A decrease in cryptocurrency prices is being pointed to as a potential reason for the rapid rise of disputes related to cryptocurrencies in China. Ambiguous rules regarding cryptocurrencies in combination with legal grey areas have made it increasingly difficult for courts in China to bring cases to a conclusion. China, which has banned cryptocurrency trading, now is faced with the task of resolving over 270 disputes that are related to cryptocurrencies, according to China Money Network.
The courts in China have been struggling to cast effective judgements in cases related to cryptocurrency trading owing the grey area around ascertaining the legality of such economic activity. A ban was imposed by the authorities in Bejing that banned token sales along with the exchange of any digital coin using the nation currency Yuan.
One such case involved a Chinese cryptocurrency exchange, Coinnice, that accident sent 5 BTC to one of its client’s wallet as they were in the process of upgrading their system. The defendant, Li Jianfeng, withdrew the BTC, sold it and then refused to refund the BTC back to Coinnice. The defence for Jianfeng argued that he was in the clear because when the BTC was transferred to his wallet, bitcoin trading with RMB was illegal in China at the time and it was actually Coinnice that was committing a criminal offence
The ruling by the Chinese courts made no mention or comment upon the legality of digital asset trading and treated the dispute as a civil case which was ruled upon in accordance with contract laws. According to the Bejing courts ruling, since Jianfeng had signed up to the exchange under his real name and bank account, he had in doing so consented to the service agreements outlined by Coinnice. The court came to the conclusion that owing to the service agreement, both parties involved must, therefore, perform their obligation under the contract and obliged Jianfeng to compensate Coinnice for its losses.
The ruling was appealed by Jianfeng’s legal counsel and the appeal was submitted to the Second Intermediate People’s Court of Beijing. The People’s court has confirmed the ruling stating that any violations of rules on behalf of the trading platform don’t affect the defendant’s obligation to return the said funds.
