A recent unfair enrichment case in China has shed some light on how the country’s legal system is approaching cryptocurrencies. In the case, the Shanghai Hongkou District Court recognized Ethereum’s ether (ETH) should be “protected by law” as general property.
The case, according to a post on Baidu, involved a total of 20 ETH (about $4,600) that had been transferred to a “technology company” that was issuing tokens through an initial coin offering (ICO).
China notably banned the fundraising practice last year, along with digital currency exchanges, which forced users to resort to peer-to-peer trading. ICO projects that had already raised funds were, at the time, told to return them to investors.
Per the news outlet, in this case the company refused to return the 20 ETH. The plaintiff reportedly reached out through text messages, letters sent by his lawyers, and other means. The defendant reportedly “refused to communicate” with the plaintiff.
In court, the defendant claimed cryptocurrencies like ETH weren’t recognized nor permitted in the country and, as such, the case had no legal basis The court ruled the plaintiff had a right to ask for his funds back, as he managed to prove he transferred them through blockchain records and letters from companies called Nanchang Digital Network Technology and Hangzhou Rongzhi Technology confirming the funds had been received.
It noted, however, China doesn’t recognize the monetary properties of cryptocurrencies like ether, although it “cannot deny” that ether “should be protected by law as general property.” The post reads:
The court considered that the current state didn’t recognize the monetary properties of so-called “virtual currencies” such as ether, and prohibited financial activities in them, including their circulation. However it cannot deny the fact that ether should be protected by law as general property.
According to the piece’s author, this means a precedent may have been set, as the country will likely keep on admitting cryptocurrencies like ether should be protected by law. Future cases, however, may have other obstacles to go through.
Per the author, similar cases will need the legal name of the person or entity who received the funds, as well as other distinguishable data such as its residence. Due to the cryptocurrency space’s nature, ICO projects could merely add fake information.
Earlier this month, as CryptoGlobe covered, China’s central bank issued a warning regarding ICOs and cryptocurrency trading. This as crypto exchanges have been able to bypass the country’s crackdown by changing their domain names.
Note: Some sentences in this article were translated from Chinese.
