The plaintiff lost more than $ 10,000 in 2018 amid a ban by the Chinese Central Bank on financial institutions supporting cryptocurrency transactions.
The High Court of Shandong Province (northern China) has publicly stated that investments in digital assets such as cryptocurrencies are not protected by law. The comment was made as the bench was considering the Jinan Intermediate Court’s decision on an allegation of fraud involving virtual tokens.
The development is the latest setback for China’s cryptocurrency investment industry, as the decision sets a precedent by banning investment in digital assets like Bitcoin.
The complainant initially addressed the Jinan City court claiming to have invested more than $ 10,000 in the purchase of digital currency in 2017 on the advice of three friends.
However, the accounts to which the complainant transferred the funds were closed by the People’s Bank of China as part of the implementation of the ban on financial institutions supporting crypto transactions in 2018. As a result, the complainant’s money became stuck in the process, which led to him not receiving the money or tokens.
The Jinan City court refused to grant relief to the plaintiff in January 2021, saying that the allegation of fraud was unsustainable because the digital assets did not have legal status. The Jinan Intermediate court upheld the verdict in March 2021, prompting the complainant to apply to the North Shandong High Court. However, the high court reaffirmed the position of the lower courts and stated in a public commentary on the case that “cryptocurrency investing or trading is not protected by law”.
The statement by China’s judicial system comes just months after the nation began cracking down on cryptocurrency-focused companies and banning mining, prompting the country’s crypto mining industry to move to Africa and Central Asia.
While the above case did not result in further legal actions against the plaintiff, in a separate case in the city of Zhenjiang, eight people were arrested after using Bitcoin to override restrictions on withdrawing only $ 50,000 of foreign currency per year. The court said that the Bitcoin exchange system where individuals use Bitcoin as a way to exchange yuan with other fiat currencies like the South African rand has resulted in transactions worth more than 1.4 billion yuan since 2019. Six of the accused have been sentenced to prison while the investigation continues.
Such cases fuel the perception that the use of digital currency is predominant in the commission of crimes and further encourage the Chinese government, historically opposed to cryptocurrencies, to adopt stricter regulation.