Chinese developer Hoolai on how half its iOS revenue got eaten by virtual currency scams last fall

After bringing its hit social game Three Kingdoms to the iPhone last fall, everything was looking up for Beijing-based developer Hoolai. The game had climbed to the top of the grossing charts in China, Apple’s biggest market by revenue after the U.S.

Hoolai looked set to rake in $600,000 from iOS last October, said Jian Huang, the company’s president.

But when the payment came from Apple, only half of it was there. The rest had been eaten by fraudulent virtual currency purchases originating from Taobao, known as the eBay of China.

Hoolai, which is backed with more than $20 million from Sequoia China, Greylock Capital and Bertelsmann AG, is one of several Chinese mobile developers that have seen a big share of their reported revenues consumed by virtual currency scams.

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