China’s Pingjiang County Court in Hunan Province ruled several BKEX cryptocurrency exchange futures transactions were illegal gambling.
These judgments, focusing primarily on BKEX employees and agents, establish a significant legal precedent by classifying the exchange’s contract trading as gambling and designating its agents and employees as accomplices in the crime of operating an illegal casino.
Investigation Details on BKEX Exchange
BKEX, founded in 2018, initially traded cryptocurrencies. In early 2021, it added high-leverage perpetual contracts, essentially turning it into an online gambling platform, according to the court.
Founder Ji Jiaming, lacking experience, partnered with Lei Le, who ran the contract trading operation. Profits were split 58/42 between Ji’s Chengdu and Lei’s Shenzhen teams.
BKEX, accessible via app and website, lets users leverage trades 1x to 1000x, magnifying their investment, and bet on the price fluctuations of cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).
The platform integrated market data, forced liquidation mechanisms, and a tiered agent rebate system, facilitating the expansion of the user base to over 270,000 users who traded contracts. According to the court’s judgment, this generated 54,797,677 USDT (over 300 million yuan) in profit, which transformed the platform into an online gambling operation.
Court Convictions
Given Ji Jiaming’s fugitive status, the court focused on his employees and agents. Eight separate judgments were issued involving two employees and six agents.
The judgments detail the roles of various defendants. For example, the authorities found Zheng Lei, a wallet engineer and head of the wallet department, guilty of providing essential technical support for the platform’s illegal operations. They implicated Wang, the head of the audit department, for his role in processing transactions and facilitating fund settlements. Both individuals received suspended sentences, substantial fines, and the forfeiture of their illicit gains.
The court consistently characterized the defendants as accomplices, acknowledging their subordinate roles and varying degrees of involvement within the organization.
Despite clear convictions, the consistent application of suspended sentences suggests consideration of mitigating factors such as cooperation with authorities, restitution of illicit gains, and expressions of remorse.