China's Second Court Ruling Dismisses Crypto Lending as Legally Unprotected Activity
Summary:
A Chinese court has determined that crypto lending is not legally protected, marking the second such ruling. Mr. Ming, who lent 80,000 Tether (USDT) for stablecoin trading, was unable to seek legal action when the loan was defaulted on by Mr. Gang. The court required proof that Tether is a legally recognized fiat currency for the case to be valid, which Mr. Ming failed to provide. Owing to China's Crypto Ban and reasons such as environmental concerns, cryptocurrency activities remain prohibited in the country.
In a second instance, a Chinese court has determined that crypto lending falls outside the jurisdiction of the nation's legal framework. As per an announcement released on October 10 by the Nanchang People's Court, Mr. Ming, loaned 80,000 Tether (USDT) to another individual named Mr. Gang for stablecoin trading in April 2021. The arrangement was for the loan to be settled within half a year. Nonetheless, Mr. Gang failed to return the loan, prompting Mr. Ming to take legal action in the Nanchang's People Court. In a ground-breaking judgement this week, the court required that Mr. Ming provide evidence that Tether is a legally sanctioned fiat currency in order to proceed with a claim for judicial intervention, referencing several laws that make up China's Crypto Ban. Unable to meet this requirement, the court found that Mr. Ming's case did not come under the purview of civil lawsuits. The ruling was subsequently appealed by Mr. Ming, but to no avail. In his submission, the overseeing judge noted, "Participation in virtual currency investment and related trading activities carries legal risks. If any legal entity, unregistered organization or individual invests in conflicting virtual currencies and associated derivatives, any ensuing civil legal procedures would be rendered null and void, and any losses will be accounted for by the investor." Since late 2021, cryptocurrencies have been prohibited in China, primarily due to environmental reasons and a lack of oversight. In a separate judgement from earlier in August, the Changzhou Zhonglu People's Court scrapped a $10 million Bitcoin loan agreement, stating that the lender had no judicial recourse given the borrower's default on the loan due to the country's ban on cryptocurrency activities. Magazine: JW Verret, the blockchain professor closely monitoring the flow of money, answers six queries.
Published At
10/12/2023 11:32:44 AM
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