Is trading cryptocurrencies on the mainland legal or not?
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 contemplated this question; we might as well refer to this case in Shanghai.
Recently, the People's Court of Songjiang District, Shanghai, concluded a service contract dispute case arising from the validity 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 a service fee of 300,000 yuan for token issuance, believing in the development of virtual currencies. However, the final plan fell through, leading Company X to sue in the People's Court, requesting the termination of the contract and the return of the 300,000 yuan service fee by Company S. The Songjiang District People's Court ultimately ruled the agreement invalid and ordered Company S to return 250,000 yuan.
The People's Court found that token issuance financing refers to the financing entity raising Bitcoin, Ethereum, and other so-called "virtual currencies" through the illegal sale and circulation of tokens, which is essentially an act of unauthorized public financing that violates regulations, involving illegal token sales, illegal securities issuance, illegal fundraising, financial fraud, pyramid schemes, and other illegal activities. Therefore, no organization or individual may illegally engage in token issuance financing activities.
Engaging in virtual currency investment transactions carries legal risks; any civil legal actions that violate mandatory laws and regulations are invalid, and any resulting losses must be borne by the party itself.
To summarize, simply holding virtual currencies personally is not illegal, but issuing tokens independently is not permitted; the act of token issuance is not only unprotected but may also be illegal!
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