- Chinese court deems crypto lending as unprotected by the country’s legal framework.
- Mr. Ming’s attempt to recoup 80,000 Tether loan ends in disappointment.
- This is the second such judgment invalidating crypto-based transactions.
China’s legal stance fortifies its crypto ban, making lending and transactions risky, unprotected ventures.
A Disputed Crypto Loan: The Case’s Origins
In April 2021, Mr. Ming lent 80,000 Tether (USDT) to Mr. Gang for stablecoin trading purposes. This agreement necessitated a repayment within six months. However, when Mr. Gang defaulted on the agreement, Mr. Ming decided to pursue a legal course of action, taking the matter to the Nanchang’s People Court.
Why the Court Declined Relief
The Nanchang People’s Court, in its ruling, stated that for the lawsuit to be valid, Mr. Ming had to demonstrate that Tether was a legally issued fiat currency, as per China’s Crypto Ban legislations. Failing to establish this meant that the lawsuit did not align with the permitted civil litigation parameters. Even an appeal by Mr. Ming met with dismissal, emphasizing the court’s firm stance on the matter.
Contextualizing China’s Stringent Crypto Stance
China has adopted an unwavering stance against cryptocurrencies, initiating a ban in late 2021. The country has cited concerns ranging from environmental impacts to challenges in effective surveillance. Earlier in August, a parallel incident transpired when the Changzhou Zhonglu People’s Court negated a $10 million Bitcoin lending contract. The court ruled that the lender couldn’t avail judicial relief against a borrower’s default, reinforcing the notion that crypto-related activities remain taboo within China’s borders.
Conclusion
The rulings by Chinese courts have far-reaching implications for crypto enthusiasts, traders, and lenders in the country. As the judicial system refrains from offering relief in crypto-related disputes, it underlines the inherent risks involved in such activities in China. Investors and traders must tread with caution, fully aware of the limitations and potential pitfalls that lie ahead in the realm of cryptocurrencies.
