After the borrower defaulted, the plaintiff, Mr. Ming, will not be able to obtain court remedy to recover his 80,000 Tether loan. According to a second Chinese court, cryptocurrency lending is not covered under the nation’s legal framework.
In April 2021, a person by the name of Mr. Ming loaned a total of 80,000 Tether to a person by the name of Mr. Gang for stablecoin trading, according to a news statement issued by the Nanchang People’s Court on October 10. Six months were allotted for debt repayment. But when Mr. Gang didn’t repay the debt, Mr. Ming filed a lawsuit against his counterpart.
According to the Nanchang People’s Court, which cited a number of laws that constitute China’s cryptocurrency ban in its historic ruling this week, Mr. Ming must demonstrate that Tether is a duly issued fiat currency in order to establish a sufficient cause of action for judicial relief. The lawsuit was deemed outside the proper purview of civil litigation by the court because Mr. Ming was unable to do so. The verdict was then challenged by Mr. Ming, but it was also overturned on appeal. The chief magistrate penned:
“Engaging in trading and investing activities using virtual currencies carries certain legal dangers. The applicable civil legal actions will be deemed void, and any losses incurred by any legal entity, unincorporated organisation, or natural person who invests in virtual currencies and similar derivatives that contravene public order and good customs will be their responsibility”.
Due to lack of monitoring and environmental concerns, cryptocurrencies have been outlawed in China since late 2021. An August judgement by the Changzhou Zhonglu People’s Court voided a $10 million bitcoin lender-borrower agreement, holding that the borrower’s default left the lender without legal recourse because cryptocurrency is illegal in the nation.