The People’s Court of Pingjiang County, Hunan Province, has classified futures trading on a crypto exchange as gambling.
The ruling has resulted in the conviction of several BKEX exchange employees and external promoters as accomplices in the crime of opening a casino. However, most of the sentences were ultimately suspended.
BKEX Exchange and the Gambling Allegations
The BKEX exchange, founded in 2018 by Ji Jiaming, is central to the case. Wu Blockchain, citing recently published criminal judgments, reported that Ji Jiaming is on the run.
BKEX exchange was initially established under Chengdu Dechen BiKe TianXia Technology Co., Ltd., facilitating cryptocurrency spot trading, which later expanded into futures trading. Specifically, between July 2019 and January 2022, the company changed its registered name multiple times during its eventual dissolution. By 2021, BKEX introduced a perpetual contract trading function, allowing users to leverage their bets using USDT stablecoin.
According to the report, the court determined that this trading model amounted to gambling. The court stated that it encouraged speculation on Bitcoin (BTC) and Ethereum (ETH) price movements with leverage as high as 1,000 times.
“BKEX gathered people for gambling via the internet,” local media reported, citing the court ruling.
Reportedly, due to a lack of operational expertise, Ji Jiaming collaborated with Lei Le, who established a team in Shenzhen responsible for running the contract trading module. The agreement split net profits, with 58% going to Jiaming’s Chengdu team and 42% to Lei’s Shenzhen operation.
The court revealed that BKEX had over 270,000 users participating in contract trading, generating a net profit of over $54.7 million (approximately 300 million yuan). With the founder, Ji Jiaming, still at large, the trial focused on employees and agents. Among the eight defendants named in court documents, two were employees, and six were agents.
One of the convicted individuals, Zheng Lei, served as a wallet engineer and head of the wallet department. He received a 25-month prison sentence, suspended for the same duration, and fined 150,000 yuan (nearly $30,000). The court also confiscated his illegal earnings of 1.34 million yuan.
Another employee, Wang, who oversaw KYC authentication and cryptocurrency transactions, received a 23-month suspended sentence with a fine of 52,000 yuan (nearly $10,000). Additionally, agents like Dong, who recruited users to the platform, were convicted.
For example, Dong developed over 10,000 sub-agents and earned 33,558 USDT in rebates before turning himself in. He received an 18-month prison sentence, suspended for the same period, and was fined 35,000 yuan (around $6,400).
China’s Growing Crypto Regulations
This ruling aligns with China’s ongoing crackdown on risky cryptocurrency activities. Recently, the Chinese government introduced stricter bank regulations to curb illicit crypto trading, reinforcing its long-standing stance against speculative investments in digital assets.
However, China’s regulatory playing field remains complex. While the recent court decision treated crypto trading as gambling, a prior ruling by China’s High Court recognized cryptocurrencies as legal property, acknowledging their commodity status. This apparent contradiction highlights the growing nature of China’s approach to digital assets.
Despite regulatory crackdowns, cryptocurrency adoption continues to thrive in China. The country remains a major player in the global crypto market. As BeInCrypto reported, Asia leads the world in adoption—accounting for 60% of global crypto users. Reports suggest that Chinese investors are still actively engaged in digital asset trading, often through decentralized platforms and overseas exchanges.
Nevertheless, the court’s decision to categorize crypto futures trading as gambling could have broad implications for the digital asset industry in China. It sets a precedent for stricter enforcement against exchanges that offer leveraged trading. This could drive more platforms underground or force them to relocate operations overseas.
Given the legal risks associated with crypto-related employment in China, the ruling may also deter professionals from working in the sector. For now, the future of crypto trading in China remains uncertain, balancing between regulatory crackdowns and the undeniable market demand for digital assets.
