A Case of Cryptocurrency Investment Gone Wrong: Court Rules in Favor of Defendant

Recently, the Shanghe County People's Court concluded a case involving a contract dispute related to investment in "virtual currency." The court ultimately dismissed the plaintiff, Wang, claim.

Last October, a lecture about investment was held in a local town, where the presenter advocated purchasing U-coin, a type of virtual currency, on a specific platform. Chen, believing this to be a viable investment with easy entry and exit, transferred over 70,000 yuan to Wang's bank account after a third party, Zhang, provided the account information. This money was intended to purchase 10,000 U-coins. Zhang then installed a trading software on Chen's phone, and Wang transferred the 10,000 U-coins into Chen's account. However, when Chen later opened the software, the asset information showed as zero.

Chen argued that Wang had unfairly benefited from the 70,000 yuan, resulting in financial harm to Chen. He filed a lawsuit demanding the return of the 70,000 yuan purchase price and interest.

While Chen claimed that Wang's gains were unjustified, both parties acknowledged that Chen's transfer of funds to Wang was based on his own conscious decision, not any unlawful act by Wang. Therefore, the case was not classified as an unjust enrichment dispute.

This case involved a contract dispute arising from an agreement to purchase U-coins on behalf of another party, which the court ultimately classified as a contract dispute.

The court, in its judgment, referred to Article 8 of the Civil Code of the People's Republic of China, which states that civil entities engaged in civil activities must not violate the law or public order and good morals. The court highlighted that "U-coin" is a type of digital currency similar to Bitcoin. Citing regulations issued by the People's Bank of China, including the "Notice on Preventing Bitcoin Risks" and "Notice on Preventing Risks of Token Issuance Financing," the court asserted that virtual currencies are not issued by monetary authorities, lack legal tender status and mandatory attributes of currency, and are not true money.

The court declared that U-coin, as a type of virtual currency, lacks legal equivalence with real money, and its investment and trading are not protected by law. Chen's transfer of funds to Wang for U-coin purchase, followed by Wang's deposit of those U-coins into Chen's account on the platform, constituted a contractual agreement for purchasing U-coins. Based on the above, the court concluded that the contractual relationship between the parties was invalid, and any losses incurred by Chen are his own responsibility. Therefore, the court dismissed all of Chen's claims.