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China Convicts BKEX Staff in Crypto Gambling Case

China Convicts BKEX Staff in Crypto Gambling Case

BKEX employees were sentenced after a Chinese court ruled the crypto contract trading platform operated illegally, facilitating unauthorized gambling.

The cryptocurrency exchange BKEX was found to have engaged in unlawful gambling through its contract trading platform by a Chinese court, which also sentenced a number of its employees and agents to prison for their involvement in the scheme.

On January 29, the People’s Court of Pingjiang County, Hunan Province, found that BKEX’s contract transactions constituted an online gambling activity and that the parties involved were complicit in the crime of “opening a casino.”

The ruling stated that BKEX permitted users to speculate on the price movements of Bitcoin (BTC), Ether, and other cryptocurrencies using USDt USDT$0.9998, a stablecoin based on the US dollar, and to use high leverage, up to 1,000x in certain situations.

A Chinese cryptocurrency platform is embroiled in a legal battle.

In a financial contract known as futures trading, buyers and sellers commit to exchanging an asset at a predetermined price at a later time. Cryptocurrency enables traders to use leverage to speculate on price movements, increasing their potential gains and losses.

Because these activities involved assembling people to wager on financial outcomes, the court determined that they qualified as illegal gambling under Chinese law.

According to the court filings, the platform’s creator, Ji Jiaming, established BKEX in 2018 via Chengdu Dechen BiKe TianXia Technology. To avoid investigation, he altered the company’s registration several times before it was finally dissolved. Ji and Lei Le formed a team in Shenzhen in 2021 to develop and market the perpetual contract trading function, which became a crucial aspect of BKEX’s business operations.

Before authorities stepped in, BKEX’s contract trading generated more than 54.7 million USDT in profit and reached over 270,000 users, including 60,000 active traders.

Sentences for agents and BKEX’s employees

Eight people in all were charged with crimes.

Former department head and wallet engineer Zheng Lei was found guilty of giving technical assistance to a gambling operation. The court sentenced him to two years and one month in prison and a fine of 150,000 yuan ($20,900). His earnings of 1.34 million yuan ($186,600) were confiscated.

Wang, who oversaw BKEX’s audit division, was in charge of transaction processing and KYC verification. The court sentenced him to one year and 11 months in prison and a fine of 52,000 yuan ($7,250).

Dong, an agent who recruited users by distributing QR codes and referral links, earned $33,558 in commissions from BKEX. The court sentenced him to one year and six months in prison (suspended) and a fine of 35,000 yuan ($4,880). His earnings of 223,000 yuan ($31,000) were also confiscated.

The ruling is part of China’s ongoing crackdown on cryptocurrency-related activities, which the government considers a threat to financial stability. 

The government has repeatedly banned crypto, including a 2013 ban on banks handling crypto, a 2017 ban on ICOs and exchanges, and a 2021 crackdown on trading and mining.

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