The Arrest of DouYu CEO Highlights the Crackdown on Chinese Business Leaders

In a recent development that underscores the ongoing crackdown on business leaders in China, the chairman and CEO of DouYu, a popular Chinese video game live-streaming platform, has been arrested. Chen Shaojie, the chief executive of DouYu, was taken into custody by the police in Chengdu on or around November 16. The news of his arrest has sent shockwaves across the business community, raising concerns about the potential impact on DouYu’s operations. This incident comes in the wake of increased scrutiny by Chinese authorities on various industries, including technology and finance.

DouYu’s Statement and Police Confirmation

DouYu released a regulatory filing on Tuesday, revealing the arrest of Chen Shaojie. The company stated that it had been informed of the arrest only on Monday and had not received any official notice regarding the investigation or the reasons behind Chen’s arrest. DouYu further highlighted the potential material impact on its business due to Chen’s ongoing detention and any subsequent legal proceedings. Meanwhile, the police in Chengdu confirmed Chen’s arrest on suspicion of opening a casino. The state-run news agency, Xinhua, cited the police statement as confirmation of the arrest.

Chen’s Disappearance and Previous Investigations

Chen’s disappearance had been reported around two weeks prior to his arrest. The state-owned media outlet, Cover News, had indicated that Chen was being investigated and had been missing for nearly three weeks. This disappearance followed an onsite inspection of DouYu by the Cyberspace Administration of China, which had raised concerns about alleged pornography and “vulgar” content on the platform. Additionally, DouYu had also faced accusations of hosting online gambling, an activity deemed illegal in mainland China.

Previous Gambling Case and National Significance

DouYu’s association with online gambling had come under scrutiny before. In December of the previous year, three individuals operating a popular account on the platform were sentenced to up to six years in prison for “opening casinos.” These individuals had organized an online lottery that attracted approximately 4.4 million users and amassed nearly 120 million yuan ($16.9 million) in bets. The case was significant as it marked the first gambling case involving a live-streaming platform handled under the direct orders of the Ministry of Public Security. The court’s statement emphasized the national importance of the case and aimed to serve as a warning to society.

DouYu’s Commitment to Compliance

In its latest regulatory filing, DouYu reiterated its commitment to complying with regulations. Despite the arrest of its CEO, the company stated that it is operating as usual and is developing contingency plans in response to the situation. However, DouYu refrained from providing any comments on pending legal proceedings. The company did not respond immediately to CNN’s request for further comment.

Increasing Scrutiny of Chinese Business Leaders

Chen Shaojie joins the growing list of high-profile executives in China who have faced increased scrutiny or gone missing. Throughout this year, leaders from various industries, including technology, finance, and real estate, have been subjected to detention, corruption probes, or unexplained absences. These incidents have created a sense of uncertainty within the business community, with some entrepreneurs opting to lie low.

DouYu’s Background and Success

DouYu, which means “fighting fish” in Chinese, was founded by Chen Shaojie and quickly emerged as one of China’s most valuable startups. Often compared to Amazon’s Twitch service, DouYu allows users to watch and interact with live-streams of video games while engaging in real-time chat. The platform also features other content created specifically for its audience. With support from Tencent, DouYu gained significant popularity and achieved substantial success.

Market Reaction to Chen’s Arrest

News of Chen’s arrest had an immediate impact on DouYu’s shares. Following the announcement, the company’s stock prices closed almost 6% lower in New York. Investors and industry observers will closely monitor the situation, as any further developments related to Chen’s arrest could have implications for DouYu’s future performance.

Conclusion

The arrest of DouYu’s CEO, Chen Shaojie, adds to the increasing list of Chinese business leaders facing scrutiny from authorities. Chen’s detention highlights the ongoing crackdown on various industries, including technology and finance, as Chinese authorities aim to enforce regulations and maintain control. The incident raises concerns about the potential impact on DouYu’s operations and the broader business community in China. As the situation unfolds, it remains to be seen how it will affect the future of DouYu and its position in the competitive Chinese market.

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