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Douyu Founder Chen Shaojie Detained over Illegal Casino Charges

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Chengdu police in Sichuan province, China, announced the arrest of a 39-year-old man with the surname Chen on charges related to operating a casino. The arrest came a day after the announcement from Douyu International Holdings, a major video game live-streaming platform listed in the U.S., confirming the detainment of its founder and CEO, Chen Shaojie.

Douyu, a company with backing from Tencent Holdings, disclosed on their website that the company’s CEO Chen was taken into custody last Thursday in Chengdu. The company warned that Chen’s continued detention and the ensuing legal proceedings might negatively affect Douyu’s reputation and operations in the future.

Publication Puts End to Speculation

Speculation about Chen’s arrest had been circulating since Chinese media reported he had been held by authorities since October, which led to suppositions that there was a connection to gambling-related activities on Douyu’s platform. The Paper, a Chinese media outlet, reported that Chen’s arrest was likely tied to illegal gambling activities.

Douyu, launched in 2014, ranks among China’s top three video game live-streaming platforms. Tencent is a major investor in both Douyu and its main competitor, Huya. However, a proposed merger of the two platforms by Tencent, worth $5.3 billion, was blocked during a regulatory crackdown in mid-2021.

A Respected Figure in the Chinese Industry

Chen, born in 1984 in Shandong province, has a history in the video gaming industry. His early venture, Zhangmenren, was acquired by Shenda Games in 2009. He then led Acfun, a video-sharing platform, from 2010 to 2012, during which he initiated a live-streaming business that eventually evolved into Douyu.

In August, during Douyu’s earnings call, Chen drew attention to the company’s efforts regarding content management and compliance with regulatory guidelines. Following its initial public offering in New York in July 2019, raising $775 million, Douyu’s shares recently fell by 5.9%, closing at $0.91 on November 21.

Earlier this year, China’s Cyberspace Administration, the country’s internet regulator, carried out a rare on-site inspection of Douyu. Then in May, the regulator said that it had sent a working group from Hubei province in order to handle “serious” problems at Douyu, including vulgarity and pornography. The group remained at Douyu for a month in order to oversee the “rectification” of these issues.

In its last statement, Douyu said that the company “remains committed to upholding regulatory compliance on its platform”.

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