Is trading cryptocurrencies on the mainland illegal?

The latest ruling in a Shanghai case has provided an answer!

Is trading Bitcoin and other virtual currencies illegal? I believe every talented trader in the mainland has pondered this question, and we might as well refer to this case in Shanghai.

Recently, the People’s Court of Songjiang District in Shanghai concluded a service contract dispute arising from the effectiveness of a virtual currency issuance financing service contract.

In 2017, a certain agricultural development company (Company X) signed a "Blockchain Incubation Agreement" with an investment management company (Company S) for the promising development of virtual currencies and paid 300,000 yuan as a service fee for token issuance. However, the plan ultimately fell through, prompting Company X to sue in the People’s Court, requesting the termination of the contract and the return of the service fee of 300,000 yuan by Company S. The People’s Court of Songjiang District ultimately ruled that the agreement was invalid and ordered Company S to return 250,000 yuan.

The People’s Court found that token issuance financing refers to the act of the financing entity raising Bitcoin, Ethereum, and other so-called "virtual currencies" from investors through the illegal issuance and circulation of tokens, which is essentially an unauthorized public financing behavior that violates regulations, involving illegal token sales, illegal securities issuance, as well as illegal fundraising, financial fraud, pyramid schemes, and other illegal activities. Therefore, no organization or individual is allowed to illegally engage in token issuance financing activities.

Participating in virtual currency investment trading carries legal risks; if mandatory legal regulations are violated, the relevant civil legal acts are invalid, and any resulting losses shall be borne by the violator.

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