Chinese court: Virtual Money contracts are gambling, BKEX exchange employees convicted of "running a gambling operation"

A court in China's Hunan Province recently ruled that BKEX exchange's Contract Trading was "gambling" and sentenced a number of employees and agents for "opening a casino", and the founder is still at large. Analysis of legal experts: Does an individual's frequent participation in Contract Trading also constitute the crime of gambling? Why did Chinese courts rule that holding cryptocurrency is not illegal, and there is no need to be overly optimistic? (Background added: Alipay now encryption advertising is a precursor to unbanning?) Lawyer: China may open coin franchising, but mining and coin issuance are still early) Recently, the People's Court of Pingjiang County, Hunan Province, China, announced a number of criminal judgments involving BKEX (coin) exchange, finding that the platform's Contract Trading was gambling, and pursuing the criminal responsibility of relevant employees and agents for the crime of "opening a casino", which caused widespread follow-up by the coin community. Case background According to Wu, BKEX exchange was founded by Ji Jiaming in Chengdu, Sichuan Province in 2018, mainly providing Virtual Money exchange and Spot trading services. In 2021, the platform launched the perpetual Contract Trading function, allowing users to use USDT for deposit, and trade with BTC, ETH and other Virtual Money ups and downs through high leverage (up to 100 times for ordinary Perptual Futures, 125 times – 1000 times for crazy contracts). Subsequently, Ji Jiaming reached a cooperation with Lei Le, and Lei Le was responsible for the operation and promotion of Contract Trading, a BKEX platform. As of the time of the case, the platform has more than 270,000 Contract Trading users, including more than 60,000 active users. BKEX has accumulated a net profit of about 54.798 million USDT (about 300 million people's coin) through user withdrawal fees, transaction fees, forced Close Position and gambling profits. The judgment states that the court found that BKEX exchange's Contract Trading was essentially online gambling. Since the founder Ji Jiaming is still at large, Lei Le is sued in a separate case, and the judgment that has been made public is mainly against the internal employees and agents of the platform, involving 2 employees and 6 agents respectively. Among them, Wallet engineer Zheng Lei was sentenced to 2 years and 1 month in prison, suspended for 2 years and 1 month for the crime of "opening a casino", and fined 150,000 yuan of people's coin, and the illegal income of 1.34 million yuan of people's coin was fully recovered and turned over to the state treasury. Wang Mou, the head of the audit department, was also sentenced to 1 year and 11 months in prison for the crime of "opening a casino", fined 52,000 yuan of people's coin, and recovered about 520,000 yuan of his illegal income and turned it over to the state treasury. In addition, Dong Moumou, the agent responsible for the publicity and promotion of the platform, was sentenced to 1 year and 6 months in prison, suspended for 1 year and 6 months, fined 35,000 yuan of people's coin, and recovered about 223,000 yuan of people's coin, which was handed over to the state treasury by the public security organs. Does playing a contract constitute a gambling offence? In summary, in the BKEX case, the Chinese judicial authorities determined that Virtual Moneyexchange's Contract Trading was gambling, thus treating the BKEX platform as a "casino", and the relevant responsible persons and employees were charged with the crime of "opening a casino". In this regard, when Web3 lawyer Liu Zheng wanted to analyze whether the legal basis of the case was sufficient, he first pointed out that in order to understand the "crime of opening a casino", we must first understand the "crime of gambling". According to China's Criminal Law, not all gambling is illegal, and only "gathering multiple people to gamble" or "gambling as a business" will break the law. The crime of "opening a casino" involves the provision of gambling establishments and the operation of casinos, and has been extended to online gambling, such as setting up gambling websites and providing bets. Lawyer Liu cited the Supreme Court's Guiding Case No. 146 of 2020, which found that if investors are solicited through the Internet outside the statutory futures exchange, and the price rises and falls as the target of trading, if the profit and loss result has nothing to do with the actual market fluctuation, but "bets on the size and wins and losses", it can be recognized as gambling. BKEX exchange, which offers trading methods such as high leverage and Perptual Futures, is considered similar to this case, so it was found by the judicial authorities as gambling and thus criminalized. Especially in China, the judicial authorities have a highly cautious and even criminalized attitude towards Virtual Money transactions, making the opening of Virtual Money Exchange necessarily involve criminal liability. If an individual engages in highly leveraged contract trading on a full-time or part-time basis and uses this as their main source of income, it may be recognized as a suspected "gambling offence". However, since the Virtual Moneyexchange is mostly set up overseas, it is difficult for the judicial authorities to investigate and collect evidence, coupled with the transaction has Anonymity, and the supervision is mainly aimed at the exchange rather than ordinary investors, the current legal risk for individual contract traders in China is low, and the main risk is still the freezing of funds when buying and selling USDT. The case reflects the Chinese government's strict regulatory attitude towards Virtual MoneyContract Trading. Investors should raise their risk awareness and be cautious about participating in highly leveraged trading to avoid breaking the law. Related reports Chinese court ruling: Cryptocurrency mining contract is invalid! The risk of loss is borne by investors Seventh anniversary of BTC's "94 incident": a ban wiped out the Chinese market, what is the current situation? China's trading of USDT "can be closed for more than five years", Guangdong court case: it is a crime of illegal foreign exchange trading, endangering national financial security "Chinese court: Virtual Money contract is gambling, BKEXexchange employee "opened a casino" was sentenced" This article was first published in BlockTempo "Dynamic Trend - The Most Influential Block Chain News Media".