A Chinese court has sentenced multiple employees of cryptocurrency exchange BKEX for facilitating illegal gambling through its contract trading platform. The People’s Court of Pingjiang County, Hunan Province, ruled on January 29 that BKEX’s futures trading functioned as online gambling, violating Chinese law.

High-Leverage Trading Leads to Legal Trouble

BKEX allowed users to trade using USDt, a stablecoin pegged to the US dollar, and apply leverage of up to 1,000x to speculate on Bitcoin (BTC), Ether (ETH), and other cryptocurrencies. The court deemed this practice akin to illegal gambling, as it involved users betting on financial outcomes.

Futures trading enables traders to speculate on an asset’s future price using leverage, amplifying both potential gains and losses. However, in China, authorities classified this as gathering people for betting, leading to criminal charges.

Founder’s Attempt to Evade Scrutiny

BKEX was founded in 2018 by Ji Jiaming through Chengdu Dechen BiKe TianXia Technology Co. To evade regulatory oversight, Ji frequently changed the company’s registration before eventually dissolving it. In 2021, he partnered with Lei Le to develop and promote perpetual contract trading, which became a key feature of BKEX.

The platform gained significant traction, amassing over 270,000 users, including 60,000 active traders. Before authorities intervened, BKEX reportedly generated more than 54.7 million USDT in profit.

Employees Sentenced for Their Roles

Eight individuals faced criminal charges for their involvement in BKEX’s operations.

  • Zheng Lei, former wallet engineer and department head, received two years and one month in prison and a fine of 150,000 yuan ($20,900). Authorities also confiscated his earnings of 1.34 million yuan ($186,600).
  • Wang, head of the audit department, was sentenced to one year and 11 months in prison with a fine of 52,000 yuan ($7,250) for handling KYC verifications and processing transactions.
  • Dong, an agent who recruited users through referral links, earned $33,558 in commissions. He received a one-year-and-six-month suspended sentence and a fine of 35,000 yuan ($4,880). His 223,000 yuan ($31,000) earnings were confiscated.

China’s Continued Crypto Crackdown

This case is part of China’s ongoing efforts to eliminate cryptocurrency-related activities, which authorities view as a threat to financial stability. The government has imposed multiple crypto bans over the years, including:

  • 2013: Ban on banks handling cryptocurrency transactions.
  • 2017: Prohibition of ICOs and crypto exchanges.
  • 2021: Complete crackdown on trading and mining.

China’s strict stance underscores its commitment to preventing crypto-related financial risks, with authorities now targeting not just exchanges but also individuals involved in operations.

The BKEX case serves as a warning to crypto platforms operating in China. As regulations tighten, companies facilitating leveraged trading could face severe legal consequences, reinforcing the government’s anti-crypto stance.

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