Chengdu police report Douyu CEO Chen Shaojie case: arrested on suspicion of opening a casino

(source: thepaper.cn reporter: fan Jialai)

On November 21st, Douyu (Nasdaq:DOYU) announced that Chen Shaojie, the company's CEO, was arrested by Chengdu police around November 16. Douyu said the company had not received any formal notification about the reasons for the investigation of Mr. Chen or the apparent arrest of Mr. Chen. The company is not in a position to comment on the nature or expected schedule of possible follow-up legal proceedings, if any. Mr. Chen's continued detention and any subsequent legal proceedings and enforcement actions against interested parties may have a significant adverse impact on the company's reputation, business and results of operations.

Douyu said the company maintains the normal operation of its business and remains committed to ensuring that its platform meets regulatory requirements. The board of directors and management will supervise the operation of the company and draw up contingency plans to deal with Chen Shaojie's arrest and related investigations.

Earlier, a number of sources had confirmed to thepaper.cn that Chen Shaojie had lost contact in October.

As for the reason for the disappearance, on November 21, sources told thepaper.cn that Chen Shaojie was arrested by the police or suspected of gambling. The person revealed that Chen Shaojie's gambling experience can be traced back to more than a decade ago and is related to Xu Chaojun, the former head of Renren. From January 2010 to January 2011, Chen Shaojie was a direct subordinate of Xu Chaojun and took part in gambling games with Xu Chaojun all the year round.

According to public sources, Xu Chaojun was admitted to Tsinghua University at the age of 16, participated in the founding of Chinaren, served as Sohu's technical director, was in charge of Renren, and became chief operating officer of Shanda online and president of Shanda winger at the age of 30.

In 2017, Xu Chaojun was reported to have gathered for gambling, and it was publicly reported that the amount of gambling set up by Xu Chaojun far exceeded the amount suspected of gambling. According to the provisions of the Criminal Law, if more than three people gather together and the cumulative amount of gambling money involved in the case reaches more than 50,000, it constitutes a gambling crime. When Xu Chaojun organized gambling within half a month, the amount of money involved in the case was as high as more than 3 million yuan. On July 29, 2017, Xu Chaojun was arrested by the procuratorate on suspicion of gambling, Beijing Satellite TV reported.

Before that, there were rumors in the industry that the disappearance of Chen Shaojie may have something to do with the gambling involvement of Douyu in the studio "Jiujiu Outdoor" and "Changsha Rural Expenditure team". "Douyu's gambling case seems to be an anchorman's behavior, but in fact it is the boss behind the scenes."

According to public media reports, Douyu's studio, also known as "339 Outdoor" and "339 Outdoor", had previously been suspected of gambling by tens of thousands of people, with running water of nearly 120 million yuan a year.

"the Outdoor" is composed of Douyu anchors Fu Hailong, Pan Bin, JT, Hulk Devil King and other members. On December 23, 2022, according to the court of Dujiangyan City, Sichuan Province, the actions of the three people constituted the crime of opening a casino, and the anchors were sentenced to six years' imprisonment in accordance with the law. Zhou, their logistics and finance, were given a suspended sentence according to law, and the three were fined 1.65 million yuan.

In addition, the Changsha Rural Expenditure team has been broadcasting suspected gambling activities using Douyu's various raffle rules. If users buy designated props within a period of time, they can participate in a virtual currency raffle worth from 1000 yuan to tens of thousands of yuan. "Changsha rural death squads" then through Alipay or "backpack merchants" and other third-party channels to buy virtual currency to cash in the bonus.

The live studio often starts a gambling lottery at 10:00 in the evening. The "Changsha Rural Expenditure team" also calls the bet a "10 o'clock economics lesson" with the public code "classes start at 10:00 in the evening." Many teenagers indulge in it, suffer heavy losses and cannot extricate themselves. Some users bet more than 300,000 yuan crazily in the studio within half an hour.

However, for Chen Shaojie missing, November 6, Douyu insiders told reporters that the company's operation is normal, unaffected.

On Oct. 13, the official "Social products legal Compliance Department" said that the person in charge of a large live broadcast platform was recently arrested by a local authority in Sichuan on suspicion of opening a casino, and it was widely speculated that it had something to do with Chen Shaojie's disappearance.

However, on November 6, thepaper.cn called the head of the official account and the team of Kenting law firm, who said that the push article was not directly related to the disappearance of Douyu CEO Chen Shaojie, and that the article had been deleted.

Douyu, headquartered in Wuhan, is a game-centric live streaming platform. Users can enjoy real-time streaming of interactive games and entertainment through PC and platforms on mobile applications.

Chen Shaojie was last seen in a conference call after Douyu's second-quarter results on Aug. 14. At that time, he said that he would continue to build Douyu's healthy and sustainable game community ecology, attach importance to the operation of core users, and implement the development strategy of "diversified content ecological platform with games as the core". Committed to the production of high-quality content and product model innovation.

According to the financial report, Douyu's net profit in the second quarter was 61.4 million yuan, an increase of 161% over the same period last year, but total revenue was 1.392 billion yuan, down 24.1% from the same period last year, and has been on a downward track for three consecutive years.

At the beginning of 2021, Douyu reached as high as US $20.54 per share and has now fallen by more than 90%. As of November 20, it closed at US $0.96, up 2.58%, with a total market capitalization of US $308 million. However, affected by the news, as of press time, its US stocks have fallen more than 7% before trading.

It is worth noting that Douyu was asked to focus on rectification and reform in the first half of this year because of pornography and vulgarity. According to CCTV news on May 8, in view of the serious ecological problems such as pornography and vulgarity in Douyu platform, the State Internet Information Office directed the Hubei Internet Information Office to send a working group to Douyu platform to carry out one-month centralized rectification and reform supervision.

At that time, Douyu responded that he would actively cooperate with the inspection and guidance of the working group of the Hubei Internet Information Office and conscientiously carry out in-depth content rectification and reform in accordance with regulatory requirements. At present, the operation of Douyu platform is normal. Thanks to the public's attention and supervision, Douyu will further optimize the platform content review mechanism, earnestly fulfill the platform's regulatory responsibilities, and create a more healthy and positive webcast environment.