Traditionally, red envelopes containing money are gifted during the Lunar New Year celebrations, a custom that goes back to ancient times. … According to the University of California, Irvine, one popular source is the legend of a young orphan who, during the Sung Dynasty, won a battle against a huge demon terrorizing the village of Chain-Chieu. As a reward, the village elders gave the child a red envelope full of money.

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