The people’s court of Shenzhen’s Futian district has ruled that cryptocurrency investments and transactions are not subject to legal protections under current Chinese law.
In a case brought before the Futian court the plaintiff Mr. Zhao alleged that the defendant Mr. Zheng had convinced Zhao to invest in “DK coins” and “DK miners” by claiming that they would provide a return on capital within three months.
Zhao subsequently made a payment of 1.08 million yuan to Zheng, entrusting him with the purchase of DK coins and DK miners.
Zhao alleges in the lawsuit that Zheng failed to make the arranged purchase, instead claiming 44,046 yuan as “returns” for himself before informing Zhao that the investment had failed.
Zheng claimed that there was no entrustment relationship between himself and the plaintiff, and that he had not obtained any profits by helping Zhao with the purchase of cryptocurrency miners or cryptocurrencies.
The Futian court ruled that given the uncertainty surrounding the legality of cryptocurrencies in China, the investment transaction was not subject to legal protections, and the case did not involve any criminal conduct or fall within the purview of Chinese civil litigation.
The Futian also made the warning that “cryptocurrencies are not issued by monetary authorities, do not possess equal legal standing with currencies, and cannot be circulated or used on the market as money.”
“The issuance of cryptocurrency for financing is inherently an unapproved and illegal form of public financing….investors should not be tempted by the high returns of illegal criminal activities.”