In a recent significant decision by the Nanchang People’s Court, crypto lending has been deemed beyond the protection of Chinese law.
The court’s ruling came into play after an April 2021 transaction where an individual, Mr. Ming, lent 80,000 Tether to Mr. Gang for stablecoin trading. With the loan set to be repaid within half a year, Mr. Gang failed to do so. Consequently, Mr. Ming initiated legal proceedings against him.
To advance his case, the court mandated Mr. Ming to demonstrate that Tether is recognized as a legally issued fiat currency in accordance with China’s crypto prohibitive laws. As Mr. Ming couldn’t meet this requirement, the lawsuit was considered outside the realm of acceptable civil litigation. Mr. Ming subsequently appealed the decision, which was also dismissed with the judgment emphasizing the inherent legal risks associated with virtual currency investments. The presiding judge wrote:
“There are legal risks involved in participating in virtual currency investment and trading activities. If any legal person, unincorporated organization, or natural person invests in virtual currencies and related derivatives that violate public order and good customs, the relevant civil legal actions will be invalid, and the resulting losses shall be borne by them.“
This decision aligns with China’s stance on cryptocurrencies. Following environmental and surveillance concerns, they were banned in late 2021. Earlier in August, another Chinese court, the Changzhou Zhonglu People’s Court, nullified a Bitcoin lending deal worth $10 million, marking another instance where crypto lending found no legal foothold in the country.
Image: https://unsplash.com/photos/UoSsTJKkX54
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