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A court in China ruled against the plaintiff, who is suing the BTC blockchain mining operator for breach of contract. A court in Beijing ruled that the contract was invalid because mining was prohibited in the country. In addition, he turned over all the materials of the case to the national authorities so that they could shut down the mining.
Last year, China imposed tight restrictions on cryptocurrency mining, effectively displacing most miners from a country that once mined 75% of the BTC hashrate. While it was still not clear where the legal disputes surrounding this now illegal industry would take, the Chaoyang District People’s Court in Beijing gave an insight into the future of digital currency court decisions.
The lawsuit was filed by Fengfu Jiuxin, which, according to court documents, entered into three agreements with blockchain company Zhongyan Zhichuang in 2019, when mining was still legal and China was the dominant player.
As part of the agreements, the plaintiff paid the defendant 10 million yuan ($ 1.6 million) for the purchase and placement of mining machines in Liangshan Yi Autonomous Prefecture in Sichuan Province.
At that time, China almost begged miners to deploy their operations in the country. The provincial governments of this Asian country have provided incentives to several companies so that they can consume excess hydroelectric power for production. Zhongyang was one of those who took investment and did all the hard work of setting up mining businesses.
However, that all changed this year when the Xi Jinping government declared mining of cryptocurrencies illegal. By the time the ban took effect, the plaintiff had received only 18.35 BTC from the transaction, which is about $ 900,000 at current prices.
In its lawsuit, the company claimed 278.17 BTC ($ 13.6 million) in compensation and damages.
The Beijing court ruled against the plaintiff. According to the verdict, the relevant property rights associated with the blockchain mining contract are invalid and not protected by Chinese law.
The court did not confine itself to dismissing the claims. He informed the Sichuan National Development and Reform Commission of the operation so that it could stop it.
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