Pinduoduo and other major Chinese ecommerce players are being used to launder billions of dollars to offshore accounts, according to authorities.
Gamblers are using Pinduoduo to bypass strict Chinese capital controls which prevent them from transferring money to international websites.
According to the Financial Times, gamblers can purchase fake items on Pinduoduo and have the equivalent amount of funds transferred illegally to an offshore gaming account.
Police forces across the country and the People’s Bank of China are investigating these networks, stating that at least $2 billion has so far been illegally transferred using this method.
Hundreds of millions of fake packages were found by police to have been inserted into courier firms’ tracking systems to complete these fake ecommerce transactions, with many of the same package tracking numbers appearing in money-laundering cases.
Concerns have also been raised that these transactions could inflate the ecommerce platform’s gross merchandise volumes (GMV).
While gamblers have readily admitted to using Pinduoduo, other shopping sites have been implicated in the investigations, but Alibaba and JD.com declined to comment.
Pinduoduo said that it is working with authorities to identify these groups, and that “gambling syndicates operating under false pretences on ecommerce platforms is an industry-wide problem”.
It has reportedly referred more than 1000 leads to authorities since 2019 resulting in more than 200 arrests, adding that it does not include orders identified as fake in its GMV.