By way of example: Playing contracts in the crypto world is gambling?

Recently, the Pingjiang Court in Hunan Province publicly announced 8 criminal judgments related to BKEX (Coin Guest) Virtual Moneyexchange, causing a stir in the crypto worldfren. The main reason is that the judicial authorities have determined Contract Trading of Virtual Moneyexchange as gambling, and then Virtual Moneyexchange is a casino. As a result, the relevant bosses and employees are suspected of operating a gambling establishment.

Is the legal basis for such determination sufficient? What are the points of controversy? As a web3 lawyer, Lawyer Liu will analyze it in a small article today.

Background of the Case

The Pingjiang Court found that around July 2017, Ji Mouming and others cooperated with BKEX exchange to develop Contract Trading function. After installing the ‘BKEX’ app or logging in to its official website, users can recharge with Tether (USDT) and then buy contracts for mainstream coins such as BTC and ETH.

Users can “buy long on ( bullish sentiment” or “sell short on ) bearish sentiment” through regular perpetual contracts (up to 100 times leverage) and crazy contracts (125 times-1000 times leverage). In addition, the “BKEX” exchange has functions such as market reference data, forced liquidation, matching trading, platform betting trading, and agent commission rebate.

In the ‘Court Findings’ section, it is shown that the business team formed by Mr. Lei developed a multi-level agency and user network, directly or through others, with more than 10,000 sub-agents. As of the time of the case, the ‘BKEX’ platform had a total of over 270,000 Futures Trading users, including more than 60,000 active users. The platform accumulated a net profit of 54,797,677 USDT(, which is equivalent to approximately 300 million yuan), by charging fees during user withdrawals and bets, as well as through forced liquidation and gambling profits.

According to the court judgment, there are no more detailed details of the case. At present, it can be confirmed that the main culprit in this case should be Ji Mouming and Lei Mou, of which Ji Mouming has not been arrested, and is most likely abroad; Lei Mou has been sued in another case, and the judgment may not have taken effect or been rendered at present.

Eight judgments that have been made public are all basic employees or agents of the “BKEX” exchange, and the sentences have not exceeded five years.

( What is the crime of running a casino?

To understand the crime of running a casino, you first need to know what gambling crime is.

There is no definition of gambling in the “Criminal Law” of our country. Generally speaking, gambling is regarded in academic circles as the act of “using chance to gamble with property or games of chance” (Zhang Mingkai). However, not all gambling activities are prohibited by law. Only two types of gambling are not allowed by Chinese law: first, organizing gambling activities with multiple people; second, engaging in gambling as a profession (full-time or part-time). In specific identification, our country has relevant judicial interpretations with detailed provisions, which Lawyer Liu will not elaborate on.

The crime of setting up a gambling den refers to providing a venue or space for gambling to others, and controlling the behavior of the gambling den. It is stipulated in Article 303, paragraph 2 of the Criminal Law of our country. With the proportion of online crimes increasing in traditional crimes, the “Two Highs and One Department” issued the “Opinions on Several Issues concerning the Application of Law in Handling Cases of Online Gambling Crimes” in 2010, which includes situations such as “setting up a gambling website and accepting bets”, “setting up a gambling website and providing gambling for others”, and “acting as an agent for a gambling website and accepting bets”, all of which are specified as the criminal act of “setting up a gambling den” in the Criminal Law, that is, the crime of setting up a gambling den.

The punishment for setting up a casino includes two levels: for general circumstances, imprisonment for a term of no more than five years, criminal detention or control; for serious circumstances, imprisonment for a term of more than five years; both levels are subject to a fine.

![Opinion: Is playing futures trading in the crypto world gambling?])https://img.gateio.im/social/moments-a930875c5fe17662dc737c7c53c09647###

( Is playing futures trading gambling?

Returning to the topic of the crypto world that fren are concerned about. Among the people who speculate on cryptocurrencies, most of them have dreams of getting rich overnight to varying degrees. Of course, buying spot cannot achieve this dream (unless the market has a quite astonishing performance); for most people, they still think of getting rich by playing futures trading.

In the ‘Crazy Contract’ of the ‘BKEX’ exchange, there is actually a 1000x contract gameplay. If you buy the right direction, you can indeed become a ‘5U War God’. But in reality, does this gameplay comply with legal regulations?

It’s a pity that according to current Chinese law, this kind of gameplay can indeed be classified as gambling.

According to Guiding Case No. 146 of the Supreme People’s Court (December 2020) – the case of Chen Qinghao et al. Opening a Casino, the court’s adjudication view is that, in addition to the statutory futures exchange, the Internet is used to solicit investors, and the price trend of foreign exchange varieties in a certain period of time in the future is used as the trading object, and the profit and loss are determined according to the “buy up” and “buy down”, and the investors who buy in the opposite direction make a profit and buy the principal in the wrong direction belong to the market maker; If the profit and loss result is not linked to the actual rise and fall of the price, it is still essentially a gambling behavior of “betting on the size and winning or losing”. The corresponding website shall be recognized as a gambling website.

In the Futures Trading of the Virtual Money exchange, the series of high-risk behaviors such as Virtual Money + ultra-high leverage + perpetual contract, etc. are naturally difficult to gain favor in the judicial authorities that already hold a negative view of Virtual Money. Especially in a judicial environment dominated by a mindset of criminalization, opening a Virtual Money exchange in mainland China is bound to involve criminal liability.

So for fren who often play futures, especially when you play futures full-time or part-time and your main source of income is playing futures, there may indeed be a suspicion of gambling. However, due to practical factors such as Virtual Money exchange being located overseas, the difficulty for judicial authorities to investigate and obtain evidence is high; the anonymity of trading Virtual Money is strong and its connection to the real world is weak; the regulation of Virtual Money for ordinary investors by the country is weak, etc., all of which have resulted in few legal risks for fren who trade coins in the real world. The current risk is mainly reflected in the freezing of cards when buying or selling U.

) Four, Finally

Since the release of the ‘9.24 Notice’ in 2021, mainland China’s Virtual Money exchange bosses have either gone overseas or changed their careers. Those who insist on operating domestically are destined to face criminal crackdowns in the country. Over the past two years, lawyer Liu has handled a number of cases involving the establishment of Virtual Money exchanges, with the most common situations being charged with running a gambling establishment or engaging in pyramid schemes. Whether it’s CZ or Sun Yuchen, the probability of escaping criminal accountability upon returning to mainland China is very low.

However, it seems that it is impossible for Virtual Money represented by Bitcoin to completely disappear since its development in 2009. Regulators in China should consider how to properly embrace Virtual Money, but this seems to be impossible. Any form of acceptance will lead to an impact of Virtual Money on sovereign currency and financial order, which is unacceptable to some. The future is unclear at the moment.