Court Finds BKEX Guilty of Operating Illegal Gambling The People’s Republic of China has jailed several workers and representatives of BKEX for operating illegal gambling using crypto contract trading. In a judgment dated 29 January, the People’s Court of Pingjiang County, Hunan Province ruled that BKEX’s trading system constitutes online gambling, which is illegal under Chinese law. Authorities ruled BKEX’s high-leverage crypto contract transactions were not standard financial trading but bets on the price movements, hence “opening a casino” according to Chinese law. How BKEX’s Trading Model Was Classified as Gambling BKEX users were allowed to place bets using USDT, a stablecoin pegged to the U.S. dollar. Traders could apply extreme leverage of up to 1,000x to speculate on the prices of Bitcoin (BTC), Ethereum (ETH), and other cryptocurrencies. The platform quickly started to grow: it attracted 270,000 users, with 60,000 active traders, and churned out a profit of 54.7 million USDT before law enforcement intervened. In the court’s decision, the risk-heavy speculation-laden nature of these deals was gambling rather than financial trading. BKEX’s Founder Tried to Evade Scrutiny The ruling said BKEX was set up in 2018 by Ji Jiaming via Chengdu Dechen BiKe TianXia Technology. He repeatedly altered the company’s registration information to avoid supervision from regulators. In 2021, Ji co-operated with Lei Le in setting up a perpetual contract trading system for BKEX. It soon became its main business and eventually attracted unwanted government attention. Prison Sentences for Employees and Agents The court convicted eight persons who participated in BKEX’s illegal operations and sentenced them as follows: Zheng Lei, a wallet engineer, was sentenced to two years and one month in prison, along with a 150,000 yuan ($20,900) fine and 1.34 million yuan ($186,600) in illegally obtained earnings. Wang, head of BKEX’s audit department , received one year and 11 months in prison, a fine of 52,000 yuan ($7,250), and liability for KYC verification and transaction processing. Dong had enlisted users through referral links and was paid $33,558 in commissions. He was handed a one-year and six-month suspended sentence and fined 35,000 yuan ($4,880), with 223,000 yuan ($31,000) of earnings confiscated. China’s Tough Stance on Cryptocurrency Anti-crypto Actions Include: The BKEX case is part of China’s wider crackdown on activities related to cryptocurrency, which the government considers a threat to financial stability. 2013: Prohibition on banks from processing crypto transactions. 2017: Prohibition on ICOs and crypto exchanges. 2021: A country-wide crackdown on crypto trading and mining. The BKEX case confirms once again that China adopts a zero-tolerance attitude toward unauthorized financial platforms and takes severe measures against crypto-related activities.
