The Jiangsu High Court of China released a hearing in the case of foreign-related commercial trials, ruling out that overseas crypto investment is not protected by Chinese law. In this particular case, a Singaporean investor, Pan, has lost his legal battle against a Chinese partner, Tian, over an investment in virtual currency.
China HC Ruling in Foreign Crypto Investment Dispute
Pan, who had been looking for high-return opportunities, partnered with Tian in 2019 to invest in a blockchain project called “MFA Blockchain.” The project, launched with a third-party partner, aimed to profit from crypto trading, with Tian handling the technical operations and Pan overseeing the financial contributions.
Formerly, the investment opportunity seemed promising, and Pan transferred 15.74 million yuan to buy MFA crypto. However, as time went on, Pan grew concerned as his expected returns failed to materialize. After repeated requests for the return of his funds, Tian returned 10.6 million yuan, but by September 2020, the investment received a severe blow when the trading platform, MEXC, removed MFA/USDT spot trading, locking out Pan’s assets.
According to the official statement by Jiangsu High Court, Pan took legal action, seeking to recover his remaining investment. However, both the Intermediate People’s Court of Yancheng City and the Jiangsu High Court ruled against him, arguing that the project involved virtual currency speculation, which violated China’s laws on financial security and public order. The courts found that the cooperation agreement was invalid under Chinese law, which prohibits cryptocurrency trading and related activities.
The judge ruled, “The ‘Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation’ jointly issued by the People’s Bank of China, the Supreme People’s Court and other ten ministries and commissions stipulates that virtual currency-related business activities are illegal financial activities, which are strictly prohibited and resolutely banned in accordance with the law; overseas virtual currency exchanges providing services to residents in my country through the Internet are also illegal financial activities.”
The courts thus ruled that since the investment violated China’s mandatory legal provisions, Pan and Tian would have to bear the losses themselves.
