China Cracks Down on BKEX: Employees Convicted for Illegal Crypto Gambling

China has intensified its crackdown on cryptocurrency-related activities, convicting several employees of the crypto trading platform BKEX for facilitating illegal gambling through its contract trading system. The ruling, delivered by the People’s Court of Pingjiang County, Hunan Province, highlights the government's stringent stance against unauthorized betting operations in the digital asset space.

Key Takeaways

BKEX employees were found guilty of facilitating illegal gambling through crypto contracts.
The court ruled that contract trading on BKEX constituted illegal gambling under Chinese law.
Several employees received prison sentences and fines for their roles in the operation.

The Court's Ruling

On January 29, 2025, the People’s Court of Pingjiang County determined that BKEX’s contract trading functioned as a form of illegal gambling. The court classified the activities as “opening a casino,” as users were allowed to place bets on the price movements of cryptocurrencies like Bitcoin and Ether using USDT, a stablecoin pegged to the US dollar.

The court found that BKEX’s operations involved high leverage, allowing users to amplify their bets significantly, which further contributed to the classification of these activities as gambling.

Sentences Imposed

A total of eight individuals, including employees and agents of BKEX, faced criminal charges. Notable sentences included:

Zheng Lei: Former wallet engineer and department head, sentenced to 2 years and 1 month in prison, fined 150,000 yuan ($20,900), and had his earnings of 1.34 million yuan ($186,600) confiscated.
Wang: Head of the audit department, sentenced to 1 year and 11 months in prison, fined 52,000 yuan ($7,250).
Dong: An agent who promoted the platform, received a suspended sentence of 1 year and 6 months, fined 35,000 yuan ($4,880), and had his earnings of 223,000 yuan ($31,000) confiscated.

Background of BKEX

Founded in 2018 by Ji Jiaming, BKEX initially focused on cryptocurrency spot trading before expanding into futures trading. The platform gained significant traction, amassing over 270,000 users and generating more than 54.7 million USDT in profit before authorities intervened. The court revealed that the founder had repeatedly changed the company’s registration to evade scrutiny until it was ultimately dissolved.

Implications of the Ruling

This ruling is part of China’s broader crackdown on cryptocurrency activities, which the government views as a threat to financial stability. The decision to classify crypto futures trading as gambling could push such activities further underground or overseas, complicating the landscape for digital asset trading in China.

Despite the crackdown, cryptocurrency adoption remains prevalent in China, with many investors continuing to engage in digital asset trading, often through decentralized platforms and overseas exchanges. The future of crypto trading in China remains uncertain, balancing regulatory pressures with market demand for digital assets.