Investing in crypto is not protected by Chinese law, the high court of Shandong province said in a ruling yesterday on a contract dispute case that dates back to 2017. The ruling contradicts one from a Shanghai court last week.
- The case could set a legal precedent for crypto trading in the country, an activity that is already under intense pressure.
- Other courts in China have taken a different stance, ruling that digital assets are protected as virtual property or commodities.
- A court in more financially liberalized Shanghai said last week that crypto is protected as virtual property, and China’s Supreme Court last year called for increased protections for virtual currencies.
- In the Shandong case, the plaintiff, identified as Ma, entrusted the three defendants with 70,000 yuan (US$10,500 at the time) to invest in tokens in 2017. Soon after, Chinese authorities banned crypto trading using the yuan, and Ma’s money was locked in the trading account.
- The Shandong high court said that notices from the People’s Bank of China, as well as the securities, banking, cyberspace and other regulators had clearly said at the time that investing in crypto tokens is illegal. Under China’s civil law, the plaintiff was breaching the law and thus couldn’t get his money back from the defendants.
- Echoing lower court rulings, the Shandong court said that crypto is not a legal currency issued by an authorized monetary authority, so it doesn’t have the legal status of other currencies.