A Chinese court has convicted several staff members of the cryptocurrency exchange BKEX for their involvement in facilitating crypto contract gambling. The convictions highlight the ongoing crackdown on cryptocurrency-related activities in China, even as the regulatory landscape surrounding digital assets remains complex.
On January 29, the People’s Court of Pingjiang County, Hunan Province, determined that BKEX’s contract transactions were a type of online gambling and that the individuals involved were accomplices to the crime of “opening a casino.”
The ruling states that BKEX permitted customers to employ USDT (USDT $0.9998), a stablecoin tied to the US dollar, with up to 1,000x leverage to bet on the price fluctuations of Bitcoin (BTC), Ether, and other cryptocurrencies.
The court’s decision focused on the staff member’s role in enabling users to engage in futures trading and other forms of leveraged crypto trading, which were deemed to constitute gambling under Chinese law. While details of the specific charges and sentences haven’t been fully disclosed publicly, the case underscores the risks associated with operating cryptocurrency exchanges and offering related services within China’s regulatory framework.
This legal action serves as a stark reminder of the stringent regulations governing cryptocurrency in China. While the country has explored the development of its own central bank digital currency (CBDC), it maintains a strict stance against most other cryptocurrency activities, including trading, mining, and offering related financial services. The conviction of the BKEX staff is likely to further deter individuals and businesses from engaging in such activities within the country’s jurisdiction.
The case also raises questions about the future of cryptocurrency exchanges that have previously catered to the Chinese market. Many exchanges have already shifted their operations overseas due to the tightening regulations, and this latest development could accelerate that trend. It reinforces the need for clarity and consistency in regulatory frameworks surrounding cryptocurrencies globally, as jurisdictions grapple with how to manage this rapidly evolving asset class.
