The New York Law Journal reports on a new federal lawsuit filed by Murphy’s Law founding partner Liam Murphy on behalf of investor Xiaoliang Mou against cryptocurrency exchange BKEX, its parent company BTC King Technology Co. Ltd., and founder Ji Jiaming. Reporter Michael A. Mora covers the case, which was filed in the U.S. District Court for the Southern District of New York.
The complaint alleges that BKEX fraudulently induced Mou to deposit more than $8 million in digital assets by promising secure custody, only to suspend withdrawals and collapse after diverting customer funds beyond their reach. Between 2020 and 2022, Mou deposited approximately 115.93 Bitcoin, 14.908 Ethereum, and $53,640 in USD-denominated stablecoins into the platform, relying on the exchange’s representations that customer assets were held securely, reflected accurately on internal ledgers, and available for withdrawal on demand.
According to the filing, BKEX routinely transferred customer deposits to crypto wallets associated with Binance without authorization, while continuing to display those assets as available within users’ accounts. These undisclosed transfers allegedly placed the crypto beyond customers’ control while creating a false impression that the exchange remained solvent. BKEX abruptly suspended withdrawals on May 29, 2023, citing a criminal investigation involving certain personnel, but blockchain records show large volumes of cryptocurrency were moved through multiple wallets and exchanges shortly before and during the suspension.
The complaint further alleges that founder Ji Jiaming stole millions of dollars in cryptocurrency in the days surrounding the withdrawal freeze and remains a fugitive who has so far escaped criminal prosecution. The lawsuit brings claims under the Commodity Exchange Act, alleging a deceptive scheme carried out in connection with commodity-linked trading activity.
Murphy told the New York Law Journal that the case reflects a broader pattern of investors relying on representations of stability and regulatory credibility from cryptocurrency platforms, only to discover that access to their assets could be halted without warning.
If you have lost access to funds on a cryptocurrency exchange, Murphy’s Law handles crypto fraud recovery and platform-liability litigation. Contact us for a free consultation to discuss your legal options.