A Chinese court has ruled that crypto futures trading constitutes gambling, marking a significant shift in regulatory enforcement. The decision by the Pingjiang County People’s Court in Hunan Province led to several BKEX exchange employees and promoters being found guilty of running an illegal gambling operation. However, many sentences were suspended.
BKEX Exchange and Gambling Allegations
Founded in 2018 by Ji Jiaming, BKEX quickly became a key player in crypto trading. Initially focused on spot trading, the platform later expanded into futures trading. Between July 2019 and January 2022, the company repeatedly changed its registration name before facing legal action. In 2021, BKEX introduced perpetual contracts with up to 1000x leverage, allowing users to trade with USDT stablecoin.
The court ruled that BKEX’s business model was structured around gambling, stating that its leverage-based trading system encouraged speculative behavior. According to local reports, the exchange “operated as an online gambling platform under the guise of crypto trading.”
BKEX’s Financials and Legal Repercussions
As per court documents, BKEX had over 270,000 users involved in contract trading, generating a net profit of $54.7 million (300 million yuan). Key players in the exchange’s operations faced legal action, while the founder Ji Jiaming remains at large.
Two key employees were sentenced:
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- Zheng Lei, a wallet engineer and head of the wallet department, received 25 months in prison, with a suspended sentence and a $30,000 fine. Additionally, his illicit earnings were confiscated, amounting to $200,000 in compensation.
- Wang, responsible for KYC verification and transaction processing, was sentenced to 23 months, with a $10,000 fine.
Several promoters were also penalized, including Dong, who built over 10,000 user funnels and earned 33,558 USDT in commissions. After voluntarily surrendering, Dong was sentenced to 18 months, with a suspended sentence and a $6,400 fine.
China’s Expanding Crypto Crackdown
This ruling underscores China’s ongoing regulatory crackdown on crypto trading and high-risk financial activities. The government has introduced stricter banking regulations to prevent illicit transactions. However, regulatory inconsistencies remain. While this ruling classifies crypto futures trading as gambling, China’s Supreme Court has previously recognized cryptocurrencies as legal assets, treating them as commodities.
Despite tightening regulations, crypto adoption in Asia continues to thrive. The region accounts for 60% of global crypto users, maintaining its influence in the evolving digital asset market.
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