Cooperation Mining Farm Equipment Dispute Claim Lawsuit, Hunan Province Court in China ruled virtual currency related contract invalid, losses borne by oneself

BlockBeats News, November 21st. Recently, the People's Court of Guiyang County, Hunan Province, China, concluded a virtual currency "mining" contract dispute case. The plaintiff, Mr. Hu, cooperated with others to carry out virtual currency "mining" activities. Later, due to the loss of mining equipment, he sued the court to demand the return of 570,000 yuan in investment. The court ruled to dismiss all of the plaintiff Mr. Hu's claims.

Mr. Hu and Mr. Zhou are friends. A certain technology company was established in May 2021, with Mr. Zhou as one of the shareholders, and Mr. Li and Mr. Peng participating in the company's "mining" business through an affiliate relationship. The two parties agreed to cooperate in "mining." Mr. Hu paid Mr. Zhou 55,000 US dollars through a virtual currency APP (equivalent to 357,082 yuan as agreed by both parties) and entrusted Mr. Cao to transfer 198,000 yuan to Mr. Zhou's bank account, totaling 555,082 yuan, all used to purchase servers, hard drives, and other "mining" equipment, which were hosted and operated by the technology company. In July 2022, the equipment was transferred to Mr. Zhou's kitchen for storage, and thereafter, Mr. Hu only paid the electricity bill to Mr. Zhou. In November 2023, Mr. Li removed some hard drives due to an economic dispute with Mr. Zhou. Although the police station mediated and Mr. Li returned 82 hard drives, Mr. Hu claimed that some hard drives were still missing, and the two parties failed to reach a settlement through negotiation. In 2024, Mr. Hu sued the four defendants on the grounds of equipment loss, demanding the return of 570,000 yuan in investment.

After trial, the court believed that according to the joint announcement of the People's Bank of China and ten other departments titled "Notice on Further Preventing and Disposing of Risks Associated with Virtual Currency Trading Speculation," Article 1 states: Virtual currency does not have the same legal status as fiat currency, does not have legal tender status, and should not and cannot be used as currency circulating in the market. Virtual currency-related business activities constitute illegal financial activities. Participation in virtual currency investment and trading activities carries legal risks. Any legal person, non-legal person organization, or individual investing in virtual currency and related derivatives, contrary to public order and good customs, renders the related civil legal acts invalid, and any resulting losses should be borne by the parties themselves. In this case, the equipment purchased by Mr. Hu for "mining," using virtual currency for payment and settlement management fees, undermines the legal status of fiat currency and violates public order and good customs. The entrusted contract in question should be deemed invalid.