Attention: Offshore Casino Operator BitStarza Facilitated by Crypto Payment Processors MoonPay and Changelly!

FinTelegram has pointed out several times that offshore operators of online gambling, casino, and sports betting sites, such as the Dama Group, are increasingly relying on crypto to accept deposits from their clients without having a regulatory permit. In doing so, they use companies they set up in Cyprus as payment agents. The most popular payment facilitators for crypto payments include MoonPay and Changelly. Both facilitate Dama Group’s BitStarz.

BitStarz Key Data

Short BitStarz Narrative

BitStarz is one of the thousands of Curacao-licensed online casinos, sportsbooks, lotteries, and gambling ventures. The Dama Group operates it. BitStarz, like most other gambling providers, works with various domains through which customers are recruited, onboarded, and supported. These include customers from the U.S., Canada, and Russia, as well as from EU countries and Asia.

Although BitStarz holds a license in Curacao, this does not automatically entitle the company to offer its games of chance and online casinos in Europe. Most EU countries, including Germany, Norway, Italy, Austria, Denmark, The Netherlands, and Spain, have their own national regulations and licensing systems for online gambling, and they require operators to obtain a local license or comply with specific rules and standards.

The Crypto Payment Scheme

Many illegal or unauthorized schemes involved in online gambling or trading are increasingly adopting cryptocurrencies to receive deposits from their customers. Crypto payment processors like MoonPay or Changelly facilitate this trend. Here’s how the process typically works:

1. Customer Direction to Crypto Payment Processors: Customers of these illegal or unauthorized schemes are directed to crypto payment processors to purchase cryptocurrencies. This purchase is typically made using credit/debit cards or bank transfers.
2. Automatic Forwarding of Cryptocurrencies: Once the customers purchase the cryptocurrencies, these digital assets are automatically forwarded to the accounts of the illegally operating merchants. This step is critical in the process, as it effectively transfers funds from the customer to the merchant under the guise of a cryptocurrency transaction.
3. Difficulty in Initiating Chargebacks: This method complicates the possibility of chargebacks. In traditional online transactions, customers can sometimes dispute charges and request chargebacks through their banks or credit card companies if they believe they have been defrauded. However, in the case of cryptocurrency transactions, the situation is markedly different. Since the customers’ transactions are officially recorded as purchases of cryptocurrencies from a payment processor and they have received the said cryptocurrencies, it becomes challenging to argue for a chargeback. The reason is that from a financial transaction perspective, the service (i.e., the provision of cryptocurrencies) was rendered as agreed.
4. Separation of Purchase and Transfer: It’s important to note that the automatic transfer of the purchased cryptocurrencies to the illegally operating merchants is a separate action from the purchase itself. This separation often obscures the trail of the funds and complicates the legal process for reclaiming them.
5. Use of Payment Agents in Specific Jurisdictions: In some cases, like with illegal gambling operators, there are specific strategies employed to facilitate these transactions. For example, these operators might use payment agents registered in jurisdictions like Cyprus. These agents act as intermediaries, further blurring the lines of the transaction and making it harder to track and regulate.

Overall, the use of cryptocurrencies in this manner presents significant challenges for regulation and customer protection. The digital and decentralized nature of cryptocurrencies, combined with the complexities of international law and jurisdictional issues, makes it difficult to combat these illegal activities effectively.

Facilitating Payment Processors

In the case of BitStarz, the supporting crypto payment processors are MoonPay and Changelly. As part of their KYC/AML procedures, they must check whether their merchants (the gambling providers) have the necessary licenses. The individual transactions must also be checked. It should become apparent that BitStarz (and many others) accept payments from customers in jurisdictions where BitStarz is not allowed to operate.

We could have deposited up to $11,940 per transaction at BitStarz without a KYC/AML check.

Share Information

If you have any information about BitStarz, its operators, and its facilitators, please share it with us through our whistleblower system, Whistle42.