NetEase Money Laundering: Execs Detained

A reported internal sting operation at NetEase Games has led to the detention of several senior employees on suspicion of money laundering, according to Chinese tech outlet Leifeng (as picked up by Vice). The incident has shaken investor confidence, with NetEase’s stock (NTES) falling roughly 5% since trading opened following the news.

Details of the Operation

The sting reportedly involved a routine weekly marketing meeting that was moved from its usual location in Guangzhou to Hangzhou. When general manager Xiang Liang and other suspected employees arrived, they were detained and investigated. The amount allegedly laundered is estimated between 800 million and 1 billion yuan (approximately $111 million to $140 million). NetEase is also believed to have suspected members of Xiang Liang’s team of purchasing traffic for the studio’s games, potentially to skew performance metrics, though this remains speculative. According to Leifeng, several employees have since been released, but Xiang Liang has not responded to requests for comment.

Corporate Context and Past Controversies

NetEase has been expanding internationally through acquisitions and partnerships. Key moves include acquiring Grasshopper Manufacture in 2021 and Quantic Dream in 2022, as well as a long-term collaboration with Blizzard Entertainment that produced Diablo Immortal in 2022.

The company also faced a legal setback in 2022 when Riot Games and its parent company Tencent successfully sued NetEase for copyright infringement over its hero shooter HyperFront, which was deemed too similar to Valorant. The lawsuit resulted in HyperFront’s shutdown.

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