A second Chinese court has ruled that cryptocurrency lending falls outside the protection of the country’s legal system. In this recent case, Mr. Ming lent 80,000 Tether (USDT) to Mr. Gang for stablecoin trading in April 2021, with a six-month repayment agreement. When Mr. Gang failed to repay the loan, Mr. Ming filed a lawsuit.
However, the Nanchang People’s Court, in a landmark decision, ruled that Mr. Ming needed to prove that Tether is legally issued fiat currency to have grounds for judicial relief. Since this couldn’t be demonstrated, the court determined that the lawsuit did not fall within the scope of civil litigation. Mr. Ming’s subsequent appeal was also dismissed. The presiding judge emphasized that participating in virtual currency investment and trading activities carries legal risks and that investments in virtual currencies and related derivatives that contravene public order and customs would result in invalid civil legal actions.
This ruling is consistent with China’s broader ban on cryptocurrencies, which has been in place since late 2021 due to environmental concerns and the lack of regulatory oversight. In another case from August, the Changzhou Zhonglu People’s Court invalidated a $10 million Bitcoin lending agreement, stating that the lender had no means of judicial relief due to the borrower’s default, as crypto is considered a prohibited activity within China.
By FCCT Editorial Team
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