For the second time, a Chinese court has ruled that crypto lending is illegal in the country.
Mr. Ming lent Mr. Gang a total of 80,000 Tether for stablecoin trading in April 2021, according to a press release from the Nanchang People’s Court dated 10 October.
The loan was due within six months. However, Mr. Gang defaulted on the loan, prompting Mr. Ming to file a lawsuit against his counterpart.
In this week’s landmark decision, the Nanchang People’s Court stated that Mr. Ming was required to prove that Tether is a legally issued fiat currency to bring a necessary cause of action for judicial relief, citing a series of laws that comprise China’s crypto prohibition.
As Mr. Ming could not do so, the court determined that the lawsuit did not meet the requirements for civil litigation. Subsequently, Mr. Ming filed an appeal, which was also denied. The presiding judge wrote:
“There are legal risks involved in participating in virtual currency investment and trading activities. If any legal person, unincorporated organization, or natural person invests in virtual currencies and related derivatives that violate public order and good customs, the relevant civil legal actions will be invalid, and the resulting losses shall be borne by them.“
Since late 2021, China has prohibited cryptocurrencies due to environmental concerns and a lack of oversight. In another ruling from August, the Changzhou Zhonglu People’s Court invalidated a $10 million Bitcoin lending agreement, ruling that the lender had no means of judicial relief due to the borrower’s delinquency, as crypto is a prohibited activity within the country.
