Another strike for cryptocurrencies in China.

Let us first recall that cryptocurrencies have been banned since the end of 2021 in China. The main reason for the measure was environmental concerns and the lack of monitoring of them.

The past October 10th, the Nanchang People’s Court (Jiangxi) issued a press release explaining that cryptocurrency lending lacks legal protection.

A couple of years ago, in April 2021, an individual known as Mr. Ming lent the amount of 80,000 Theter (USDT €0.95) to Mr. Gang, so that he could trade stablecoins, with the condition that repayment would be made after six months. After Mr. Gang’s default, Mr. Ming proceeded to sue him in court.

To Mr. Ming’s astonishment, the Nanchang People’s Court held that he had to prove that Tether is a fiat currency with enough legal standing to bring a cause of action necessary for judicial relief, despite the body of laws behind the ban on cryptocurrencies in the Asian country. Faced with Mr. Ming’s inability to prove this, the court ruled that his claim was outside the scope of civil litigation. Although Mr. Ming appealed the decision, his claim was dismissed.

Indeed, the presiding judge wrote:

There are legal risks involved in engaging in virtual currency investment and trading activities. If any legal entity, unincorporated organization or natural person invests in virtual currencies and related derivatives that violate public order and good morals, the relevant civil legal actions will be invalid and the resulting losses will be borne by them.

In a similar line, the Changzhonglu People’s Court invalidated a $10 million Bitcoin loan in late August, arguing the same inadequacy of the lender to carry out judicial relief in the face of the borrower’s default, given China’s ban on cryptocurrencies.