China’s high court proclaims that crypto is not protected by law

on Aug 23, 2021
  • China’s Shandong court recently reviewed a case involving cryptocurrencies from 2017.
  • The plaintiff sued their friends who endorsed crypto investing, after having their account closed by the bank.
  • The court said that there is no ground for fraud allegations as cryptos do not have legal status.

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China has been making a lot of headlines in regards to the crypto industry this year, and more often than not, not for good reasons. The country has seen a number of its provinces crackdown on cryptocurrency mining, causing the miners to abandon their posts and seek out cheap electricity in other provinces, countries, and even continents.

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Now, however, a recent court case involving digital currencies led the Northern Shandong province’s high court to proclaim that cryptocurrency is not protected by law. This particular ruling might set a precedent for every other crypto case that takes place in China for the foreseeable future, especially now that investment and trading of crypto have been outlawed.

Details about the case

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The case, which will likely have strong consequences for the future of crypto in China, saw the plaintiff invest 70,000 yuan, which is around $10,756. The plaintiff invested the money recommended and endorsed by several friends back in 2017. However, the accounts were closed after the central bank, the PBoC, brought back the ban on payment institutions supporting digital currency transactions.

Earlier this year, in January 2021, the intermediate court in Shandong’s capital of Jinan ruled that the fraud allegations were not tenable. However, that’s only because the assets in question — digital currencies — had and have no legal status in the country. The ruling was upheld after the plaintiff’s appeal, and the verdict became official.

After reviewing the case, the Shandong high court repeated the statement that investing or trading digital currencies is not protected by law. In other words, if someone gets scammed, their scammer will likely be able to walk away with no punishment from the country’s legal system.

This is likely to have very negative consequences on the country’s investment community, which has been growing year after year regardless of the fact that financial payments involving cryptos have been illegal since 2013.