China’s High National Court in Jiangsu Province recently released information on a foreign-related case between Singaporean investors Pan Mumou and Chinese citizens that caused a 15.74m former cryptocurrency contract to deteriorate.
China’s cryptocurrency regulations have always been strict. Chinese citizens are permitted to own and trade digital currencies, but the country does not recognize digital assets as fiat currency.
Therefore, Chinese law argues that all risks attached to a contract or contract, including cryptocurrency, are borne by the contractor, and the law cannot protect them. This is especially true in the Pan-Tian conflict, as foreign organizations are involved.
“MFA Blockchain” Investment
In 2019, Singaporean citizen Panmumou and Chinese citizen Amanemumou entered into a partnership to invest in a project called the “MFA Blockchain.”
Following their agreement, Pan Mumou will donate to the capital, while Tian Mumou will be in charge of technology and operations. After the project began, Pan donated 15.74 million yuan (approximately $2.1 million) to the project.
After Tian failed to return the capital of Pan after a while, he decided to withdraw from the deal and asked Tian to return the investment.
Initially, Tian cited the issue of market liquidity, but ultimately returned 10.6 million yuan (about $1.4 million) to bread. The remaining 5.15m yuan (approximately $700,000) has been outstanding. Eventually, the MFA blockchain account was locked, unhappy with the operation, and the rest of the principal was lost. It was bread I sued Tian to collect the remaining funds.
China’s High Court intervenes
The case was initially tried by Yangchen Central Court and Jiangsu High Court. The court ruled that digital currency investment is null and invalid on the grounds that it violates Chinese law and violates public order and morality.
In mainland China, cryptocurrencies are not recognized as fiat currency, and related transactions are illegal financial activities.
For this reason, the court held that the parties must enter into a contract at their own risk and incur losses due to the arrangement. This essentially means that Pan must incur the remaining losses of his capital.
This incident serves as a story of attention to foreigners, taking into account the investment of cryptocurrency in cooperation with Chinese partners. Contract agreements do not provide absolute security as Chinese courts may void the contract if they violate domestic regulations.
Foreigners are not bound by Chinese law, but once legal action is pursued against Chinese citizens in China, the case will be dealt with in accordance with Chinese law. Investors who are not familiar with Chinese law should not easily enter into contracts or contracts.
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