Helping others speculate on "Tether" and losing hundreds of thousands of yuan? The court: The contract is invalid and all the money must be returned

Some time ago, the "Squid Coin" was fired because of the online drama

A zero-out crash

Well-known

Cryptocurrency prices are on a roller coaster

But many investors still want to make a fortune

Professional traders are happy to see this happen

As a result, the two parties hit it off and agreed to entrust the transaction.

So, are virtual currency entrustment transactions valid?

Let's take a look at the case recently concluded by Huangyan Court.

A case of entrustment contract dispute

Case Review

On September 3, 2019, Huang Jia, who lives in Huangyan District, Taizhou City, was introduced by someone and signed a "Digital Currency Quantitative Entrustment Agreement" with Zhang Yi. It was stipulated that Huang Jia would transfer 200,000 yuan to Zhang Yi in his personal name for the purchase of Tether (USDT), which would be invested and operated by Zhang Yi . After the expiration of the agreement, the same amount of digital currency purchased by Huang Jia when the contract was signed would be returned to Huang Jia as a minimum; Zhang Yi would settle the corresponding income with Huang Jia regularly, and settle the entrusted digital currency when the contract expired; the term of the agreement was one year.

After the contract was signed, Huang Jia immediately remitted 200,000 yuan to Zhang Yi, expecting a steady profit. However, the market conditions were not as good as Huang Jia expected . Seeing that his investment was about to go down the drain, Huang Jia became anxious and repeatedly asked Zhang Yi to pay the entrusted money on WeChat. Zhang Yi was also unable to control the changes in the virtual currency market, and gradually returned 95,760 yuan of investment to Huang Jia. The remaining funds have not been returned to Huang Jia, not to mention the promised returns.

Seeing that there was no hope of making a profit on his investment , Huang Jia filed a lawsuit against Zhang Yi in court, demanding that he return the investment and compensate for the corresponding interest losses.

The court held

The subject matter of this case, Tether, is a virtual currency. The relevant national documents clearly define the so-called "virtual currency" including Bitcoin and Tether as essentially an act of illegal public financing without approval. No organization or individual may illegally engage in token issuance and financing activities. Tether, the subject matter of this case, as one of the virtual currencies, is not issued by the monetary authorities stipulated by my country, does not have the monetary attributes of legal compensation and compulsion, and cannot and should not be circulated and traded in the market as a subject matter.

Since the subject matter involved in this case is not legal in itself , the plaintiff and the defendant's entrustment and custody of the transaction object are 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 defendant , the property obtained under the invalid contract should be returned to the plaintiff, and the defendant should return the remaining investment of 104,240 yuan to the plaintiff.

As for the plaintiff , he should have known that investment in virtual currency is not protected by national laws, but still entrusted the defendant to invest, which was his fault. Therefore, his claim for compensation for losses such as interest has no legal basis and this court does not support it.

Judge Reminder

Virtual currency is a specific virtual commodity that is not issued by the monetary authorities, is not legal and compulsory, is not a real currency, and should not and cannot be circulated and used as currency in the market. In September this year, the People's Bank of China, together with relevant departments, issued the "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation", which clearly stated that virtual currency does not have the same legal status as legal currency, its related business activities are illegal financial activities, and there are legal risks in participating in virtual currency investment and trading activities.

If any legal person, non-legal person organization or natural person invests in virtual currency and related derivatives and violates public order and good morals, the relevant civil legal acts will be invalid and the losses caused by them will be borne by themselves; those suspected of disrupting financial order and endangering financial security will be investigated and dealt with by relevant departments in accordance with the law. Investors and financial practitioners are reminded to enhance risk awareness, establish correct investment concepts, conduct investment and trading activities through compliant and legal channels, and avoid losses.