Falling crypto prices have been blamed for a growing number of crypto-related legal disputes in China. Unclear regulations and unofficial restrictions are making it harder for courts to resolve these cases. Many of them involve cryptocurrency trading which is supposed to be banned in the People’s Republic, or is it?
Over 270 Court Cases Related To Cryptocurrency
Chinese courts have been challenged to resolve hundreds of crypto-related disputes whose number has increased significantly with the drop in cryptocurrency prices in recent months, local media revealed. The government-imposed crypto ban is ambiguous and it turns out restrictions in the People’s Republic are sometimes implemented without an official mandate.
According to data released by the Chinese judiciary, as of the first week of August there were 274 pending legal cases related to cryptocurrency. Of those, 126 were criminal cases, involving mostly property and economic crimes, China Money Network reported. Another 107 were civil cases about breach of contract and mismanagement, and two were administrative cases.
Chinese courts are finding it hard to rule in such cases as many of them involve cryptocurrency trading. Judges have been unable to clearly determine how legal these economic activities really are. The ban Beijing authorities imposed last year prohibited token sales and the exchange of digital coins with yuan, the national fiat. The Hong Kong based CMN notes, however, that the trading ban in particular was not explicitly mentioned in official statements.
Crypto Dispute Resolved as Civil Case
The report covers a dispute between a Chinese cryptocurrency exchange and one of its users in which the ruling did not even comment on the legality of digital asset trading. The platform, Coinnice, accidentally sent 5 BTC to its client’s wallet during a system upgrade. He withdrew the cryptos, sold them, and later refused to refund the exchange insisting that bitcoin trading with RMB is illegal in China and accusing Coinnice of committing criminal offence.
Treating the dispute as a civil case, a court in Beijing ruled it according to contract laws. It also determined that the defendant’s successful registration, under his real name and with his bank account, amounts to consent to Coinnice’s service agreement. The court decided that both parties should perform their obligations under their contract and obliged the client to compensate the exchange for its losses.
Following an appeal, a higher instance, the Second Intermediate People’s Court of Beijing, has since confirmed the ruling stating that any violations of relevant rules on behalf of the trading platform do not affect the defendant’s obligation to return the funds.
Ban on Exchanges Imposed Without Mandate
Chinese regulators prohibited initial coin offerings (ICOs) about a year ago. Last September, they also ordered local crypto exchanges to suspend operations and tried to block access to foreign cryptocurrency trading platforms offering services to Chinese residents. The restrictions targeted the crypto-yuan trade affecting some of the world’s largest trading platforms that were based in the People’s Republic at the time.
The ban forced exchanges like Huobi, OKcoin and Binance to halt all trading in the country and seek to relocate to more favorable jurisdictions. The Chinese-run companies founded new entities abroad and opened offices in Hong Kong, Singapore, South Korea, Japan, the United States, and the EU. This allowed them to continue their activities and even expand significantly.
While the ICO ban was officially introduced with an administrative measure issued by several state regulators, including the People’s Bank of China (PBoC), the ban on crypto exchanges was imposed without official statements of enforcement. This, according to the outlet, is part of the reasons for its ambiguity.
Do you think crypto-related disputes can be resolved without comprehensive crypto regulations? Share your thoughts on the subject in the comments section below.
Images courtesy of Shutterstock.
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