EOS

🔴 High Risk

EOS, while promoted as a high‑performance smart‑contract platform, has played a problematic role in the evolution of crypto‑enabled money laundering, particularly in China and related cross‑border flows. Its low fees and high throughput made it an ideal rail for gambling dApps and underground financial services that functioned as de facto mixers, allowing rapid, repetitive token transfers that obscured the provenance of illicit funds under the veneer of gaming and high‑volume user activity. In practice, EOS was integrated into broader underground banking ecosystems: Chinese‑linked actors cycled criminal proceeds through EOS gambling contracts and controlled wallet clusters, then off‑ramped via loosely regulated exchanges and OTC brokers into fiat or more liquid assets such as USDT and BTC, exploiting gaps in KYC and cross‑border supervision. Although enforcement narratives often spotlight other major coins, the structural features and usage patterns of EOS demonstrate how “chain‑based” laundering—relying on dense webs of native token transfers rather than formal mixer contracts—can be just as effective in frustrating tracing efforts, underscoring the need for regulators and investigators to treat EOS‑based infrastructures as high‑risk when combined with China‑facing gambling, OTC, and cross‑chain services.

This analytical case depicts an EOS‑based laundering network centered on China‑facing gambling dApps that exploit EOS’s speed and low fees to process large volumes of transactions that disguise the origin and destination of criminal proceeds. Chinese users and intermediaries channel illicit funds—derived from illegal gambling promotion, fraud, and FX violations—into EOS wallets, cycle them through gambling contracts and controlled addresses to commingle and fragment balances, and then move them to offshore exchanges and OTC desks for conversion into other cryptoassets or fiat currencies. The operation relies on a layered ecosystem of offshore corporate shells, underground OTC brokers, straw accounts at global exchanges, and domestic payment channels, all designed to sidestep China’s strict capital controls and AML regime. While no specific PEPs are confirmed in this configuration, the scale, cross‑border reach, and use of opaque structures pose heightened corruption and sanctions‑evasion risks. China’s ongoing crackdown on crypto‑enabled money laundering, revisions of AML law, and targeted actions against gambling and underground banking networks collectively demonstrate that authorities recognize and are responding to such typologies, even when public narratives highlight more commonly used coins like USDT and BTC rather than EOS by name.

Countries Involved

The typology primarily involves mainland China as the source jurisdiction for both users and much of the illicit capital, but it is inherently cross‑border because the EOS gambling dApps and their corporate operators frequently reside or bank abroad. In practice, front companies, servers, or corporate vehicles might be located in Hong Kong, Southeast Asia, or other permissive offshore centers, allowing operators to escape direct Chinese licensing and enforcement. At the same time, the exchanges and OTC desks that provided liquidity and off‑ramps for EOS into fiat or stablecoins were often registered or banked in global hubs such as Singapore, South Korea, or European financial centers, which historically offered looser or fragmented oversight for virtual asset service providers. Cross‑border movement is a key feature: EOS tokens originating from China‑linked gambling flows would transit through offshore exchanges, sometimes hop chains into assets like BTC or USDT, and then re‑enter banking systems in third countries. This reflects the same pattern Chinese authorities and international watchdogs describe in major cases where crypto is used to bypass foreign‑exchange controls and move value out of China, even when specific coins (often USDT and BTC) are named more often than EOS in official communications.

Date Discovered / Reported

The misuse of EOS in gambling and high‑risk online gaming emerged shortly after the launch of the EOS mainnet in 2018, when EOS quickly became one of the largest platforms by on‑chain transaction volume, heavily driven by gambling dApps. Blockchain analytics and industry reports over 2018–2020 repeatedly noted that a disproportionate share of EOS activity came from casino‑style contracts, many of which were openly marketed to Chinese users and used in practice as a payment rail for gray‑market and illicit services. Around 2019–2021, Chinese regulators escalated their clampdown on overseas online gambling and on the use of cryptocurrencies in underground banking and cross‑border capital flight, which implicitly targeted models like EOS gambling platforms, even when individual projects were not always named in public releases. During this period and into the mid‑2020s, investigative reporting and law‑enforcement statements highlighted mass arrests of suspects running crypto‑enabled underground banks, as well as seizures of gambling‑related crypto assets, reflecting growing official awareness of such typologies. These enforcement trends, combined with broader bans on crypto trading and mining, effectively pushed EOS‑based gambling operations further offshore or into more covert channels, but did not fully eliminate their use as laundering tools by transnational groups.

Cryptocurrency Involved

EOS (core laundering rail); often swapped into USDT and BTC at later stages for liquidity and off‑ramping

Type of Crime

The primary crime type in this constructed case is money laundering, specifically the concealment and layering of proceeds from illegal online gambling, fraud, and capital‑control evasion using EOS‑based financial infrastructure. The gambling dApps operate as both predicate crime platforms—offering unauthorized or illegal betting services to users in China—and as laundering venues because they recycle and commingle funds from multiple illicit sources under the guise of gaming. In parallel, EOS is used in underground banking schemes to move value across borders in violation of China’s strict foreign‑exchange regime, similar to documented cases where large volumes of crypto are used to swap RMB into foreign currency via illicit OTC dealers and offshore exchanges. Depending on the predicate activity, related offenses can include operating illegal gambling businesses, running unlicensed payment or remittance services, fraud against individual victims, tax evasion, and currency smuggling, all of which are aggravated when combined with cross‑border organized‑crime structures. From a global perspective, such EOS‑based laundering may also support downstream crimes, including cyber fraud targeting foreign victims, investment scams, or even sanctions evasion when laundered funds ultimately interact with high‑risk or blacklisted jurisdictions, although public cases more commonly cite BTC and USDT in that context.

Entities Involved

The entities involved typically span several layers: front‑end dApp operators, liquidity providers, OTC brokers, exchange accounts, and occasionally shell companies that provide a veneer of legitimacy. The gambling dApp team may be formally incorporated in offshore jurisdictions, marketing itself as a “blockchain gaming” or “entertainment” provider while quietly tailoring products to Chinese users and partnering with local affiliates to drive traffic. Liquidity providers and house wallets are controlled by insiders or close partners who supply EOS liquidity, manage bankrolls, and periodically rebalance funds between the contract, hot wallets, and exchange accounts. OTC brokers, sometimes operating as underground banks, handle customer onboarding and cash‑in/cash‑out, receiving RMB via domestic payment channels and arranging EOS or other crypto transfers to and from client wallets, often without full KYC. At the institutional layer, accounts at global exchanges are opened by strawmen or offshore companies that claim benign business purposes but are in fact controlled by the same network, enabling large value movements with limited scrutiny in earlier enforcement periods. In more sophisticated operations, shell companies registered in multiple countries are used to open bank accounts and exchange accounts, blending illicit EOS‑derived flows with nominally legitimate trade or service revenue, thereby obscuring the economic purpose and beneficial ownership of the funds.

PEP Involvement

No confirmed politically exposed person (PEP) involvement is assumed in this typology case, as public reporting on Chinese crypto‑laundering crackdowns and gambling dApp enforcement has not consistently identified senior political figures as direct participants in EOS‑specific schemes. In practice, however, complex underground banking and online gambling operations in or around China can operate with varying degrees of protection or passive tolerance from local officials, especially at lower administrative levels, introducing potential corruption risk even where direct PEP ownership is not documented. From an AML‑risk perspective, investigators and compliance teams treat any large‑scale cross‑border gambling and unlicensed exchange activity as inherently high risk for PEP exposure, given the sectors’ attractiveness for tax evasion, kickbacks, and bribery‑related flows, but that is a risk‑based assessment rather than proof of involvement by named individuals. Globally, major enforcement actions involving crypto and PEPs have more frequently centered on other assets and infrastructures—such as offshore banks, real‑estate holdings, or large OTC stablecoin networks—so EOS should be viewed as one possible channel rather than uniquely tied to documented PEP scandals. Accordingly, for conservative case‑file drafting, this EOS typology would be coded as “No confirmed PEP involvement,” while flagging that screening of counterparties and related legal entities remains essential due to the structural risk of political exposure in high‑value, cross‑border financial crime networks.

Laundering Techniques Used

The laundering techniques revolve around three main pillars: transactional obfuscation on the EOS chain, commingling via gambling dApps, and off‑chain layering through exchanges and OTC markets. On‑chain, actors create and control numerous EOS addresses that interact repeatedly with gambling contracts, simulating normal player behavior while in fact moving the same pool of illicit funds through different wallets in rapid cycles. The dApp’s internal logic, with many small bets and payouts, naturally fragments balances and generates noisy transaction graphs, making it harder to distinguish laundering activity from genuine high‑volume gaming. At intervals, funds from house wallets or aggregator addresses are sent to exchange deposit addresses or OTC brokers, often using peel chains, where amounts are gradually reduced across a series of hops to break direct links to the original crime proceeds. Once on centralized platforms, EOS is traded into more liquid assets, most often USDT or BTC, and then transferred again—sometimes across chains—to other exchanges or to OTC desks offering fiat payouts in RMB, USD, KRW, or other currencies, completing the layering and integration stages. Additional techniques can include structuring withdrawals to avoid automated thresholds, using multiple exchanges in different jurisdictions to exploit regulatory arbitrage, and mixing EOS‑derived flows with legitimate merchant or e‑commerce receipts to create plausible business rationales for large transfers.

Estimated Value Laundered

While there is no single public figure for EOS‑specific laundering in China, a conservative analytical estimate can be derived from broader enforcement statistics on crypto‑enabled underground banking and gambling. Chinese authorities have reported dismantling crypto money‑laundering rings moving values in the tens of billions of yuan using various cryptocurrencies, with some individual cases involving billions of yuan routed through OTC markets and exchange accounts. In parallel, law‑enforcement and investigative reports have documented that online gambling linked to Chinese users can generate multi‑billion‑dollar annual turnovers, a portion of which is routinely laundered through virtual assets rather than traditional banking channels. Given EOS’s historical dominance in gambling dApp activity and its popularity among China‑facing gaming platforms during its early years, it is reasonable to infer that cumulative EOS‑denominated flows used in laundering have reached at least hundreds of millions of dollars over multiple years, if not more, even though public case narratives may highlight other coins. For typology purposes, this constructed case can be scoped at the “hundreds of millions equivalent” level, with the understanding that the true global exposure is likely larger when factoring in unreported and ongoing operations. Such an estimate aligns with known large‑scale crypto laundering crackdowns in China that cite comparable or higher values for networks using similar infrastructures, even if specific breakdowns by coin are not always disclosed.

Transaction Analysis Summary

A forensic review of EOS chain data in this typology would show clusters of addresses associated with gambling dApps, house wallets, and intermediaries exhibiting high‑frequency, repetitive patterns inconsistent with ordinary retail use. Incoming flows would often originate from a mix of exchange withdrawal addresses, OTC‑linked wallets, and other gambling‑related wallets, indicating that proceeds from multiple sources and predicate crimes are being pooled in the same on‑chain ecosystem. Analysts would detect characteristic behaviors such as rapid cyclic transfers between controlled wallets, small increments of value being “peeled” off over a series of hops towards exchange deposit addresses, and periodic consolidation transactions where fragmented EOS balances are re‑aggregated in preparation for off‑ramping. Time‑series analysis might reveal correlations between major enforcement events or regulatory announcements and spikes in movement from EOS gambling wallets to exchanges or cross‑chain bridges, suggesting attempts to move funds preemptively in response to perceived law‑enforcement pressure. On the off‑chain side, bank account and payment‑app records, where available, would likely show dense networks of domestic transfers associated with OTC brokers, many of which feature high turnover, limited business rationale, and counterparties spread across multiple provinces, consistent with underground banking typologies identified by Chinese police. When integrated with KYC data from cooperative exchanges and communications records from seized devices, this transaction analysis can map the hierarchy of operators and money mules, link EOS flows to real‑world identities, and quantify the role of EOS within a broader multi‑asset laundering architecture.

Regulatory/Enforcement Actions Taken

China has progressively tightened its stance on cryptocurrencies, banning most commercial activity involving virtual assets and explicitly targeting their use in money laundering, illegal gambling, and underground banking. Enforcement campaigns have included large‑scale arrests of individuals running crypto‑based laundering schemes, seizures of digital assets linked to unlicensed exchanges and gambling operations, and joint statements from prosecutors and foreign‑exchange regulators pledging to crack down on the use of stablecoins and other tokens in illicit FX trading. While many public communications focus on USDT and BTC, the same campaigns sweep in EOS‑based activity, especially where it intersects with gambling and cross‑border value transfer, as evidenced by police actions against EOS gambling teams and broader dismantling of crypto‑enabled underground banks. At the legal level, revisions to China’s Anti‑Money Laundering Law and related regulations extend AML/CFT obligations to a wider range of financial intermediaries and highlight virtual assets as a significant risk, encouraging closer cooperation with blockchain analytics providers and foreign counterparts. Internationally, exchanges and OTC desks serving China‑linked clients have faced increasing pressure from host regulators to strengthen KYC, implement robust transaction monitoring, and off‑board high‑risk accounts associated with unlicensed gambling or underground banking, closing some of the gaps that previously enabled large‑scale EOS flows to circulate with minimal oversight. Collectively, these measures have raised the cost and complexity of running EOS‑based laundering networks, even if adaptive actors continue to migrate to new platforms, coins, and cross‑chain tools to evade detection.

Links to Reports / Sources

Case Title / Operation Name:

EOS Gambling dApp Laundering Network – China / Global Typology Case

Country(s) Involved:

China, Singapore

Platform / Exchange Used:

Multiple offshore and regional centralized exchanges (e.g. Asia‑focused spot exchanges), EOS‑based gambling dApps, and China‑facing OTC/underground banking brokers acting as fiat on/off‑ramps

Cryptocurrency Involved:

EOS (core laundering rail); often swapped into USDT and BTC at later stages for liquidity and off‑ramping

Volume Laundered (USD est.):

Typology‑level estimate in the hundreds of millions of USD equivalent over multiple years, with realistic potential exposure in the low billions when considering cumulative EOS‑linked gambling and underground banking flows

Wallet Addresses / TxIDs :

N/A

Method of Laundering:

Use of EOS gambling dApps as de facto mixers; high‑frequency native EOS transfers between controlled wallets (split/merge, peel chains); commingling of illicit and gray‑market funds within gambling liquidity pools; off‑chain layering via centralized exchanges and OTC brokers; chain‑hopping into BTC/USDT before fiat cash‑out

Source of Funds:

Proceeds from illegal online gambling targeting Chinese users; fraud and scam revenues funneled into gambling platforms; capital‑control evasion and underground FX trading; potential tax evasion and unlicensed payment/settlement activity

Associated Shell Companies:

Offshore “gaming” and “blockchain entertainment” companies incorporated in permissive jurisdictions; nominee‑owned entities used to open exchange and bank accounts and to present gambling operations as legitimate tech or entertainment businesses

PEPs or Individuals Involved:

N/A

Law Enforcement / Regulatory Action:

Chinese nationwide crackdowns on crypto‑enabled underground banking and online gambling; arrests and prosecutions of gambling and OTC operators; seizures of crypto linked to illicit platforms (including EOS gambling projects); tightening of AML law and bans on most crypto activity

Year of Occurrence:

Activity began shortly after EOS mainnet launch (2018); peak gambling/ML usage circa 2018–2021; continuing adaptations into the mid‑2020s as enforcement and AML rules tightened

Ongoing Case:

Ongoing

AML Network Risk Rating:

🔴 High Risk