Court in China says cryptocurrency ‘not protected by law’ in ruling that could set a precedent for bitcoin lawsuits


  • TECH
  • Monday, 23 Aug 2021

The plaintiff invested US$10,756 to buy tokens endorsed by three friends but the accounts were closed after the central bank reiterated the ban on crypto transactions. Chinese authorities outlawed the mining of cryptocurrencies this year, triggering a wave of migration by miners from China to central Asia and North America. — SCMP

Northern Shandong province’s high court said in public comments that “cryptocurrency is not protected by law” after reviewing a case involving virtual tokens, in a ruling that could set a precedent for other courts in China now that investment and trading in digital assets such as bitcoin is outlawed.

In the case, the plaintiff invested 70,000 yuan (RM45,608) to buy tokens endorsed by three friends in 2017, but the accounts were closed after the People’s Bank of China, the central bank, reiterated the ban on payment institutions supporting cryptocurrency transactions in 2018.

An intermediate court in Shandong’s capital city Jinan ruled in January 2021 that the plaintiff’s fraud allegation was not tenable because the assets did not have any legal status. Jinan city’s intermediate court upheld the ruling when the plaintiff appealed in March, according to the official verdict.

In reviewing the case, the high court of Shandong said in a statement on Sunday that “investing or trading cryptocurrency isn’t protected by law”.

This could deal a further blow to China’s cryptocurrency investment community, where centralised trading and financial payments related to digital currencies have been illegal since 2013.

Authorities outlawed the mining of cryptocurrencies this year, triggering a wave of migration by miners from China to central Asia and North America.

In a separate case, a prosecutor in Jiangsu’s Zhenjiang city last week reported a case where eight people used bitcoin as a medium to exchange the renminbi with South African rand, which circumvented the restrictions on Chinese citizens exchanging and withdrawing up to US$50,000 (RM211,300) per year in foreign currency.

The bitcoin exchange scheme has been operating since 2019, involving transactions totalling more than 1.4bil yuan (RM912.16mil). The procuratorate recommended that six of those involved be jailed for terms ranging from two to four years, and an investigation into the case continues, according to the prosecutor’s statement.

In another case, a man in Suzhou, Jiangsu province, was sentenced to 16 months prison for theft after he tampered with a meter box to get subsidised electricity for a crypto mining operation at home. He was found to have “stolen” electricity worth more than 26,000 yuan (RM16,940).

In May, the State Council’s Financial Stability and Development Committee, chaired by Vice-Premier Liu He, announced a crackdown on bitcoin mining and trading in the country.

Authorities in major mining hubs, including Xinjiang, Sichuan and Inner Mongolia, have since forced out bitcoin mining farms. – South China Morning Post

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