A Chinese court has sentenced multiple employees of cryptocurrency exchange BKEX for facilitating illegal gambling through its contract trading platform. The ruling, delivered by the People’s Court of Pingjiang County, Hunan Province, on January 29, found that BKEX’s leveraged trading system functioned as a form of online gambling, violating Chinese law.
High-Leverage Crypto Contracts Deemed Gambling
BKEX allowed users to place bets using USDt, a stablecoin pegged to the US dollar, and offered leverage of up to 1,000x on Bitcoin (BTC), Ether (ETH), and other cryptocurrency price movements. The court determined that this speculative trading method was equivalent to gathering people to place financial bets—falling under the crime of “opening a casino” under Chinese law.
Futures trading, a common financial instrument that lets traders speculate on asset prices, was deemed illegal in this case due to its gambling-like nature and lack of regulatory oversight.
BKEX’s Rise and Crackdown
BKEX was founded in 2018 by Ji Jiaming through Chengdu Dechen BiKe TianXia Technology Co. To evade regulatory scrutiny, Ji frequently changed the company’s registration before eventually dissolving it. In 2021, he partnered with Lei Le to further develop the platform’s perpetual contract trading function, which became a major part of BKEX’s operations.
BKEX saw rapid growth, amassing over 270,000 users, including 60,000 active traders, and generating more than 54.7 million USDT in profit before authorities intervened. The Chinese government, which has imposed strict crypto regulations since 2013, viewed these activities as a threat to financial stability.
Employees Sentenced for Their Roles
Eight individuals faced criminal charges, with key employees receiving prison sentences and financial penalties:
- Zheng Lei (Wallet Engineer & Department Head): Sentenced to two years and one month in prison, fined 150,000 yuan ($20,900), and had 1.34 million yuan ($186,600) confiscated.
- Wang (Head of Audit Department): Sentenced to one year and 11 months in prison, fined 52,000 yuan ($7,250).
- Dong (Agent & Recruiter): Sentenced to one year and six months (suspended), fined 35,000 yuan ($4,880), and had 223,000 yuan ($31,000) confiscated.
The crackdown reflects China’s continued hardline stance on crypto-related activities, reinforcing the government’s strict regulations against digital asset trading and speculation.
China’s Aggressive Crypto Ban Continues
China has taken a strict approach toward cryptocurrency since banning banks from handling crypto transactions in 2013. The country escalated its crackdown in 2017 by prohibiting ICOs and exchanges, followed by a complete ban on crypto trading and mining in 2021.
The BKEX case highlights China’s firm stance on digital asset trading, making it clear that any crypto-related activities, particularly those resembling gambling, will face severe legal consequences.
