virtual currency platform "runs away", can the millions of investment be recovered?
2024-09-22
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the virtual currency trading platform was frozen and the investors' funds could not be recovered. can they get compensation? recently, the donghu people's court of the wuhan donghu new technology development zone people's court of hubei province concluded a virtual currency investment entrustment contract dispute case and ruled to dismiss the plaintiff's lawsuit in accordance with the law, requiring the investors to bear the losses.
in 2020, liu began to try to invest in virtual currencies. after learning that his colleague wang had "connections" to invest overseas and promised to "guarantee principal and interest", liu, based on his trust in wang, transferred a total of more than 1.84 million yuan to wang and his designated third-party account through various methods such as alipay, bank cards, and cash from december 2020 to october 2022 to invest in "tether usdt". during this period, liu only received more than 56,000 yuan in refunds from wang.
after a transaction, liu found that the website for purchasing the virtual currency could not be opened, and he tried many times without success. liu could not accept the huge loss caused by investing in virtual currency, so he sued the court on the grounds of entrustment contract dispute.
liu believed that wang had not provided him with any materials regarding the overseas investment project, the two parties had not signed any agreement, and had not agreed upon the investment method, term, returns and other related matters. therefore, he claimed that the entrusted investment relationship between the two parties was invalid and demanded that wang compensate him for his losses of more than 1.78 million yuan.
wang argued that the basic facts stated by liu were false, and that he had not helped liu invest in "tether usdt". all investments were made by liu himself through his personal account on the virtual currency website platform. it was an investment relationship established between him and the website, not a commissioned investment relationship established with himself. secondly, the transfer between the two was not the money he helped liu invest in virtual currency, but the sale, exchange or other virtual currency transactions of "tether usdt" between the two parties, and the amount of transactions between the two parties was wrong. the difference in the amount in the transfer record was more than 340,000 yuan, not the more than 1.78 million yuan claimed by liu.
after trial, the court found that from december 6, 2020 to december 17, 2021, the difference in the amount in the transfer records between the plaintiff liu and the defendant wang was more than 340,000 yuan. both parties did not provide communication records, and there was no evidence to prove that the nature of the funds was the funds entrusted by liu to wang to invest in virtual currency for him. therefore, liu's request for return has no factual and legal basis, and the court does not support it.
at the same time, it was found that from december 18, 2021 to september 2022, liu transferred, instructed payment, and made cash payments to wang totaling more than 1.05 million yuan. combined with the chat records of a certain software and wang's statements, it can be determined that the two parties were trading "tether usdt", which is a virtual currency. according to the "notice on further preventing and dealing with the risks of virtual currency trading speculation", there are legal risks in participating in virtual currency investment and trading activities. any legal person, non-legal person organization, or natural person who invests in virtual currency and related derivatives in violation of public order and good morals shall have the relevant civil legal acts invalid, and the losses caused by this shall be borne by themselves.
the court held that liu, as a person with full civil capacity, should be aware of the legal risks in virtual currency transactions, and that the losses caused by his virtual currency transactions through wang should be borne by himself. therefore, the court finally ruled to dismiss the plaintiff liu's lawsuit.
virtual currency should not and cannot be used as currency circulation
the judge said after the trial that the current information and digital revolution has a profound impact on the economy and society, and has also brought a great impact on the issuance and circulation of currency. virtual currencies, such as bitcoin and ethereum, have become a powerful financial force. with the popularization of digital currencies, "digital currency trading platforms" have also received unprecedented attention.
however, in my country, investment and trading activities of virtual currencies have been strictly regulated and even banned. the notice on further preventing and dealing with the risks of speculation in virtual currency transactions, jointly issued by the people's bank of china, the central cyberspace affairs commission, the supreme people's court, the supreme people's procuratorate and other ten departments, clearly pointed out that virtual currencies do not have the same legal status as legal tender. virtual currencies such as bitcoin, ethereum, and tether have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed accounts or similar technologies, and existing in digital form. they are not legal tender and should not and cannot be circulated and used as currency in the market.
virtual currency-related business activities are illegal financial activities. virtual currency-related business activities such as the exchange of legal currency and virtual currency, the exchange of virtual currencies, the purchase and sale of virtual currency as a central counterparty, the provision of information intermediary and pricing services for virtual currency transactions, token issuance financing, and virtual currency derivatives transactions are suspected of illegal financial activities such as illegal sale of token tickets, unauthorized public issuance of securities, illegal operation of futures business, and illegal fundraising. all of them are strictly prohibited and resolutely banned in accordance with the law. those who engage in related illegal financial activities that constitute a crime shall be held criminally liable in accordance with the law.
in addition, the provision of services to chinese residents through the internet by overseas virtual currency exchanges is also an illegal financial activity. domestic staff of relevant overseas virtual currency exchanges, as well as legal persons, non-legal organizations and natural persons who knowingly or should have known that they are engaged in virtual currency-related businesses and still provide them with marketing, payment settlement, technical support and other services, shall be held accountable in accordance with the law.
there are legal risks in participating in virtual currency investment and trading activities. any legal person, non-legal person organization or natural person who invests in virtual currency and related derivatives and violates public order and good morals will have their relevant civil acts invalidated and will be responsible for the losses caused by them. if they are suspected of disrupting financial order and endangering financial security, they will be investigated and dealt with by relevant departments in accordance with the law.
the judge reminded that before making any investment, investors should fully understand the legality and risks of the investment project, and should not blindly follow the trend or trust the high returns promised by others to avoid causing loss of their own property.
