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CEZA Suspends Operations of 3 Cryptocurrency Exchanges

Following the arrest of Chinese nationals for illegal cryptocurrency trading operations, the Cagayan ecozone authority in the Philippines ordered the suspension of three cryptocurrency exchanges. How is this related to offshore gaming operations?

Operations of three cryptocurrency exchanges in the Philippines have been suspended until their transfer to Cagayan, upon the order of the Cagayan Economic Zone Authority (CEZA).

Of at least 25 offshore cryptocurrency firms that hold principal CEZA licenses, only three – Golden Millennial Quickpay, Liannet Technology Ltd, and Asia Premier – are operational. But for them to resume operations, they must relocate within the economic zone for due diligence, beginning in 2020.

According to CEZA rules, CEZA-licensed virtual currency firms should be located in Cagayan. But the ecozone authority had previously allowed the firms to temporarily operate in Metro Manila until the completion of the facilities in the economic zone.

Illegal Operations with Chinese Customers

Golden Millennial Quickpay, however, may lose its license if enough evidence will be gathered that will link the firm to the illegal operations conducted by its service provider, Grapefruit Services Inc., in the Philippines.

Last week, police authorities arrested about 270 Chinese nationals employed by Grapefruit for providing services to customers based in China where cryptocurrency trading is illegal. Reports said the company failed to integrate their platform with CEZA and proceeded to cater customers from restricted jurisdictions.

The raid and arrest of the said company pushed through after receiving leads from the Chinese government, based on reports.

Connection to Offshore Gaming Operations

Last month, Cambodia implemented strict rules against local and offshore online gambling. Prime Minister Hun Sen announced that online gambling licenses would no longer be granted to any firm to safeguard his people.

“The Royal Government stops granting…licenses to operate online gambling businesses in and out of Cambodia from the day of the signing of this directive onwards.”

Reports, however, link the Prime Minister’s decision to China’s efforts to combat offshore gambling. The Chinese government previously appealed to the Philippine government to stop offshore gambling operations (POGO) that both target Chinese players and recruit Chinese nationals.

Previously handled by CEZA, POGOs are now under the authority of Philippine Amusement and Gaming Corporation (PAGCOR). But the Philippines shows no signs of following Cambodia’s action, as POGOs bring in at least P8 billion to PAGCOR every year.

Both cryptocurrency trading and online gambling or betting are banned in China, but Chinese citizens based in other countries can trade cryptocurrencies and place bets, provided such activities are permitted by the laws of the country they are in.

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