A Chinese court has convicted several employees of cryptocurrency exchange BKEX for facilitating illegal gambling through contract trading. The People’s Court of Pingjiang County, Hunan Province, ruled on January 29 that BKEX’s operations amounted to “opening a casino”, leading to multiple prison sentences and fines.

High-Leverage Crypto Trading Declared Illegal

BKEX, founded by Ji Jiaming in 2018, allowed users to trade crypto contracts using USDt (Tether), a stablecoin pegged to the US dollar. The platform offered extreme leverage, reportedly up to 1,000x, enabling users to place high-risk bets on Bitcoin (BTC), Ether (ETH), and other cryptocurrencies.

Chinese authorities determined that these transactions resembled online gambling, as users were speculating on future price movements in a way that closely mirrored casino-style betting. The court found that BKEX actively encouraged gambling-like behavior, making it a criminal offense under Chinese law.

BKEX’s Growth and Legal Crackdown

BKEX gained popularity, amassing over 270,000 registered users, including 60,000 active traders. Before authorities intervened, the exchange reportedly generated $54.7 million in profit from its contract trading services.

To evade regulatory scrutiny, founder Ji Jiaming repeatedly changed the company’s registration before ultimately dissolving it. In 2021, he joined forces with Lei Le to expand the platform’s perpetual contract trading operations from Shenzhen. However, China’s strict stance on crypto activities led to a crackdown on the exchange.

Employees Sentenced for Involvement

A total of eight individuals faced criminal charges for their roles in operating BKEX.

• Zheng Lei, a former wallet engineer, was sentenced to two years and one month in prison with a $20,900 fine. His earnings of $186,600 were confiscated.
• Wang, the head of BKEX’s audit department, received a one-year, 11-month sentence and a $7,250 fine.
• Dong, an agent who recruited users, was sentenced to one year and six months (suspended) and fined $4,880. Authorities confiscated his earnings of $31,000.

China’s Continued Crypto Crackdown

China has maintained a strict anti-crypto stance for over a decade. Authorities first banned banks from handling cryptocurrencies in 2013, outlawed ICOs and exchanges in 2017, and imposed a nationwide crypto trading and mining ban in 2021. The BKEX case reinforces China’s commitment to preventing unauthorized digital asset activities, particularly those resembling gambling or financial speculation.

With the crackdown intensifying, crypto exchanges and trading platforms catering to Chinese users face growing legal risks, highlighting the challenges of operating in one of the world’s most restrictive crypto environments.