BKEX Exchange Has Ceased Operations, Its Leveraged Token Products No Longer Have an Active Market
BKEX (Biker) exchange ceased operations in late May 2023, and users can no longer access the platform. Consequently, its previously offered leveraged tokens and other trading products no longer have an active market. Looking back at BKEX's history, the platform once faced legal action in mainland China due to its contract trading function and was deemed an illegal activity by the courts.
Legal Characterization and Regulatory Risks of BKEX
According to several criminal judgments released by the Pingjiang County People's Court in Hunan in January 2025, BKEX exchange's contract trading function was deemed "gambling" by the court. The court ruled that relevant employees and agents were accomplices in "operating a casino." BKEX's founder, Ji Jiaming (also known as Ji Jingyan), is currently at large. People's Bank of China (PBOC) and 10 other ministries and commissions explicitly stated as early as September 2021 that overseas virtual currency exchanges providing services to residents in mainland China constitute illegal financial activities. BKEX's continued operation against this backdrop undoubtedly carried extremely high risks.
General Price Mechanism of Leveraged Tokens (Previously Adopted by BKEX)
Although BKEX has ceased operations, the leveraged tokens (Leveraged Tokens or Leveraged ETPs) it once offered typically followed a set of industry-standard price mechanisms. These tokens are designed to provide a fixed multiple of the underlying asset's daily returns (for example, a token that goes long 3x on Bitcoin would theoretically increase by 3% if Bitcoin rises by 1%).
- Tracking perpetual contracts: The value of leveraged tokens is usually linked to the market value fluctuations of a basket of perpetual contract positions.
- Daily rebalancing: To maintain the target leverage level, leveraged tokens undergo daily rebalancing operations. This means that token issuers buy and sell assets to adjust positions, reinvesting when profitable or reducing risk when losing. However, frequent rebalancing can lead to "volatility decay," especially in volatile markets, where the long-term performance of holding leveraged tokens may deviate from the leveraged performance of the underlying asset.
- No liquidation risk: For users, leveraged tokens are designed to avoid the liquidation risk inherent in traditional margin trading, and users do not need to manage margin.
- Fees: Leveraged tokens typically charge management fees. For example, BKEX previously charged a 0.3% maker fee and a 0.4% taker fee for ETF transactions, along with dynamic management fees.
Risk Warning and Industry Alert
The BKEX case once again reminds investors that participating in cryptocurrency trading requires choosing compliant and transparent platforms and fully understanding the risks of related products. For platforms that have ceased operations or have been deemed illegal by regulatory agencies, their products and services are no longer available, and there may be significant legal risks. Before conducting any transactions, investors should verify project information and platform status through reliable market information platforms such as Svmuu, and independently verify the compliance and security of trading channels to avoid unnecessary risks.
