Court Bans Crypto Futures Trading: China's Latest Blow to Crypto Industry

China's Court Declares Crypto Futures Trading Illegal Gambling in Major Ruling

In a significant development, a Chinese court has ruled that cryptocurrency futures trading constitutes illegal gambling. The ruling, issued by the People's Court of Pingjiang County, Hunan Province, has convicted several BKEX exchange employees and external promoters as accomplices in the crime of opening a casino.

The court determined that BKEX's contract transactions functioned as a form of online gambling, as they involved gathering people to place bets on financial outcomes. The platform allowed users to place bets using USDT, a stablecoin pegged to the US dollar, and apply high leverage, up to 1,000x in some cases, to wager on the price movements of Bitcoin (BTC), Ether (ETH), and other cryptocurrencies.

The ruling is part of China's ongoing crackdown on cryptocurrency-related activities, which the government considers a threat to financial stability. The government has previously implemented measures such as a 2013 ban on banks handling crypto, a 2017 ban on ICOs and exchanges, and a 2021 crackdown on trading and mining.

The court's decision sets a precedent for stricter enforcement against exchanges that offer leveraged trading. This could drive more platforms underground or force them to relocate operations overseas. Additionally, the ruling may deter professionals from working in the crypto sector due to the associated legal risks.

BKEX Exchange, founded in 2018 by Ji Jiaming, was central to the case. Wu Blockchain, citing recently published criminal judgments, reported that Ji Jiaming is on the run. The exchange initially facilitated cryptocurrency spot trading but later expanded into futures trading. Specifically, between July 2019 and January 2022, the company changed its registered name multiple times during its eventual dissolution. By 2021, BKEX introduced a perpetual contract trading function, allowing users to leverage their bets using USDT stablecoin.

According to the report, the court determined that this trading model amounted to gambling. The court stated that it encouraged speculation on Bitcoin (BTC) and Ethereum (ETH) price movements with leverage as high as 1,000 times. "BKEX gathered people for gambling via the internet," local media reported, citing the court ruling.