Crypto lending has been rejected by a Chinese court in a second landmark decision
A second Chinese court has ruled that crypto-lending is an activity outside the protection of the country's legal system.
According to a press release issued by the Nanchang People's Court on October 10, in April 2021, an individual identified as Mr. Ming lent a total of 80,000 Tether (USDT) to a stablecoin business named Mr. Gang. The loan was to be repaid within six months. But when Mr. Gang defaulted on the loan, Ming took his colleague to court.
In a landmark ruling this week, the Nanchang People's Court said Mr. Ming would be required to prove it was a legally issued fiat currency in order to seek legal relief, citing a series of laws banning cryptocurrencies in China. As Mr. Ming failed to do so, the court ruled that the suit was not properly litigated in civil litigation. Mr. Ming subsequently appealed the decision, which was dismissed. The presiding judge wrote:
“There are legal risks involved in virtual currency investment and business activities. If any legal person, unorganized organization or natural person invests in virtual currencies and related derivatives in violation of public order and good morals, the relevant civil legal actions will be invalid, and the resulting losses will be borne by them. It will be covered.
Cryptocurrencies have been banned in China since late 2021 due to environmental concerns and lack of oversight. In another ruling from August, the People's Court of Changzhou Zonglu rejected a $10 million bitcoin (BTC) loan agreement, ruling that the lender had no recourse for judicial relief due to the borrower's default, making crypto an illegal activity in the country.
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