Some time ago, the “Squid Coin” was fired because of the Internet drama. Staged a clearing plunge, as we all know.The price of virtual currency is like a roller coaster.
But many investors still want to make a fortune, and professional traders succeed. As a result, the two parties hit it off and agreed on an entrusted transaction.
So, is virtual currency commissioned transaction effective? Let’s take a look at an entrusted contract dispute case recently concluded by the Huangyan Court of China.
On September 3, 2019, Huang Jia, who lives in Huangyan District, Taizhou City, China, was introduced by others. Signed a “Digital Currency Quantitative Entrustment Agreement” with Zhang Yi. It was agreed that Huang Jia would transfer 200,000 yuan to Zhang Yi in his own name to purchase USDT. Operated by Zhang Yi Investment.
After the agreement expires, the guarantee will return the equivalent amount of digital currency purchased when the Huangjia contract is signed. Zhang Yi regularly settles the corresponding income with Huang Jia, and settles the entrusted digital currency when the contract expires. The term of the agreement is one year.
After the contract is signed. Huang Jia immediately sent 200,000 yuan to Zhang Yi, waiting to make a steady profit. However, market conditions are not as good as Huang Jia expected. Seeing that one’s own investment will be in vain. Huang Jia was anxious, and asked Zhang Yi for the entrusted payment on WeChat many times.
And Zhang Yi cannot control the changes in the virtual currency market. He successively returned RMB 95,760 to Huang Jia’s investment. The remaining payment has not been returned to Huang Jia for a long time. Not to mention the promised benefits.
Huang Jia who sees no hope of returning investment. A suit brought Zhang Yi to the court. It is required to return the investment money and compensate the corresponding interest loss.
The court held that
The subject matter of this case, the TEDA coin, is a virtual currency. The relevant documents of the Chinese state clarify the so-called “virtual currencies” including Bitcoin and TEDA coins.
In essence, it is an act of illegal public financing without approval. No organization or individual may illegally engage in token issuance financing activities.
As one of the virtual currencies, the subject matter of this case, TEDA, was not issued by the monetary authority prescribed by my country. It has no monetary attributes such as legal compensation and compulsion, and cannot and should not be circulated and traded in the market as the subject matter.
Because the subject matter involved in this case does not have legitimacy. Therefore, the entrusted custody of the transaction by the plaintiff and the defendant is not protected by law. Therefore, the “Digital Currency Quantitative Entrustment Agreement” signed by the plaintiff and the defendant on September 3, 2019 is an invalid contract.
As for the plaintiff, it should be well aware that virtual currency investment is not protected by national laws. And still entrusting the defendant to invest, there is a fault in itself. Therefore, its claim for compensation for losses such as interest is unfounded by law, and this court does not support it.
Virtual currency is a specific virtual commodity. It is not issued by the monetary authority, and is not legally compensatory and compulsory. It is not a real currency, and should not and cannot be used as currency in the market.
In September this year, the People’s Bank of China, in conjunction with relevant departments, issued the “Notice on Further Preventing and Disposing of the Risks of Hype in Virtual Currency Transactions.”
It is clear that virtual currency does not have the legal status equivalent to legal tender. Its related business activities are illegal financial activities, and participation in virtual currency investment transactions involves legal risks.
Any legal person, unincorporated organization and natural person invests in virtual currency and related derivatives.
In violation of public order and good customs, relevant civil legal acts shall be invalid. The loss caused by this shall be borne by it. Anyone suspected of disrupting financial order or endangering financial security shall be investigated and punished by relevant departments in accordance with the law.
Remind investors and financial practitioners to enhance risk awareness. Establish a correct investment concept, conduct investment transactions through compliant and legal channels, and avoid losses.