On May 22^nd, the Hangzhou Internet Court opened a public hearing through the online litigation platform to judge a case of bitcoin property transaction. The plaintiff Mr.Wu accused the defendants, FXBTC and Taobao of refusing  his pre-ordered bitcoin after payment.

This is the first case of its kind regarding a dispute about bitcoin property transaction in Hangzhou.

Mr. Wu, the plaintiff purchased the “FXBTC recharge code “(par value ¥497.5) through Taobao store owned by FXBTC  in May 2013. According to the snapshot of the transaction, the description of the goods indicates that the shop is the official shop of Bitcoin trading platform (www.FXBTC.com), and the goods Wu bought are the RMB recharge code of FXBTC.com. In November 30^th of the same year, Mr. Wu transferred 19920 yuan to Mr Huang’s(the operator of the store) Alipay account.

But on May 2^nd, 2014, “FXBTC” website issued a “stop-running notice”, saying that due to the pressure of the central bank policy blockade, the website was unable to recharge and withdraw cash, and after a long period of losses, it finally decided to stop operation. Users are requested to withdraw the money as soon as possible before the website closes on May 10^th, 2014. Subsequently, a number of media reported on the closure of the Bitcoin trading platform “FXBTC”.

Mr.Wu said that the website operator  did not remind him when the “FXBTC” website was shut down, resulting in ordered Bitcoin can not be retrieved. Mr. Wu  believes that Internet virtual coins such as Bitcoin, and other related commodities are prohibited commodities on Taobao, while Taobao has not fulfilled its audit obligations.

Therefore, Mr.Wu requires the defendants to pay for his loss of 76314 yuan (transaction price of 2.675 bitcoins when suing) and litigation costs as compensation.

Chen Ying, judge of the Hangzhou Internet Court said,

“One of the dispute in this case is whether Bitcoin belongs to legally recognized virtual property which enjoying corresponding legal rights, and whether it is valuable, scarce and controllable. And is  Taobao store, Alipay account and “FXBTC” website in this case belong to the same owner. Is the prosecution has exceeded the limitation of action, it requires to be judged by specific factors”.

In this case, the prosecutor and the defendant failed to reach a settlement at the court. If the final mediation fails, the Hangzhou Internet Court will make a judgment on a selective date. The trial of this case will play a guiding role in determining the legal nature and legal status of virtual currency such as Bitcoin.