A man invested 790,000 yuan and asked someone to trade Bitcoin for him. After 9 months, only 42 yuan was left in his account.

In order to make money, the man verbally asked his friend to help him speculate in Bitcoin and transferred 792,000 yuan in multiple installments. He believed that the other party did not tell him the transaction information such as the purchase record and results, so he sued the court to declare the entrustment of both parties invalid and return the financial management funds. On March 15, the Beijing Chaoyang Court opened a hearing on the case.

The man, Wang, is the general manager of a company and is friends with Lei. Between December 23, 2019 and February 27, 2020, Wang transferred a total of 792,000 yuan to Lei on multiple occasions, all of which were used to entrust Lei to buy Bitcoin for financial management. Lei accepted Wang's entrustment through WeChat chat, but Lei's purchase of Bitcoin and other transaction information were not informed to Wang.

Wang learned that the entrusted financial management behavior of both parties violated the "Notice on Preventing the Risks of Token Issuance and Financing", and Lei refused to settle the transaction results of the entrusted financial management with Wang. In order to protect his own legitimate rights and interests, Wang sued the court, requesting that the "Entrusted Financial Management Contract" verbally reached between Wang and Lei be declared invalid; Lei should return the financial management funds of 792,000 yuan.

Lei argued that starting from December 2019, Wang transferred 792,000 yuan to him in installments and entrusted him to trade Bitcoin. Starting from March 2020, Bitcoin began to explode, and the account losses were almost gone. However, the funds had already been invested in Bitcoin transactions. During this period, Wang acknowledged the losses and also made some profits. The entrusted financial management agreement between the two parties was legal and valid, and he did not agree to return the 792,000 yuan.

The court found that after Lei received the entrusted financial management funds from Wang, he bought USDT (Tether), and then used the purchased USDT plus 5-10 times leverage to buy Bitcoin. The purchase method was to place an order to buy USDT on a certain website, and after buying USDT, the website sent an email to the email address used by Lei.

It is understood that USDT is a virtual currency of the blockchain, 1USDT is equivalent to 1 US dollar. The website's founder had his office in Xi'erqi, Changping District, Beijing before 2017. After 2017, the registered place was moved abroad, and then you need to "climb over the wall" to log in to the website. Since February 2020, the price of Bitcoin has fallen. On February 27, 2020, the website began to force liquidation. As of September 1, 2020, the liquidation was completed, and Lei had 0.0001 Bitcoin left in his account.

It has been confirmed by both parties that as of April 13, 2021, there was only 0.0001 bitcoin left in Lei's account, equivalent to RMB 42.46.

Whether the entrusted financial management agreement verbally reached between Wang and Lei on Bitcoin trading is valid; whether Lei should return the entrusted financial management funds of 792,000 yuan, etc. have become the focus of controversy in the case.

During the trial, both parties confirmed the above facts and expressed their willingness to negotiate to resolve the dispute. In the end, the two parties voluntarily reached a mediation agreement: Lei returned the entrusted financial management funds of 250,000 yuan to Wang.

However, Judge Li Linqiang also emphasized that the entrusted financial management agreement reached between Wang and Lei regarding the virtual currency involved is not protected by law in my country.

Because virtual currency, in form, is a non-physical currency developed based on computer technology, exists in virtual space, and is not carried by physical media.

The Bitcoin and USDT coins involved in the case are virtual currencies, not legal tender issued by the state authorities. They do not have monetary attributes such as legal compensation and compulsory nature, nor do they have the same legal status as currency. They cannot and should not be circulated and used as currency in the market, and their circulation function should not be achieved through exchange with legal tender.

Wang and Lei voluntarily reached a verbal agreement on bitcoin trading operations, the essence of which was the trading, circulation and speculation of bitcoin. The above agreement violated my country's current regulatory policy on virtual currencies, violated public order and good customs, and damaged the country's financial order, financial security and social public interests, and should be invalid.

He reminded that there are legal risks in participating in virtual currency investment and trading activities. Any legal person, non-legal person organization or natural person who invests in virtual currency and related derivatives and violates public order and good morals will have their relevant civil acts invalidated and will be responsible for the losses caused by them. Those suspected of disrupting financial order and endangering financial security will be investigated and dealt with by relevant departments in accordance with the law.