A Chinese court ruled that virtual currency cannot be circulated in the market as currency, so a contract for the sale of a vehicle in which the parties agreed that the buyer pays in privately issued digital currency is invalid. The court claimed that virtual currencies do not have the same legal status as national fiat currencies.
not protected by law
The Chinese court ruled that the vehicle sales contract in which the parties agreed that the buyer pays with virtual currency violates the mandatory provisions of laws and administrative regulations and is invalid.According to the court, virtual currency “cannot be circulated in the market because [a] currency. “
The Shanghai court’s ruling came after an aggrieved car buyer sought court intervention, as described in a Chinese-language report. In May 2019, a buyer identified only as Huang signed a sales agreement with Shanghai Auto Service Co., the report said.
As part of the agreement, Huang will buy the Audi sports car “in Yurimi as the currency”. After receiving 1,281 units of Yurimi virtual currency, according to the agreement, the seller is expected to deliver the vehicle. However, after the seller failed to deliver, Huang sought redress through the Fengxian court in Shanghai.
Defending his case in court, Huang insisted that Yurimi is a virtual commodity that can be exchanged for goods and therefore “does not violate the prohibition and should be valid.” However, SAIC insisted in its rebuttal that the sales agreement was a void contract and should not be protected by law.
Virtual currency lacks ‘legal compensation and coercion’
The Shanghai Fengxian Court said in its ruling that the national token issuance and financial regulations implemented in 2017 stipulate that the tokens or “virtual currencies” used for token issuance financing are not issued by monetary authorities, and therefore they lack factors such as “legal compensation”. and coercion.”
Furthermore, the virtual currency does not have the same legal status as national legal tender, the report said. Therefore, this means that they “cannot and should not be circulated in the market as money”.
Huang refused to accept the judgment and appealed to the Shanghai No. 1 Intermediate People’s Court, the report said. However, after reviewing Huang’s appeal, the higher court still ruled to uphold the lower court’s judgment.
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