China Convicts BKEX Employees for Operating Illegal Crypto Gambling Platform

A Chinese court has convicted several employees and agents of the cryptocurrency exchange BKEX for operating an illegal gambling platform through its crypto contract trading function. The ruling, made by the People’s Court of Pingjiang County in Hunan Province on January 29, determined that BKEX’s contract trading platform operated as a form of online gambling, leading to prison sentences for those involved in the operation.

BKEX’s Crypto Contracts Deemed Illegal Gambling

The court’s judgment found that BKEX’s contract trading platform allowed users to place bets using USDt (Tether), a stablecoin pegged to the US dollar, and engage in high-leverage trades—up to 1,000x—on the price movements of Bitcoin (BTC), Ether (ETH), and other cryptocurrencies. The court classified this type of trading as illegal gambling, as it involved gathering people to bet on financial outcomes, violating Chinese law.

In futures trading, participants agree to buy or sell assets at predetermined prices on future dates, often with the use of leverage to amplify gains or losses. The court found that BKEX’s platform, which allowed users to speculate on cryptocurrency price fluctuations using significant leverage, met the legal definition of gambling in China.

The Rise of BKEX and Its Role in the Illegal Operation

BKEX was founded in 2018 by Ji Jiaming through Chengdu Dechen BiKe TianXia Technology. However, Ji repeatedly changed the company’s registration details to avoid detection by authorities, ultimately dissolving the company. In 2021, Ji partnered with Lei Le to expand the platform's services, launching a perpetual contract trading function that became a core part of BKEX's operations.

The contract trading feature gained significant traction, attracting over 270,000 users, including 60,000 active traders. In total, the platform generated more than 54.7 million USDT in profits before Chinese authorities intervened.

Prison Sentences for Employees and Agents

Eight individuals were convicted for their roles in BKEX's illegal gambling operation. Among them were key employees who facilitated the platform’s crypto gambling activities.

• Zheng Lei, a former wallet engineer and department head, was sentenced to two years and one month in prison and fined 150,000 yuan ($20,900) for providing technical support to the gambling operation. Additionally, his earnings of 1.34 million yuan ($186,600) were confiscated.

• Wang, the head of BKEX’s audit department, responsible for Know Your Customer (KYC) verification and transaction processing, was sentenced to one year and 11 months in prison, along with a fine of 52,000 yuan ($7,250).

• Dong, an agent who recruited users by distributing referral links and QR codes, was sentenced to one year and six months in prison (suspended) and fined 35,000 yuan ($4,880). Dong’s commission earnings of 223,000 yuan ($31,000) were also confiscated.

Ongoing Crackdown on Cryptocurrency Activities in China

This ruling is part of China’s ongoing crackdown on cryptocurrency-related activities, which the government considers a risk to financial stability. Over the years, China has introduced multiple measures aimed at curbing crypto operations, including:

• A 2013 ban on banks handling cryptocurrency transactions

• A 2017 ban on Initial Coin Offerings (ICOs) and cryptocurrency exchanges

• A 2021 crackdown on crypto trading and mining

The BKEX case is a significant example of China’s approach to regulating the cryptocurrency industry and its ongoing efforts to clamp down on activities that are deemed to violate the country’s financial regulations.

As the Chinese government continues to tighten its grip on cryptocurrency-related activities, this case serves as a reminder of the legal risks involved in operating crypto platforms in jurisdictions with strict regulatory environments.