Chinese Court Shuts Down BKEX Crypto Exchange Over Illegal Gambling Activities

In a landmark ruling on January 29, 2025, the People’s Court of Pingjiang County, Hunan Province, convicted the Chinese cryptocurrency exchange BKEX of engaging in illegal gambling through its contract trading platform. Several key employees and agents were sentenced to prison for their involvement in what the court deemed as “opening a casino” under Chinese law.

The Court’s Ruling: Crypto Trading Deemed as Gambling

The court determined that BKEX’s contract trading operations functioned similarly to an online gambling platform, despite its focus on cryptocurrency. The exchange allowed users to speculate on the price movements of major digital assets like Bitcoin (BTC) and Ether (ETH) using high leverage—up to 1,000x in some cases. Traders could place bets using USDT, a stablecoin pegged to the US dollar.

In traditional futures trading, buyers and sellers agree on the price of an asset at a set future date. When combined with leverage, this setup magnifies both potential profits and losses. The court, however, found that BKEX’s model resembled illegal gambling, as it involved “gathering people to place bets” on financial outcomes, a practice explicitly banned under Chinese law.

Founded in 2018 by Ji Jiaming through Chengdu Dechen BiKe TianXia Technology Co., BKEX initially operated under multiple company registrations, frequently changing its structure to avoid regulatory scrutiny. Despite these efforts, the platform continued to expand, drawing in more than 270,000 users, including 60,000 active traders.

By the time authorities intervened, BKEX had generated over 54.7 million USDT in profit from its contract trading operations. However, its rapid growth did not shield it from the intensifying regulatory crackdown on cryptocurrency exchanges in China.

Sentencing of BKEX Employees and Agents

The court handed down sentences to eight individuals involved in BKEX’s operations, including key personnel and agents. Notably:

• Zheng Lei, a former wallet engineer and department head, was convicted of providing technical support to BKEX’s gambling activities. He received a sentence of two years and one month in prison along with a fine of 150,000 yuan ($20,900). His personal earnings of 1.34 million yuan ($186,600) were also confiscated.
• Wang, the head of BKEX’s audit department, was responsible for Know Your Customer (KYC) verification and processing transactions. He was sentenced to one year and 11 months in prison and fined 52,000 yuan ($7,250).
• Dong, an agent who helped recruit new users by distributing QR codes and referral links, earned $33,558 in commissions. He was sentenced to one year and six months in prison (suspended) along with a fine of 35,000 yuan ($4,880). Additionally, his earnings of 223,000 yuan ($31,000) were confiscated.

The Ongoing Crackdown on Crypto in China

This ruling is part of China’s broader effort to combat cryptocurrency-related activities, which are seen as a threat to the country’s financial stability. The Chinese government has taken a hard stance against crypto over the years, with major actions including:

• A 2013 ban on banks handling cryptocurrency transactions.
• A 2017 ban on Initial Coin Offerings (ICOs) and exchanges.
• A 2021 crackdown on cryptocurrency trading and mining.

Despite these efforts, underground crypto activities have continued to thrive, prompting the government to double down on enforcement.

BKEX’s legal downfall highlights China’s growing intolerance for cryptocurrency exchanges that operate outside the bounds of its strict regulatory framework. With the government’s persistent crackdown on digital assets, the future of crypto trading in the country remains uncertain, and further legal actions against similar platforms could be on the horizon.