Chinese technology company Xunlei has filed a lawsuit against its former chief executive officer, Chen Lei, and his core team, seeking damages of up to RMB 200 million, which is approximately $28.6 million.
Lei and former senior vice-president Dong Xue have fled overseas to evade investigation, according to sources close to the case.
The legal action comes close to six years after Xunlei, a file-sharing and cloud services provider listed on Nasdaq, first dismissed Lei in April 2020 and reported him to the Shenzhen public security authorities.
Xunlei's Accusations Against Chen Lei
Court filings and company insiders claim that Lei had his hands in different schemes to steal funds from Xunlei between 2017 and 2020.
Investigators have found an off-balance-sheet company, Shenzhen Xingronghe, a bandwidth supplier, that Lei used to transfer Xunlei’s assets through phony transactions.
Investigators found that two blockchain technology consultants from Hegang, Heilongjiang province, were actually farmers in their sixties. Even more curious, they were Xu’s relatives, and she controlled the bank accounts that received their consulting fees.
Lei and Xue reportedly have an “improper relationship,” and they put Xue’s friends and relatives from Hegang throughout Xunlei’s hierarchy.
This network proved useful for Lei as he used it to create false contracts and fabricate transactions to embezzle company funds.
Prosecutors claim Lei had his hands on millions of yuan that he routed into illegal crypto trading.
Challenges in Prosecuting Lei and Xue
Zhu Wei, an associate professor at China University of Political Science and Law, noted that senior managers possess sophisticated knowledge of corporate mechanisms and demonstrate high counter-investigation awareness. They often use side agreements, install trusted associates in critical positions, and leave minimal written evidence of wrongdoing.
Lei’s departure from China in early 2020 has frustrated the investigation because Chinese public security organs lack extraterritorial law enforcement authority.
This makes evidence collection and witness interviews difficult, and the case could be dismissed if prosecutors cannot prove that seemingly legitimate transactions concealed illegal activities.
Chen Lei's Background and Xunlei's Pivot
Before joining Xunlei in 2014 as chief technology officer, Lei held senior positions at Tencent, including general manager of Tencent Cloud Platform. He holds degrees from Tsinghua University and the University of Texas at Austin and previously worked at Google and Microsoft.
Lei rose to the position of CEO in 2017, in what was seen as Xunlei’s pivot towards blockchain technology.
Broader Trends in Tackling Corruption in Chinese Tech Companies
ByteDance dismissed 120 employees for rule violations in the third quarter of 2025. The company named 28 publicly and transferred 14 of the employees to judicial authorities for suspected criminal offenses, among other actions. Other major firms, like Bilibili, have announced similar crackdowns.
Beijing’s Haidian District People’s Procuratorate released a document in mid-2025 detailing a study on commercial corruption cases handled between 2020 and 2024. The research found threads of highly covert methods, frequent internal-external collusion, “the prevalence of petty officials embezzling huge sums, and rent-seeking through platform soft power,” in the 1,253 commercial corruption cases it looked at among internet companies.
The Haidian District People’s Procuratorate document also admitted the frustration involved in cracking these corruption cases. Some take years to uncover, with 25 cases requiring more than five years of investigation and three taking over a decade.