China has meted out stiff penalties to agents and employees of crypto contract trading platform BKEX, finding them guilty of facilitating illegal gambling
At a time when Polymarket and Kalshi have found respite in the United States, with regulators likely to ease up the pressure, China is tightening the screws on crypto contracts.
The latest case comes from The People’s Court of Pingjiang County, Hunan Province, where the judge presiding over the case against BKEX, a crypto contract trading platform, ruled against the defendants.
Crypto Contract Trading Platform’s Employees Accused of Supporting Gambling Operation
BKEX members of staff and agents were convicted of having facilitated illegal gambling through the platform’s contract trading system. Essentially, users were allowed to place wagers on the price movement of Bitcoin, Ether, and other cryptocurrencies.
All wagers were accepted in USDT, a stablecoin pegged to the value of the US dollar. These platforms have come under a lot of scrutiny, particularly in places such as Singapore, France, and the United States, but under the Trump administration, opposition to crypto contracts seems to have lessened.
The platform was launched in 2018 and halted in 2021, but it has been able to generate $54.7 million in revenue. All money was processed through USDT and the platform was able to pull in a user base of 270,000 people with 60,000 active users.
The company was re-registered several times according to the court to avoid detection, but authorities eventually caught up to it all the same, shuttered its operations, and eventually brought several individuals on criminal charges.
Among the people sentenced was Zheng Lei, who worked as a wallet engineer and department head. He was convicted of having provided technical support to the company, which was referred to as a gambling operation. He will serve a two-year and one-month prison sentence and pay a $20,900 fine.
Defendants Fail to Convince Court of Their Innocence
Zheng’s earnings, supposedly $186,600, were confiscated from him as well. Another person identified as Wang who was responsible for the platform’s KYC verification and transaction processing will serve 11 months and pay $7,250 fine.
Yet another employee – Dong, who was charged with promoting the platform through the distribution of QR codes and referral links will serve one year and six months in prison. He will also pay a $4,880 fine and has had his $31,000 earnings from his work confiscated.
China takes a dim view of private cryptocurrency and for years has banned the mining of cryptocurrency. Crypto contract platforms are another area that is on thin legal ice in China, but the latest case clearly demonstrates that courts in the country have little sympathy for such operations.
