A court in Beijing’s Chaoyang district on Wednesday settled a dispute on the city’s first Bitcoin mining contract as null and void and denied the plaintiff’s appeal for the refund of huge Bitcoin proceeds valued at $13 million.
Fengfu Jiuxin Company, the plaintiff, signed a contract with the defendant, Zhongyan Zhichuang Company in May 2019 to entrust it with the Bitcoin mining service.
Fengfu Jiuxin Company paid the Zhongyan Zhichuang 10 million yuan ($1.57 million) to purchase Bitcoin mining equipment and entrusted it to provide Bitcoin mining services in Liangshan Yi Autonomous Prefecture, in Southwest China’s Sichuan Province. Fengfu Jiuxin Company was entitled to receive the proceeds of Bitcoin mining.
However, the defendant has only paid 18.3463 Bitcoins to Fengfu Jiuxin Company during the time of the contract.
Fengfu Jiuxin took the case to court and claimed that the defendant owes it 278.1654976 Bitcoins, which are worth about $13 million as per Wednesday’s prices.
The court sentenced the contract as invalid and rejected all claims from Fengfu Jiuxin Company as mining activities and Bitcoin transactions have been banned by Chinese authorities.
The contract is null and void as it damages social and public interests. Therefore the relevant property rights and interests should not be protected by law, the court said.
After the trial, the Chaoyang district court sent judicial suggestions to the Sichuan Development and Reform Commission, suggesting a further investigation into the bitcoin mining project involved in the case.
In September China’s central bank declared all transactions involving Bitcoin and other virtual currencies illegal.
“Virtual currency derivative transactions are all illegal financial activities and are strictly prohibited,” the People’s Bank of China said on its website.
Illustration: VCG
