Beijing district court dismisses lawsuit against bitcoin exchanges

A Beijing district court dismissed a lawsuit against Chinese bitcoin exchanges, stating “people have the right to freely participate in bitcoin trading at their own risk”, the Beijing Morning Post is reporting. This comes four months after China’s ban on initial coin offering (ICO).

The lawsuit was raised by Mr. Wang, who lost RMB 400,000 trading bitcoin. He sued bitcoin exchanges, including Huobi(火币), to get his money back, arguing, “According to Karl Marx’s The Two Factors of the Commodity: Use- Value and Value, the commodity should have the use-value and value, and the bitcoin has no value and use-value, and cannot be identified as a commodity . . . so bitcoin does not exist. Therefore the previous trades should be invalidated.”

Defendant Huobi disagreed with Mr. Wang’s claim, saying that Mr. Wang’s understanding of bitcoin was wrong and his trading on the platform was not invalid. The court ruled in favor of Huobi and other bitcoin exchanges citing there are no laws forbidding the investment and trading of bitcoin.

The Beijing Haidian District Court ruled that the plaintiff cannot provide evidence that the exchange was operating illegally, and thus the plaintiff should be responsible for his own trading behavior.

The court judgement also states that, according to China’s relevant laws and regulations, bitcoin is not issued by the monetary authorities, does not have legal and monetary attributes, thereby bitcoin is not a currency issued by government and “there are no laws that forbid the investment and trading of bitcoin” and “people have the right to freely participate in bitcoin tradings at their own risk” (our translation).

The judge warned that investors should be fully vigilant and must not blindly follow trends.

Not long ago, seven ministries and commissions promulgated the “Notice on Prevention of Investment-related Risk on Token Issuance” (link in Chinese; our translation, 关于防范代币发行融资风险的公告). In response, all major domestic bitcoin trading platforms, including one of China’s largest bitcoin exchange platform—BTC China—shut down bitcoin trading.

The district judge said, “These financial platforms generally advocate that what the seven ministries and commissions have halted is the transaction between cryptocurrencies, rather than between the virtual currency and the RMB transaction. So it’s not touching the red line.” Adding that at present, the legal attributes of wealth management products such as bitcoin funds have not been clearly defined yet.