A Chinese court ruled that a sales contract that the parties agreed to pay in a privately issued digital currency was invalid because cryptocurrencies cannot be marketed as currency. The court argues that cryptocurrencies do not have the same legal status as national fiat currencies.
Not protected by law
A Chinese court ruled that the car sales contract that the parties agreed to pay in cryptocurrency was invalid because it violated the mandatory provisions of the law and administrative rules. According to the court, cryptocurrencies “cannot be distributed in the market. [a] currency. “
As mentioned in one Chinese reportThe Shanghai court ruling was made after the purchaser of the damaged vehicle sought court intervention. According to the report, the buyer identified as Huang signed a sales contract with Shanghai Automobile Service Co Ltd in May 2019.
As part of the deal, Huang purchased an Audi sports car “using Yurimi as a currency payment.” Upon receiving 1,281 units of Yurimi cryptocurrency, the seller was expected to deliver the vehicle according to the agreement. However, after the seller failed to deliver, Huang sought relief through the Shanghai Fengxian Court.
Mr. Huang alleged his case in court, claiming that Yurimi was a virtual merchandise that could be exchanged for merchandise and therefore “should be valid without violating the ban.” However, in its counter-argument, Shanghai Automobile Service Co Ltd argued that the sales contract is an invalid contract and therefore should not be protected by law.
Cryptocurrencies have no “legal compensation and coercion”
The Shanghai Fengxian Court said that the country’s token issuance and financial regulations, which came into effect in 2017, are “legal compensation and enforcement” because the tokens or “virtual currency” used to raise funds for token issuance are not issued by the monetary authorities. “
In addition, such cryptocurrencies do not have the same legal status as the national fiat currency, the report said. Therefore, this means that “it cannot and should not be circulated in the market as a currency”.
Huang, who was dissatisfied with the ruling, reportedly appealed to the Shanghai First Intermediate Court. However, even after considering Mr. Huang’s appeal, the higher court ruled in support of the lower court’s decision.
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