Social commerce platform Pinduoduo plans to sue a Chinese tech blog called Chaping for defamation. It’s seeking RMB 10 million (almost USD 1.5 million) in compensation for an article that claims Pinduoduo is failing to prevent its platform being misused for money laundering activities.
Chaping wrote that online gambling websites are using Pinduoduo to launder money by setting up front businesses that sell virtual goods. The author claims to have been able to top up their wallet at online gambling sites by choosing to pay via WeChat pay. After scanning the payment QR Code, they would be transferred to a PDD user interface, where a pop-up message told them that they had paid for another person’s virtual item. In the case cited in Chaping’s story, it was a virtual prop for the live streaming site Douyu.
Chaping’s piece alleges that a significant percentage of Pinduduo’s total transactions might stem from these types of illicit actives, and cites only a source called Laotang, to support this.
Pinduoduo discredited Chaping’s article as “totally fake and inaccurate”, saying that it has caused great damage to the company’s business reputation. According to Pinduoduo, Chaping’s article overlooks its efforts to help the government and payment platforms to crack down on illicit transactions.
The Shanghai-based company said this year alone it has so far reported 1,719 suspicious shops and nearly 19,000 suspicious items to law enforcement and that similar money laundering attempts can be found on all e-commerce platforms.
Online gambling money has long been a headache for Beijing. China has launched a campaign in March 2017, vowing to put an end to cross-border online gambling. The targets of the campaign also include underground banks, online payment platforms, and internet services providers that facilitate online gambling sites.
Earlier this year, Shandong police identified an online gambling gang which had more than 230,000 members from 27 provinces playing on their sites.