Muddy water shorting YY full text: a virtual Kingdom composed of robots

 Muddy water shorting YY full text: a virtual Kingdom composed of robots

Over the past 10 years, we have been searching for sewers in the worlds capital markets, and face fighting cases have been everywhere. After a years investigation, a new scam has emerged. About 90% of YYs live broadcasting business is forged.

From the very beginning, we are very clear that YY live broadcasting business is a complete fraud. Its a mirage ecosystem. In the high-income performance, the actual real performance only accounts for a small part of the disclosed data. Channels that claim to exist independently. In fact, it is mainly controlled by YY in order to carry out continuous false transactions.

A large number of fans are generated by YY internal network virtual robot (contributing 50% of the gift), external virtual robot, and host brush gift. Therefore, our conclusion is that 90% of YYs live broadcasting business is fraud, and the same is true of YYs international live broadcasting business bigo.

For this reason, we have doubts about Baidus acquisition of YY live broadcasting business:

What will Baidu do in the future? Does Baidu really want to achieve growth through an almost total counterfeiting business?

For the past 10 years, we have believed that the decline of Chinese companies is far greater than most investors think. Many people think that we are too cynical, but is YY really the only rat excrement in Chinese companies? Or does it represent the general disregard of American law by executives of Chinese listed companies?

In April this year, Baidus Ethics Committee issued a statement on the arrest of the former CFO: Baidu firmly combats all violations of law and discipline, and has zero tolerance for any behavior that touches the red line of professional ethics.

Now, we want to say to Baidu:

Where is your due diligence when you buy a completely fake business with nearly 7% of the market value of the same cash? How can we not find such a large-scale fraud? If Baidu thinks it respects market morality and law, lets have a look.

01. YY is prepared for counterfeiting

We were shorting huanju group because we concluded that YY live was a multibillion dollar commercial fraud.

We have come to the conclusion that YYs actual business is only a small part of its report scale, and the user indicators, revenue and cash balance reported by the company are fraudulent. Our conclusion is not only applicable to YYs live broadcast business, but also to YYs online dating business bigo and other businesses.

Specifically, about 84% of YYs reported consolidated income is fraudulent. Even if we change our basic assumption to a more favorable one for the company, the consolidated fraud income will be about 73%.

1. Robot users from YYs own server -- in our data sample, the gift value generated by the fake users of YY server accounts for about half of all gift giving values.

2. The host will recycle the gift to the system through another paying user account. As far as we know, those excellent anchors who claim to earn tens of millions of yuan a year are usually paid a fixed salary, and the salary they are paid is no more than 2.5 million yuan (about 350000 US dollars) every year.

The union that manages the anchor is part of the plan. The big unions are mainly owned by YYs former employees, who are clearly cheating. According to the financial statements of the five major trade unions released by Chinas credit bureau, the total revenue in 2018 was only 15% of what YY claimed.

Therefore, our online dating business is all about YY and ygo

1. 90% of the income of YY live broadcasting is fraudulent. YY live claimed that the live broadcast business accounted for about 95.8% of total revenue in the third quarter.

About 80% of YYs income is fraudulent. Online dating accounts for about 20% of YYs live broadcasting revenue.

3. About 80% of bigos income is fraudulent. Even if the assumptions that are more favorable to the company are applied, about 60% of the false income will be generated.

4. Bigos Singapore parent company changed auditors three times in its first four years. Bigo also received three consecutive going concern opinions from its auditors in 2016-2018. In August 2019, a few months after YYs acquisition, bigo made a significant restatement of its 2017 financial position. These fact patterns support our conclusion that bigo is also deceptive in nature.

We have studied YYs business for more than a year and adopted a two pronged approach. The first step is to collect and analyze macro data of 116 million transactions through automated means. The second is the traditional muddy water technology, i.e. review of documents and accounts, secret field investigation and human resources.

A careful study of various alleged high-income anchors reveals the prevalence of fraud in YY:

2. During the period of covid-19 closure in Wuhan City, our random sample of YY paying users shows that about 87.5% of gift income may have fraud. Most fraudulent paying users connect to mobile device ID (IMEIs) of YY server, while a considerable number of paid users in Wuhan show IP addresses that somehow jump from one city to another during the blocking period.

3. The star anchor Lao Li itself is a fraud. Lao Li is the host with the most gifts in YY live broadcast of the 2019 annual competition. However, our data show that in December this year, Lao Lis mobile device was shared with his biggest contributor, and he gave a gift of 7 million yuan, accounting for about 40% of the total. In addition, his related devices sent more gifts than Lao Li received, exposing a network of related accounts that recycled gifts and exaggerated YYs total income.

4. Top bigo anchor RCT u00ed Khan is said to receive $50000 a month in gifts, but all he does is sit at his desk doing paperwork. Even when his camera was aimed at the walls and ceiling, his studio was still full of traffic. Until recently, he admitted that the giver of the gift was himself. (his other major contributors are almost certainly part of a gift recycling network.)

Through a large number of interviews with senior members of YY ecosystem, we concluded that the gift income of YY live broadcast and bigo was actually fake.

02. 90% of the income of YY live broadcast is fake

We analyze and sample YY user data and gift income in three ways to estimate the proportion of paid users on YY live broadcast and related revenue. We have come to the conclusion that about 90% of the gift income of YY live broadcast is fake.

The second false user identification method is to randomly select 96 paid users in Wuhan during covid-19 lock-in period. We find that 87.5% of the paid users in Wuhan are obviously fake users.

In the third method, we selected 96 paying users for live broadcasting of modern users. As mentioned above, about 97.9% of the sample of modern brothers are false users.

We further verified 90% of the previous false income estimates and compared the income reported by the head union to the China Administration for Industry and Commerce (SAIC) with YYs statement. We found that there was an 85.9% difference between YY income of the top five trade unions and their income in Chinas credit report.

Our data analysis and collection methods have two components. Through Google Chrome web development tool, we can trace 88 data points of each transaction, including paying user name, paying user yyid, transaction time, gift name, gift unit price, gift ID, gift quantity, recipient name and yyid, paying user IP address and device IMEI.

Device IMEIs tells us that about half of YYs live gift income comes from YYs own server. The device IMEIs also shows us the universality of gift round trip on YY live broadcast. We use a third-party data analysis service, called xhl, owned by YY insiders, to track the number of gifts given and received per account. (the founder and owner of xhl is the founder of YY and remains a shareholder in its two key vies.)

For bigo, we developed custom code to leverage the mobile app and collect data on bigos top 50 anchors and their paid users. Starting in October 2019, we use the Google Chrome web developer tool to collect data from YY live broadcast. From November 27, 2019 to February 4, 2020, we expanded the scope of data monitoring, collecting more than 115.6 million gift transactions sent by 1.2 million paying users to 20700 anchors.

During the next few months of our research, i.e. detailed checking of the connections between the Chinese hosts and the paid users in the next few months, i.e. through the detailed inspection of the users contacts in China in the next few months, viz.

We also use xhls database to check the total gift income and gift details of more than 180000 YY paying users and more than 120000 anchors, and establish contact with their respective channel owners.

Our estimates of income fraud are also based in part on xhl data. We believe that xhls data match YYs internal accounting data for two reasons.

First of all, Jincao, the founder of xhl, is the co-founder of YY. He was once the main executive of YY, and is still the shareholder of two vies (Beijing tuoda and Guangzhou huaduo), and is still the legal representative of Guangzhou duowang, the third vie. Second, tiger tooth, a former subsidiary of YY, used xhl data as evidence in a lawsuit in a Chinese court, indicating that its data monitoring platform is authoritative, independent and reliable.

Our macro data sources for bigo are room monitoring and data collection technologies for live traffic, and third-party application analysis databases.

In december2019, we reviewed the data of 96400 YY live paid users tracked by xhl. Our analysis found that YY controls 24.9 percent of paid users. Through further analysis, these users account for 48% of our gift income samples.

By cross referencing our data analysis and the paid user information in xhl database, we can identify these paid user groups controlled by YY. We define paid users controlled by YY as: (a) paying users who display YY local server or internal network IP when sending gifts; (b) mobile device ID (IMEI) directly or indirectly linked to paying users under YY control channel owner.

We obtained paid users information from xhl, including 96400 paid users, with a total reward of 687 million yuan. According to our definition, the number of paid users was 24100, accounting for 24.9%. The reward amount was 330 million yuan, accounting for 48% of the total reward amount.

1382 paid users showed two YY controlled behaviors. The data of all the gifts sent by the users of the xhl totaled 17.75 million yuan, which indicated that the data of all the gifts sent by the users were about 11.75 million yuan. Although the absolute value of this category is very small, it allows us to find two other larger categories. They share IMEI with these users and closely associate them with YY, which leads to the exposure of false users in internal network and YY server.

The false users of internal network are the paying users who display YY internal network IP address, ~ On the other hand, the fake user of YY server is the paying user with IP ( of local host server.

The IP address displayed by these fake users can only come from YY. However, these internal IP addresses are usually masked by ordinary IP. Fake users rarely disclose these IPS: we suspect that YY usually uses VPN or other software to disguise transactions from within YY.

There are 20400 paid users sharing IMEIs with the fake users of YY intranet and YY server. Among them, the xhl gift data of paying users with domain name of 010.606 recorded 91.1 million yuan of gifts, equivalent to 13.3% of gifts in xhl data set. We believe that these paid users are false users. To some extent, these fake users are also anchors, and their channel owners are controlled by YY.

In addition, through data De duplication, 30300 unique paid users IDS share IMEI with hosts belonging to YY control channel owners. This includes 13100 paying users with xhl gift data. The 13100 (13.6%) users sent out 222 million yuan gifts, equivalent to 32.2% of all gifts in xhl dataset. We think these are also fake users.

Based on the contribution of these fake users, we find that 48.0% of the live gift income is fraudulent only based on IMEI sharing.

We confirm below that half of the gift income in live traffic is almost entirely fraudulent, as well as through additional research techniques. We contacted two samples of paying users, which showed that the vast majority of paying users were robots and therefore false users, engaged in fraudulent gift transactions and showed signs of YY control.

In the table below, we show the paying users and their total gifts by category. We started from the false users of YY server and YY internal network, and gradually expanded outward. A total of 24100 users (24.9% of the total) sent gifts of RMB 330 million (48.0% of the total).

Although we have confirmed that a quarter of paying users are related to YY, this does not mean that the remaining three-quarters of paying users and half of the gift payments are real. Instead, as we show below, most of the remaining paying users have different kinds of links to YY, which make them fake users.

The platform angels gift giving time is very precise and reaches the performers screen at the same time every day. The names of platform angels often think they come from the platform, and their precise gift giving time makes it easy for them to identify.

The figures show that behind every YY controlled false user that we have identified through IMEI sharing, there are probably two false users controlled by YY that have not been identified by IMEI method. This is consistent with our inference that about 90% of YY live gift income is false.

Next, we investigated YY users in Wuhan to determine whether they might be robots. Due to objective factors, Wuhan has become a closed city. During this period, it is almost impossible for non robot users to move places. We searched the records for paying users with IP addresses in Wuhan, and these addresses actively gave gifts at the beginning of the city closure period. A random sample of these active paying customers in Wuhan shows that about 87.5% of them are fake according to their transaction details and gift giving behavior patterns.

If it is regarded as a fake user, the paying user in Wuhan must meet the following fraud characteristics:

Sharing IMEI with devices connected to a fake user on YYs internal network

u00b7 jump IP from one geographic location to another

u00b7 use IP addresses in a large piece of IP to send gifts to controlled channel hosts (i.e., from robot farms)

u00b7 send most of the gifts to the host on YY control channel

- or other characteristics of fraud or control.

03. The top five trade unions have an income gap of 85.9%

According to YY, Yujia, Huahe, Wudi, Chinablue, and IR are the top five trade unions in terms of income in 2018. YY claimed that their revenue in 2018 exceeded 1.1 billion yuan. Here is a screenshot of a video from YYs website, which claims 2018! The income of YYs five largest trade unions exceeded 1.1 billion yuan.

However, we have obtained the China credit report of these unions, which shows that their total income in 2018 is only 156 million yuan. Compared with YYs statement, there is a gap of 85.9%. We believe that, based on a review of legal disputes in China, the anchor is paid by the trade union, and our interviews with major union owners, we believe that the credit report revenue figure is the total amount paid to the anchor. Below, we compare YYs SAIC revenue with YYs claimed Revenue:

In the fourth quarter of 2019, these five trade unions accounted for about 28.0% of YYs live broadcasting revenue.

According to xhl, the five companies are still the head Union, and the percentage of their revenue in YHLs live broadcasting revenue in the fourth quarter of 2019 is as follows:

We believe that the 85.9% gap between the revenue of 156 million yuan reported in the credit reporting system and the 1.1 billion yuan claimed by YY implies large-scale fraud. This method confirms our conclusion that only 10% of YYs income is real.

04. Rebate and fraud are prevalent

We also found that most of the gift income of some of the top YY anchors came from themselves and YY controlled robots. One of the top presenters still gets a steady stream of gifts outside of her performance, which is almost the same as the robot activity we see on the modern brothers channel. These findings are the basis of our false judgment about 90% of YYs live broadcast income.

Liu Yuning, the lead singer of the modern brothers band, is in the live broadcast in Dandong City, where many passers-by stop to listen.

Despite the hype, we learned from the manager of a YY channel owner in Dandong that YY paid someone to watch the free show in person.

Even more bizarre things happen in the range of modern brothers receiving gifts. We found that YY has created robots in 58 countries to reward the live broadcast of modern brothers.

These robots are likely to make up the majority of the 32300 gift paying users who visited the bands channel in January 2020: because we found that almost all of the so-called paid users we sampled were actually fake users.

We found that 97.9% u00b1 10% of modern brother paid users may be fake. In order to determine the level of robot activity, we randomly surveyed 96 fans of modern brothers on the behavior patterns of giving gifts in the show of modern brothers on January 30, 2020.

We chose this time as a sample because we believe that the people who give gifts during the show are real. The reason why they chose modern brothers is that they are unique in YY ecosystem, and the owners of YY channel of modern brothers are themselves. As a result, there is hardly any fraudulent power of interested third parties.

In this sample, we identify fake users based on the pattern of giving them gifts regularly and repeatedly during the days of the modern brothers outage. Some paying users who gave gifts to Hyundai brothers also showed IP addresses connected to YY servers, which further indicated that they were YY controlled robots.

In a particularly successful month, modern brothers ranked 97th in YY and earned 2.9 million yuan in gift income. However, YY seems to have hired fake users to get this ranking.

Data from xhl and YY applications show that robots have been running in their fixed mode from July 2020 to September 2020. For example, on July 22 and 23, 2020, modern brothers did not perform, but the channel received a reward of 2631 yuan from 15200 paying users and 4007 yuan from 22400 paying users, respectively.

Although the normal live time of modern brothers is from 7:00 to 10:00 p.m., the purple line shown in the following xhl gift transaction records shows that the fake users send small gifts 24 hours a day, indicating the activity time of the robot. The image on the xhl dashboard below shows the data for July 22, 2020, which was not broadcast live by modern brothers.

In addition to the modern brothers, some head anchors also have similar situation.

Lao Li, a top anchor in YY, almost all the gifts come from YY official or himself. We found this by analyzing the channel data. Data shows that in December 2019, users with eight device IDs associated with Lao Lis own devices contributed more than 80% of their revenue. This kind of device connection is combined with the fake users controlled by YY. On the whole, the amount of reward given by this user network to the anchor is far higher than that of Lao Li.

Lao Li was a security guard before and became famous through YY live broadcast. Every day, Lao Li hosts variety shows in YY, joking with other anchors and fans. Lao Li calls his 8.4 million fans Li Jiajun, and each of his videos has hundreds of thousands of views. As the third anchor on YY platform, Lao Li receives tens of millions of yuan every year. In December 2019 alone, 28 million yuan (40% of the gifts of that month) was awarded to pingshen, a top local tyrant from Lao Li.

However, our survey shows that pingshen actually shares Lao Lis IMEI. We found that the IMEIs of 14 other paying users is also related to Lao Li, including 8 head paying users. In four months, the reward amount of these eight accounts far exceeded the reward received by Lao Li.

To us, Lao Li is more like a big lie.

05. YY abnormal financial data in China

We obtained the credit report of YYs onshore entities and compared it with the securities and Exchange Commission (SEC) filings of YY and found many differences. These differences amount to hundreds of millions of yuan, including the serious cash shortage of local companies compared with the situation reported by YY to sec. This difference, especially the difference in cash balance, is a mark of manipulation or fraud.

For example, YYs filing with the securities and Exchange Commission (SEC) in 2018 shows that long-term deposits are 1 billion yuan, as shown in the table below. We believe that this total is likely to be fictitious or inflated, as the main YY onshore entities do not include these long-term deposits. A rough comparison of the two sets of financial statements shows this difference.

In addition, we believe that YY has transferred about 1.326 billion yuan to its wholly foreign-owned enterprises (most of which will be illegally transferred to its wholly foreign-owned enterprises), or that the cash of the wholly foreign-owned enterprises does not exist at all.

After calculation, as of the end of 2018, YYs WFOE cash balance was 1.298 billion yuan, of which the vast majority (about 1.16 billion yuan) was overseas. However, in view of the fact that YY does not show any substantial dividend or loan flow overseas in the SEC documents, we believe that YY has violated Chinas capital control and transferred the vast majority of RMB 1.326 billion, or the cash balance of the offshore wholly foreign-owned enterprise of RMB 1.16 billion is false.

The following table shows that the total cash balance of YYs onshore and offshore wholly foreign-owned enterprises is 1.298 billion yuan without tiger teeth.

In order to determine the onshore and offshore split of this cash, we reviewed YYs China credit report. According to the credit report, as of the end of 2018, the cash of wholly foreign-owned enterprises on shore without tiger teeth did not exceed 138 million yuan. The following table only shows the cash position of wholly foreign-owned enterprises mainly on shore and excluding Huya

Due to the small cash balance on shore at the end of 2018, we know that 1.298 billion yuan of which the cash balance of 1.16 billion yuan comes from overseas.

See below:

From these calculations, we can infer that the cash transferred to YY WFOE during 2018 should basically flow to the WFOE overseas. Because the foreign-owned enterprises on shore not only have a low cash balance, but also do not show large-scale financing activities that may lead to major cash transfers.

In order to calculate the amount of YY transferred into the offshore wholly foreign-owned enterprise, we consulted YYs cash flow statement.

In the table below, we first summarize the total cash generated by yyvie in 2018, which is RMB 3.38 billion. Then, we add this figure to the cash of the vie at the end of 2017. If there is no transfer of funds, the cash on YYs balance sheet should be 5.324 billion yuan, which is seriously different from the cash balance of 3.997 billion yuan of vie without tiger teeth shown on the balance sheet at the end of 2018.

The difference of 1.326 billion yuan includes the transfer from non tiger tooth vie to non tiger tooth WFOE as they disappear from vie cash balance in 2018. YY did not disclose the corresponding substantial dividends or loans to offshore entities in the US Securities and Exchange Commission (SEC) filings in 2018. However, as we have concluded in the above table, almost all of the cash transferred seems to have been specially directed to the foreign-owned enterprises without tiger teeth. The details of our transfer of 1.326 billion yuan are as follows:

The offshore cash balance of YY cant explain the truth.

06. Buying bigo is a big scam

We believe that YYs acquisition of bigo in 2010 for us $1.45 billion in cash and stock was a hoax, but in fact it acquired another company from its chairman. We got the local documents of bigo in Singapore, which shows that it was not Li Xueling who first created bigo, but bigo was later transferred to Li Xueling.

We also found that Bigo has increased the Chinese mainlands revenue retroactively. We think these revenues are largely false. This makes everyone seem that YYs acquisition of Bigo is a very wise decision, and it proves that the high salary of Li Xuelings chairman is reasonable.

We believe that bigo was designed to cheat investors from the beginning. Since 2015, management has misled investors and told the public that it was Li Xueling who founded bigo. However, it is a lie: according to Singapore documents, BigoTechnologyPte.Ltd . was incorporated on September 11, 2014 with only YYs BVI entity, DuoWan entertainment Corp.

YYs acquisition of bigo is the key to a scam. After several rounds of financing, it finally obtained most of the funds of yy2017s secondary issue. Most of the payments for the acquisition were paid directly to Li Xueling in cash and stock, including 38.32 million shares of YYB common stock issued, with a total value of about $156 million.

In addition, he is likely to receive a portion of $343 million in cash and a portion of YYs 314 million class a common shares. YY also made use of the huge amount of money paid to insiders to achieve significant value gains in 2018 and 2019, generating significant book profits.

Even in bigos early years, local audits were giving us some information. In the first four years, bigo changed Singapores auditor three times. Shortly after regaining its 100% stake in bigo, YYs management claimed that despite bigos overall loss, bigo live was strong enough to support the initial development of its other businesses.

However, bigos Singapore auditors raised objections. In the three annual reports of bigo from 2016 to 2018, the audit reports issued warnings against bigo as a going concern. Moreover, bigo made a significant restatement of its 2017 financial position in August 2019, a few months after the acquisition.

However, as we have detailed below, we believe that almost all Bigos income in mainland China is fabricated. In addition, when we compared the details of the local audit in Singapore with the financial position of bigo Chinas vie in Chinas credit report, we found many illogical differences.

Bigos financial fraud has brought huge fair value revaluation income to YY, thus further enhancing the value of YYs stock. YYs round D investment in bigo in 2018 resulted in a profit of 989 million yuan, equivalent to 46.7% of the reported net income in 2018. The acquisition of bigo in 2019 further improved the financial position of YYY in the first quarter of 2019, with a profit of 2.67 billion yuan, accounting for 72.2% of the net income in 2019.

As the leading actor in Li Xuelings scam, bigo has been hiding that a third of its business at the time of the acquisition did not come from overseas, but from mainland China. We believe that bigos income in mainland China is almost entirely false.

In addition, we believe that these Chinese revenues enrich bigos books through fictitious sales, thus enabling the business to be acquired at a higher acquisition price, which ultimately benefits Li Xueling.

However, according to a 6-k report submitted to the US Securities and Exchange Commission in June 2019, there was a $166 million sales from China, accounting for about one third of bigos total revenue in 2018.

The comparison found that there is a nearly similar figure, a $159 million revenue from audio live broadcasting, which means that Chinas extra revenue is derived from the Chinese mainlands live audio application Hello, and others may come from some smaller applications.

As we have described, we suspect that bigos revenue in 2017 and its revenue from orchard and related live audio services in 2018 are likely to be false or grossly exaggerated. According to the statistics we found, about 80% of bigos income is false.

Former bigo executives said most of the users were fake and the robots were directed by bigos Singapore headquarters or YYs Guangzhou headquarters.

Our investigators interviewed a former executive of bigo India and asked about how bigo operates. About 60% of the people in bigos room are robots, which are decided by the Chinese teams in Singapore and Guangzhou, the executive said.

He thinks its necessary to use robots, giving a reason to respond, when you start broadcasting, I cant let you see a blank space in the studio, we have to give you some fans.

A former bigo Middle East executive described to us the proportion of fake users on bigo, for bigo, only about 30-40% of the audience is real, and about 60-70% of the audience is robot. ,

Bigo can raise or lower the proportion of robots on the platform, the former executive said: the proportion of fake users may be much higher than I said. For example, in the live studio of a music channel, the top 5000 viewers are usually robots

Finally, a former bigo executive in Southeast Asia confirmed these claims, telling us that 70% is a typical proportion of robots on the bigo channel.

Bigo has a bean recycling mechanism. Bigo uses trade unions and anchor families to manage the distribution and distribution of bigo beans in their network, creating a dynamic similar to YY live broadcasting without the need for implicit control of channels.

The contracted hosts must keep the daily live broadcast between 30 minutes and 2 hours. This ensures that they log in as many days as possible each month, while combining their payment rewards with the metrics of third-party application analysis companies, and then ranking applications based on engagement metrics.

Bigo has always been given the impression of highly engaged users, but in fact, most of the users involved are staff working according to a set of scheduling parameters.

Bigo also offers performers a recycling option so they can use beans without leaving the platform.

Performers can buy discounted beans in tit for tat deals and buy gifts for each other, thus helping each other achieve their income goals. In this way, when their quota is insufficient, anchors usually seek the help of their union or family members to support them and exchange discount gifts.

They usually exchange bean products with other members during the last month of the event. This bigo activity creates a strong liquidity monetary activity.

Sometimes, their income even far exceeds their total income. However, it is difficult to calculate accurately because bigo not only changes the identity of the head fake user, but also changes the statistical information of the users account.

We believe that the intention behind changing the head user data is very obvious, to prevent others from discovering the scale and absurdity of the bigo scam.

Bigo also owns a Chinese mainland business but has not mentioned in his earnings call conference and annual application documents. We think it avoids mentioning the Chinese business because it is essentially a shell because its applications do not show real activity.

According to the YY report, bigos revenue in China in Asia in 2018 was $166 million, including $159 million in audio broadcast. Bigos core products, bigo and likee, are oriented to video rather than audio and streaming, and both are focused on markets outside China.

The following table shows the geographic breakdown of bigos revenue, which is filed on a yearly basis:

Through our mainland investigators and the conversations with former Bigo employees, we have determined that mainland China can not download Bigo through normal app stores. Bigos main business in China comes from overseas Chinese signed up and Chinese anchors in foreign countries. Therefore, we believe that the Chinese users of bigos live application are anchors and will not bring substantial income to bigo.

YYs June 2019 semi annual report pointed out that in March 2016, Baiguoyuan network launched an audio live appinello, which focuses on Chinas business.

Our inspection of Bigo China VIE 100 orchard shows that it has many applications and websites operating in Chinese mainland, most of which have failed. The main app is hello voice, a voice social network app with a small market share.

Therefore, we believe that as audio live broadcasting and Mainland Chinas income are basically the same, this part of the revenue comes mainly from Hello.

We found that according to the documents submitted, bigos potential revenue in China has been driving bigos growth. In 2019, YY began to disclose its share of Chinas and non Chinas live broadcasting revenue in quarterly financial statements. YYs non China income mainly comes from bigo, and a small amount comes from Huya and Hago. Assuming that bigo and its consolidated subsidiaries account for 100% of YYs non China income, we can calculate bigos minimum onshore China income by subtracting YYs all non China income from bigos total income.

From the recently disclosed YY data (now excluding Huya), we can see that the hidden income of bigo in China accounts for a relatively high proportion, accounting for 13.4% of the revenue in the third quarter of 2020, reaching 456 million yuan, an increase of 27.4%.

Bigos onshore revenue seems to be limited to the apps and investments held by vie orchards, which should basically all come from hello and its related apps.

However, when our investigators talked to YYs anchor and virtual currency merchants, they found that they didnt know much about the Chinese aphello voice.

As we will see below, we doubt whether hello and its associated app can really generate much revenue.

At present, there are few active users in our survey. This adds to our judgment that the app has little revenue.

In addition, hello was created by YY, not bigo, and we discovered it by analyzing the information disclosed by the application.

We monitored several studios and found them to be a joke. In our view, not only is the content poor, but most of them lack participants and anchors. When we browse the Hello app, we see very few active users. Even in a full room, there is still very little interaction between the anchor and the user, and almost no gifts are received.

Most users seem to be robots, not involved in any activities, neither joining nor exiting these lifeless rooms. The following two examples show that the top studio on Hello voice is running at full capacity, but there is no message or language interaction at all.

We believe that hello and its associated applications exist for the convenience of management, who may find it easier and cheaper to generate revenue onshore than offshore.

We further believe that the operation of these apps is to help bigo increase its profits rapidly, enhance its contribution to YY, and generate continuous revenue.

In addition, this kind of income increase is a way for Li Xueling to raise bigos valuation. By incorporating the possible false income of Baiguo orchard into bigo, he can obtain more benefits from YY.

As of August 2018, before YY acquired bigo, hello used YY customer service email: [email protected] This is a red flag for a small company, and even worse for bigo in 2018. It is estimated that bigos revenue will exceed 1 billion yuan this year. It shows that some operations and management of YY company have been integrated together and are under the common control of YY. We found more evidence of this actual control in a blog post in January 2017 about how to set up an account on Hello voice and get paid commissions from streaming media. According to the documents submitted in Singapore, Baiguoyuan and hello voice should be completely separated from YY and controlled by bigo from 2016. However, hello voice users are encouraged to bind their YY account to their Hello voice account and use YYs payment system. Source: editor in charge of interface news: Chen Hequn_ NB12679

As of August 2018, before YY acquired bigo, hello used YY customer service email: [email protected] This is a red flag for a small company, and even worse for bigo in 2018.

It is estimated that bigos revenue will exceed 1 billion yuan this year. It shows that some operations and management of YY company have been integrated together and are under the common control of YY.

According to the documents submitted in Singapore, Baiguoyuan and hello voice should be completely separated from YY and controlled by bigo from 2016.

However, hello voice users are encouraged to bind their YY account to their Hello voice account and use YYs payment system.