9 January Beijing-Mr. Wang invested over 1 million yuan in bitcoin over one year ago. Somehow his investment didn’t pay off and he lost over 400k in the end. Mr. Wang filed a lawsuit against Huobi and other two companies for refund, claiming that the bitcoin is not a legal tender and the contract with the exchange should be invalid. Beijing local court has rejected the case. Not long ago, a similar case for 52.8567 BTC compensation was also rejected by court. On 10 January, an article on the Legal Daily of China voiced support for the verdict by saying investment in bitcoin is not illegal, but don’t resort to law if one lose money when trading Bitcoin.
Mr. Wang’s compensation claim is not supported because the three companies are engaged in financial management transaction, which is traded between cryptocurrencies rather than between virtual currency and RMB. Such operation does cross the “red line” of law. Currently the laws and regulations do not specifically prohibit entities from investment of bitcoin. But the authority does require educating potential investors with risks of investment. In the announcement released by 7 ministries, it is made clear that the ordinary people have the freedom to participate in bitcoin trading at their own risk. One of the basic principles of civil law is “Absence of Legal Prohibition Means Freedom”. Since it is not illegal to invest and trade bitcoin, the contract between Mr. Wang and the exchange should be effective. The exchange is not liable for Mr. Wang’s investment loss in bitcoin, which is caused by Mr. Wang’s neglect of risk or good understanding of the announcement of the regulatory authority. All in all, investors must not rely on judiciary measures when they lost money. There are boundaries and principles of legal protection.
The report was hailed by the community as it reassure that is legal to trade bitcoin in China as long as the investor is fully aware of the risk. Imtoken, the ethereum SPV wallet, ask every new user to complete a questionnaire before accessing the wallet. Wu Jihan, founder of Bitmain, reposted the news. As the fastest-growing IC designer in China, Bitmain is naturally of special concern on the legal status of bitcoin . Even Bitmain has plan to operate oversea. It won’t be done in a matter of days.
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