With a leverage system resembling high-stakes betting, the court found that crypto perpetual contracts mirror the mechanics of gambling rather than financial investing.
A Chinese court has ruled that crypto futures trading constitutes illegal gambling, marking a significant precedent in China’s ongoing crackdown on digital asset activities, a local news media reported on Thursday.
The verdict, handed down by the People’s Court of Pingjiang County in Hunan Province, specifically targeted employees and agents of BKEX, a crypto exchange accused of facilitating gambling through its perpetual contract trading services.
Court Defines Perpetual Futures Contracts as Gambling
The court’s decision stemmed from multiple criminal judgments related to BKEX’s operations. According to the ruling, the platform’s perpetual contract trading function was designed in a way that encouraged high-risk speculative betting. Users would deposit USDT USDT $1.00 24h volatility: 0.0% Market cap: $144.13 B Vol. 24h: $49.68 B as collateral, apply leverage of up to 1,000x, and wager on the price movements of cryptocurrencies such as Bitcoin BTC $83 779 24h volatility: 2.2% Market cap: $1.66 T Vol. 24h: $29.59 B and Ethereum ETH $1 881 24h volatility: 1.7% Market cap: $226.87 B Vol. 24h: $15.62 B .
The court determined that this structure closely resembled a gambling operation rather than a legitimate trading activity.
The judgment further revealed that BKEX employed a multi-level agent system, where representatives recruited users and earned rebates based on trading volumes. This, the court argued, contributed to an illegal online gambling network.
BKEX Employees and Agents Convicted for Fraud
The case also resulted in convictions for several BKEX employees and agents. Among them, Zheng Lei, a former wallet engineer and head of the wallet department, was sentenced to two years and one month in prison, suspended for the same period. He was also fined RMB 150,000 and had his illegal earnings of RMB 1.34 million confiscated.
Another key figure, Wang, who headed BKEX’s audit department, was sentenced to one year and eleven months in prison, along with a fine of RMB 52,000. The court ruled that he knowingly provided financial settlement services for an illegal gambling platform.
Agents like Dong, who actively promoted BKEX and recruited users into the platform’s network, were also convicted. Dong received a suspended sentence of one year and six months and was ordered to forfeit his illegally earned commissions.
While employees and agents faced legal consequences, BKEX founder Ji Jiaming remains on the run. Court records indicate that Ji was the architect of the platform’s contract trading system and played a central role in its operation. Despite multiple company name changes, BKEX continued its activities until authorities launched their investigation.
A Landmark Case for Crypto Regulation in China
Meanwhile, the case underscores China’s increasingly strict stance on crypto trading. Since the government banned digital asset transactions and mining in 2021, authorities have pursued legal actions against platforms operating in violation of financial regulations.
The ruling reinforces Beijing’s position that digital asset speculation, especially involving leveraged trading, is a form of illegal gambling rather than a legitimate financial service.
As China continues to tighten its grip on the crypto industry, this landmark verdict signals potential further crackdowns on remaining digital asset platforms operating in the country.
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