• Tue. Aug 2nd, 2022

Chinese court ruling invalidates 2019 car sales contract settled with digital currency

ByHazel R. Lang

Jun 26, 2022

Shanghai Fengxian People’s Court, a district court in China, issued a ruling invalidating a car sales contract that the buyer had paid for with digital currency. The decision was also upheld by Shanghai Intermediate Court No. 1, where the plaintiff appealed.

According to case details shared by the Fengxian Court on its WeChat page, the case was first filed by the plaintiff – the buyer of the car – in 2019. The man, identified only as M Huang, accused the undisclosed car sales. breach of contract company.

The plaintiff claims to have signed a contract with the car dealership to purchase a 2019 Audi A6 worth approximately 409,800 yuan (currently around $58,400) for 1,281 UniHash (UNIH, also called Yurimi in China) tokens.

While the agreed payment was made immediately, the dealer did not deliver the car within the three months stipulated by the terms of the contract, so the buyer took legal action.

The court ruling cited a regulation passed in 2017 which stated that digital currencies “cannot and should not be used as circulation currency in the markets.” The court ruled that the use of the digital token instead of fiat currency rendered the sales contract null and void.

“Exchanging and selling virtual currency, providing counterparty services for virtual currency, issuing tokens, and trading virtual currency derivatives are all illegal financial activities,” the court said.

According to the decision, the plaintiff should not receive any damages, delivery of the car or reimbursement of tokens. Reports also indicate that the UNIH token had a controversial status and suspicious origins. As of now, the token project has failed to deliver on any of the promises made in its whitepaper.

China’s digital currency regulations still unclear

Although the ruling took three years to materialize, the law it is based on is what evolved into China’s 2021 blanket ban on digital assets.

The decision also shows the lack of clarity on the legal status of digital assets in China. In another high-profile decision, a court declared digital assets like Bitcoin to be property protected by Chinese property law.

The case involved a loan agreement signed by two parties in which the borrower failed to repay a bitcoin loan. In the case, the court said that Bitcoin “has a certain economic value and conforms to the attributes of ownership, the legal rules of property rights are applied for protection.”

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