Shenzhen Futian District Court: Crypto Investments and Transactions Are Not Protected By Law
As cryptocurrency is gaining popularity around the globe, crypto-related legal disputes arise. Shenzhen Futian District Court recently declared that virtual currency investments and transactions are not protected by law, state-run Xinhua News reported on Monday.
A crypto investor, known only by his surname Zhao, filed a civil lawsuit against his cryptocurrency mentor Mr.Zheng in Futian District Court several months ago, alleging that Zheng failed to buy DKtokens, an allegedly fraudulent crypto token, and its mining rigs , and refused to return 1.08 million yuan to him.
According to Zhao’s statement, the defendant Mr. Zheng talked him into buying DKtoken and its corresponding mining rigs with the promise of repaying the investment in 3 months. Great trust in Zheng encouraged Zhao to send him 1.08 million yuan and asked Zheng to manage his money.
However,Mr. Zheng did not buy DKtokens and mining machines as he previously promised, nor did he truthfully inform Zhao the progress of the deal. After just paying 44,046 yuan as “earnings” to Zhao, Mr. Zheng told him the rest of the cash had been lost.
Therefore, Zhao sought the termination of the contract and the return of his investment funds.
However, Mr. Zheng denied the claim, saying there was no actual consignment agreement between them. “At the request of Zhao, I helped open an account and purchase DKtokens and mining rigs purely out of kindness for him. I’ve handed those things to Zhao, and the subsequent transactions were operated by himself from which I profited nothing.”
In October 2018, the court dismissed the lawsuit, and clarified that the plaintiff didi not show the registration and filing information of the crypto exchange, failing to to proof the legality of the the trading platform. Due to legal uncertainty, crypto-related investment and transactions are not protected by laws. Further, the dispute which may involve crimes did not fall under the scope of civil lawsuit.
In addition, the court reminded crypto investors that virtual currencies, not issued by the central bank, have no legal tender status and cannot be circulated in the market. And initial token offering(ICO) is essentially an“illegal fundraising, pyramid scheme” which are duping people out of money under the guise of financial innovation.Investors should remain cautious on high-yield investments.