The first case involving Bitcoin infringement was sentenced today. The court confirmed that Bitcoin is a virtual property, but rejected the plaintiff's claim due to insufficient evidence.

The first case involving Bitcoin infringement was sentenced today. The court confirmed that Bitcoin is a virtual property, but rejected the plaintiff's claim due to insufficient evidence.

On July 18, 2019, the Hangzhou Internet Court held a second online public hearing on the case of plaintiff Wu against defendant Shanghai technology company and defendant Taobao for network infringement liability dispute (property rights dispute) and pronounced the verdict in court , finding that the plaintiff's claim for infringement liability against defendant Shanghai technology company and Taobao was insufficient and dismissed all the plaintiff's claims. Xinhua News Agency, People's Rule of Law, Hangzhou Daily, Hangzhou News Comprehensive Channel and other media reported on the scene.

01

Case Review

On May 7, 2013, the plaintiff Wu purchased the product "FXBTC recharge code ¥497.5 (suitable for credit cards, ordinary users can also purchase)" through the Taobao store operated by Huang, a person not involved in the case, and paid a price of 500 yuan. The transaction order was displayed as shipped, confirmed to be received and completed on the same day. The above-mentioned store marked it as the official store of the Bitcoin trading platform (www.FXBTC.com). After that, the plaintiff Wu paid a total of 19,920 yuan to the Alipay account of the above-mentioned store on November 30, 2013. On May 2, 2014, the "FXBTC" website issued a "suspension notice", and in the middle of the same month, many media reported on the closure of the above-mentioned website and the inability of users to withdraw cash. The plaintiff calculated, based on the price of Bitcoin on the day the above-mentioned RMB19,920 was paid, that the above-mentioned funds were used to purchase 2.69 Bitcoins from a Shanghai-based defendant company. The company's inaction in failing to notify the plaintiff when its website was shut down resulted in huge economic losses for the plaintiff. Taobao failed to perform its audit obligations, resulting in the plaintiff purchasing prohibited goods on the online shopping platform it operated. Therefore, the two defendants should bear joint and several liability .

For more details of the case, please click on the link: Dispute caused by 2.675 "Bitcoins"...

02



Court hearing


After trial, the court held that
although the legal status of Bitcoin as virtual property should be affirmed, the plaintiff's claim that the actual implementation entity of the infringement in this case was the defendant Shanghai technology company was insufficient. The plaintiff claimed that he paid 19,920 yuan to the defendant Shanghai technology company to purchase Bitcoin, but the direct recipient of the money was the Alipay account of the store operated by Huang, a person not involved in the case. The unilateral description of the store is not enough to identify it as the "official" recharge store of the defendant Shanghai technology company, and it is not enough to presume the identity of the store operator and the website operator ; and the plaintiff did not provide any evidence to prove whether he obtained the recharge code of the website involved after paying the 19,920 yuan involved, whether he had a corresponding website account, whether the above-mentioned funds had actually been recharged on the website, and whether the plaintiff actually obtained the corresponding Bitcoin share. According to the principle of proof that whoever claims shall provide evidence, the plaintiff shall bear the legal consequences of failure to provide evidence. Regarding the plaintiff's claim that Taobao Company shall bear joint and several liability. The product information involved in this case does not contain any obvious illegal or infringing circumstances, and the plaintiff has not submitted any evidence to prove that it has notified the defendant Taobao Company of the situation in this case. The defendant Taobao Company is not the counterparty of the transaction involved or the perpetrator of the infringement involved. There is no situation where it knew or should have known that the infringement existed but did not take timely measures. After the plaintiff's request, it has also disclosed the authentication information of the counterparty of the transaction involved in a timely manner, so it does not constitute infringement. However, the platform should further strengthen its review responsibility for the release of product information.

03


Typical significance


This case is the first case of "Bitcoin" network property infringement dispute case
accepted by our court
. It is also the second case of dispute arising from infringement of others' property rights on the Internet since the "Provisions of the Supreme People's Court on Several Issues Concerning the Trial of Cases by Internet Courts" established new jurisdiction disputes. There are two main points in the judgment of this court: First, Bitcoin has the value, scarcity and disposability that property must have as the object of rights, and its status as virtual property should be recognized. The "General Provisions of Civil Law" has established that network virtual property is protected by law, but China's laws and regulations have no clear regulations on the attributes of virtual currencies such as Bitcoin generated in the Internet environment. Although the People's Bank of China and other ministries and commissions have issued documents denying the legal status of "virtual currency" as currency, they have not denied its property attributes as a commodity. The "Notice on Preventing Bitcoin Risks" also mentioned that "in terms of nature, Bitcoin should be a specific virtual commodity." From the perspective of the constituent elements of property, firstly, Bitcoin has the economic or valuable nature of property. Bitcoin is generated through the process of "miners" and "mining" and the acquisition of labor products, which condenses the abstract labor of human beings. It can be transferred, traded, and generate income through money as consideration. It corresponds to the property actually enjoyed by the holder in real life, and has use value and exchange value; secondly, Bitcoin has the scarcity of property. Its total amount is constant at 21 million, and its supply is limited. As a resource, it is difficult to obtain and cannot be obtained at will; finally, Bitcoin has the exclusivity and disposability of property. As property, it has clear boundaries and content and can be transferred and separated. Its holder can possess, use and obtain income from Bitcoin. In summary, "tokens" or "virtual currencies" such as Bitcoin meet the constituent elements of virtual property. Although they do not have the legitimacy of currency, their virtual property, commodity attributes and corresponding property rights should be affirmed. 2. Although the court in this case recognized the virtual property status of Bitcoin, it rejected the plaintiff's claim, mainly because the plaintiff failed to fulfill its burden of proof. According to the Civil Procedure Law and the Supreme Court's Several Provisions on Evidence in Civil Litigation, the parties have the responsibility to provide evidence for their claims. If there is no evidence or the evidence is insufficient to prove the factual claims of the parties, the party with the burden of proof shall bear the adverse consequences. The plaintiff in this case failed to submit sufficient evidence to prove that the defendant Shanghai Technology Company was indeed the recipient of the 19,920 yuan he claimed to use to purchase Bitcoin shares, nor did he prove that he had actually obtained the corresponding Bitcoin shares. He failed to provide any evidence to prove how the two parties agreed on the rights and obligations before paying the 19,920 yuan involved in the case, whether he obtained the recharge code of the FXBTC.com website after payment, whether the above-mentioned funds had actually been recharged on the FXBTC.com website, whether there was a corresponding FXBTC.com website account, etc. Therefore, the court could not determine that the defendant Shanghai Technology Company was the subject of the alleged infringement, and naturally could not support the plaintiff's lawsuit.

It is necessary to remind that when conducting investment and financial management activities, the parties should pay attention to preventing and controlling financial risks and make rational investments; when conducting commercial activities, they should pay attention to examining the subject qualifications of the counterparty, retain transaction evidence, and improve risk prevention awareness to prevent the inability to provide evidence when rights protection is needed and not being supported. At the same time, there is a legal proverb that says: " The law does not protect those who sleep on their rights ." The General Provisions of the Civil Law of the People's Republic of China stipulate that the statute of limitations for general civil cases is three years. Therefore, after knowing that your rights have been infringed, you should pay attention to timely protection of your rights to avoid exceeding the statute of limitations and resulting in the inability to protect your rights.

Source: Hangzhou Internet Court

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