Investment research firm Grizzly Reports made headlines two years ago when it revealed that Chinese live streaming platform DouYu was enabling illegal gambling by its streamers. Now, it seems that the authorities have caught on, as the founder and CEO of DouYu, Chen Shaojie, has allegedly been arrested for allowing gambling and pornography on the platform.
According to a report by China’s state-owned Cover News media outlet, Chen has been “taken away” and has not been seen or heard from since. This news comes as a shock, but it’s not the first time a prominent figure in the Chinese tech industry has suddenly disappeared. Jack Ma, the CEO of Alibaba, and Bao Fan, the founder and CEO of China Renaissance, have also met similar fates.
Chen founded the streaming platform in 2014 and built it into one of China’s most popular brands. With around 50 million users, DouYu has dominated the game streaming market and expanded into other legitimate areas such as live cooking and home repair. However, the company has also allegedly ventured into illegal activities, including online lotteries and gambling, as reported by Grizzly Reports two years ago.
The company’s troubles don’t end with Chen’s arrest. DouYu’s market value has plummeted from almost $4 billion to below $300 million. Its shares on NASDAQ have also taken a hit, falling from a high of $18.72 to a low of $0.84 as of Monday afternoon. The company has received a notification from NASDAQ stating it is at risk of being delisted if it doesn’t get its stock back above $1 for 10 straight days by April 22.
It’s a steep downfall for a company that once garnered huge support from investors, raising $775 million when it went public in 2019. Now, the future of DouYu remains uncertain as its founder’s arrest and the platform’s alleged involvement in illegal activities cast a shadow over its prospects.