October- 26, 2018 | AtoZ Markets
The Shenzhen Court of International Arbitration in China has ruled on a recent economic dispute associated with a business contract for possessing and transferring crypto assets, that bitcoin should still be legally protected as a valued economic property.
In the case’s detail, the plaintiff had signed an agreement with the defendant, that allows the latter to trade and manage a group of cryptocurrencies on behalf of the plaintiff.
The latter claimed the defendant failed to meet the objective, and refused to return the cryptocurrencies after the deadline was due. Consequently, they brought the case to the arbitrator, seeking the return of the assets with interest.
The cryptocurrencies in question were around 20 bitcoins, 50 bitcoin cash, and 13 bitcoin diamond, valued at around $493,158 altogether, as per the plaintiff.
In the absence of regulation for digital assets in China, the defendant said “the ban imposed by the People's Bank of China (PBoC) on cryptocurrency trading and initial coin offerings leads that crypto payments and transactions should be considered illegal in China. As such, the entire contract between the parties mentioned, by default, would become invalid.”
The defendant cited further that there was no venue to trade and send the assets to the plaintiff.
In his turn, the arbitrator disagreed on the argument, considering the nature of the case as about the contractual obligation for returning cryptocurrencies, meaning, it does not fall under the conditions of cryptocurrency trading or initial coin offering, which are detailed in the PBoC's September 2017 ban.
The absence of crypto regulation in the country should not open doors to fraud
The arbitrator referred to that as there is no law in China currently to prohibit the possession of bitcoin and its transactions between individuals. And therefore, it should not be technically difficult for someone to send bitcoin, as long as they have a bitcoin address and a private key.
"The Arbitration Court noticed that, after September 2017, major bitcoin exchanges operating in China at the time suspended their businesses. But technically, that fact does not prevent the defendant from sending the bitcoin and bitcoin cash at dispute to the plaintiff upon the agreed deadline", said the arbitrator.
In conclusion, the court reached to that whether bitcoin is a legal tender or not, this should not have an impact on the fact that bitcoin ownership should be protected legally based on China's contract law.
"Bitcoin has the nature of a property, which can be owned and controlled by parties, and is able to provide economic values and benefits", said the court.