Sup fellow degens, 

In this industry, I usually have to write about sophisticated threats.

Threats like the Lazarus Group (North Korean hackers) draining nine figures from a bridge. Rogue developers creating backdoors in smart contracts. And using $50 spyware to pull off an over $1 million casino heist. These are the “pros". They are dangerous because they are smart, efficient, and ruthless. 

Today, we are talking about Wu Haifu and Li Yong. 

Possibly the worst gambling “operator” I have ever seen. If there were a Forbes for criminals, these guys would be in the “most likely to fail" list. 

Wu Haifu (38) and his assistant Li Yong (48) ran an illegal online gambling ring targeting Chinese nationals. 

They set up offshore platforms, ran the ads, and got traffic.

The scam wasn't complex. They didn't even rig the games. They set a trap at the exit door. 

According to the Bureau of Immigration, the duo utilized what investigators call "excessive withdrawal requirements."

In the biz, we call this a Liquidity Trap.

Legit casinos have "rollover requirements". About 30x or 40x on a bonus. It's annoying but it's in the Terms of Service. Wu and Li took this concept and weaponized it. They manipulated the gambling conditions to “extend playtime" indefinitely. 

This was the gameplay:

What should have ended at step 3 is extended to step 9. And you still don't get your money or win after the trolling.

Players are trapped in an inevitable loop where they end up punting it all away in a high-risk parlay. 

Basically a donation box with flashing lights. 

They say the Chinese are good at maths. I think these guys didn't go to school. 

I lost all respect for them as operators when I looked at the maths. 

Reports showed that the duo were able to get 500,000 users. That's tier 1 casino numbers!!

Legitimate casinos spend millions in marketing to get such a user base. 

And what was their total accumulated profit?

CNY 8.6 million. That’s roughly $1.2 million USD.

Let’s do the math together.

$1,200,000 divided by 500,000 victims = $2.40 per person.

They had to pay rent, buy servers, evade police, force themselves into seclusion, become fugitives in a foreign country, and risk over 10 years in Chinese jail all for the price of a gas station coffee per victim. 

This is terrible ARPU (Average Revenue Per User).

Legitimate casinos have an ARPU of hundreds if not thousands per user. Decent scammers manage to take in more. 

Wu and Li weren't running a cartel. They were running a lemonade stand for ants. 

It gets worse. 

Wu and Li’s facility were raided and they were arrested on December 2nd. They are both in a Filipino detention center waiting for extradition. 

China hates offshore gambling. They view it as a capital fight. And the punishment for running a gambling ring targeting the Chinese isn't a slap on the wrist. It's serious time. 

So why am I writing about two incompetent scammers? 

It's all about friction. In gambling, friction is the biggest red flag you will ever see.

Run! 

These are not technical issues. They're “Wu & Li Tactics" to keep you in the game till you liquidate your damn soul off. 

If a casino cannot afford to pay you within a few minutes or hours, they're likely insolvent, incompetent, or totally malicious. 

Wu Haifu and Li Yong are the poster children of NGMI. They failed at basic economics, risk management, and compliance. 

They scammed half a million people and could make enough to buy a getaway boat. 

Enjoy the flight home, boys. I hear the food at Guangzhou is authentic. In an orange jumpsuit? Gordon Ramsay’s Achilles heel.

TL;DR: Two Chinese fugitives (Wu Haifu & Li Yong) were arrested in Parañaque, Manila. They ran an illegal platform that used "excessive withdrawal requirements" to trap funds. They scammed 500,000 people but only made $1.2 million. That’s $2.40 per victim. Absolute rookie numbers.

Stay degen,

Dima