of millions of dollars to Bitfinex in a series of undisclosed transactions. 

Similarities to other junkets

The report from Inside Asian Gaming says that Ji is believed to have gone into hiding following the arrests of other junket operators, including SunCity’s Alvin Chau and Tak Chun’s Levo Chan.

Chau ran the SunCity Junket, another Macau-based operation, along with Steven Xin, with Xin serving as the Australian side of the operation and Chau operating in Macau. This junket was apparently operated in coordination with ‘Broken Tooth’ Wan Kuok-koi, the boss of the Macau branch of the 14k Triad during the Triad wars. Kuok-koi has other ties to the cryptocurrency ecosystem, running the Dragon Coin cryptocurrency scheme. The US Treasury has sanctioned Kuok-koi and several related organizations. 

Read more: Casino heist used bitcoin ATM in elaborate $1M scheme

The Xin Money Laundering Organization provided shadow banking infrastructure to a variety of cryptocurrency businesses as part of this broader money laundering and capital flight operation.

Levo Chan was sentenced earlier this year on charges including fraud, illegal gambling, and money laundering.

Wirecard?

It is worth mentioning that there are some strange connections to another famous fraud, Wirecard. Freeh defended Allied Wallet, a company that provided payment services to a variety of scammers, Ponzi schemers, and illegal debt collectors. Among the payments included in this were over $13 million in funds related to Pokerstars, an online gambling company. Allied Wallet was also a long-time client of Wirecard. 

Interestingly, FTX and Alameda Research’s bankruptcy listed Cuscal, an Australian bank, as one of the entities FTX firms were interacting with. This relationship seems as though it may have been intermediated through Omipay. Cuscal itself was announced as one of the Australian banks that issued Wirecard-branded prepaid cards.

Read more: Forbes questions if Ripple is round-tripping XRP just like Wirecard

Alameda Research, notably, is one of Tether’s two largest clients. 

Overall, Australia, China, and the United States seem to be attempting to crack down on international money-laundering networks.

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