CEO of Chinese Live Streaming Service DouYu Detained for Gambling and Pornography
A couple of years back, investment research company Grizzly Reports disclosed that the Chinese live-streaming platform DouYu was promoting illegal gambling through its streamers. Recently, it appears authorities have finally taken note, with claims that DouYu's founder and CEO, Chen Shaojie, was arrested in October for permitting gambling and pornography on the platform.
China's state-run Cover News shared the news, but did not explicitly mention the arrest of Chen. In their report, he was just described as "taken away" and has been out of sight since.
Imagine my surprise to discover that other major business figures, such as the CEO of the NASDAQ-listed eCommerce giant Alibaba, Jack Ma, and the CEO of China Renaissance, Bao Fan, have encountered the same fate. Ma is now in hiding, while Bao hasn't been spotted at all since February.
Building an Empire
Back in 2014, Chen set up his streaming platform, growing it into one of the most prominent brands in China. Focusing on live content for video games, DouYu also has its own eSports brand. The platform has a substantial user base of around 50 million, making it a dominant force in the game streaming market. It's even made inroads into legitimate areas like live cooking and home repair.
However, there are rumors that DouYu has been dabbling in less legitimate businesses, allegedly enabling streamers to operate online lotteries and other types of gambling. The Tencent-backed company reportedly viewed the content as an excellent revenue booster.
In May, the Cyberspace Administration of China, the official Internet monitor in China, conducted a detailed inspection of DouYu's headquarters. This lengthy investigation followed "rectification" orders given by the authorities to Chen and the company.
Reminds me of another streaming tycoon, Wang Xin, who revolutionized online streaming in China, only to have his empire crumble in 2016. The allegations against him were that he facilitated exposure to pornography and gambling through his platform. As a result, Wang was sentenced to three and a half years in prison and was ordered to pay a CNY1 million ($137,300) fine. After serving two years of his sentence, he was released.
Cease-and-Desist from NASDAQ
Due to the negative attention Chen and DouYu have attracted over the past couple of years, the company's reputation has taken a hit. Initially, in 2019, they managed to secure massive investor support, raising $775 million and reaching a valuation of almost $4 billion.
Ever since then, things have taken a turn for the worse. The company's valuation has dropped to less than $300 million, and Chen's disappearance will only exacerbate the situation.
DouYu's stock price soared to a high of $18.72 on NASDAQ on February 12, 2021, and immediately plummeted to new lows. By November, the price was down to $3.96, and as of Monday afternoon, it was at $0.84.
As a consequence of the company's plummeting stock prices, NASDAQ has sent DouYu a warning. According to a statement at the end of October, the exchange has informed the company that it's at risk of being removed if it can't keep its stock above $1 for 10 consecutive days by April 22.
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Source: www.casino.org
