A recent post by China’s WeChat [weixin.qq.com], elucidated a case conducted at the Shenzhen International Court of Arbitration. According to the post, this is a dispute over an equity transfer case which involved cryptocurrencies such as Bitcoin [BTC], Bitcoin Cash [BCH] and Bitcoin Diamond [BCD].
cnLedger, China’s cryptocurrency news provider tweeted:
“Chinese court confirms Bitcoin protected by law. Shenzhen Court of International Arbitration ruled a case involving cryptos. Inside the verdict: CN law does not forbid owning & transferring bitcoin, which should be protected by law bc its property nature and economic value.”
The Equity Transfer Agreement was signed by 3 parties which included 2 individuals and a partnership. The case was about the additional amount of share in a company held by one of the applicants. According to the case filed, one of the shareholders was compelled to transfer 5% of the company share to the other applicant.
The assets held by the shareholder were in the form of BTC, BCH, and BCD. The post stated that the other investor trusted the 1st party in terms of holding digital assets and they signed an agreement to return these assets to the 2nd party as scheduled. However, the 1st party did not transfer the amount, which led to the other two shareholders signing a petition.
The main arbitration requests are:
- The first applicant is changed to hold 5% of the shares of Company X to the respondent, and the respondent simultaneously pays the equity of RMB 250,000 to the first applicant;
- The respondent compensated the second applicant for 20.13 BTC, 50 BCH, and 12.66 BCD assets losses of US$493,158.40 and interest (calculated from the date of application for arbitration according to the Bank of China’s US dollar interest rate for the same period, until the date of return);
- The respondent paid the second applicant a penalty of 100,000 yuan.
The case was dealt with the following reference points by the Shenzhen International Court:
- The bitcoin return contract concluded between private individuals does not violate the mandatory provisions of the legal and regulatory effects and should not be considered invalid. Chinese laws and regulations do not prohibit privately held and legally transferred bitcoin.
- Second, although Bitcoin exists in the virtual space of the network, it has special characteristics in terms of possession and publicity of rights change, but it does not prevent it from becoming an object of delivery.
- Before the laws and regulations define Bitcoin, the arbitral tribunal cannot forwardly identify it as “network virtual property” as stipulated in Article 127 of the General Principles of Civil Law, but can reversely identify that it is neither a currency issued by the monetary authority. It is also not electronic of legal tender and does not generate interest.
- Bitcoin is not a legal currency and does not prevent it from being protected by law as a property. Bitcoin has property attributes that can be dominated and controlled by manpower, have economic value, and can bring economic benefits to the parties. This is the meaning of the parties’ agreement and does not violate the legal provisions. The arbitral tribunal recognizes this.
Bill Barhydt, CEO of Abra Global said:
“This is a big deal. “Chinese laws and regulations do not prohibit privately held and legally transferred bitcoin.”
A cryptocurrency enthusiast named Alan Siefert said:
“I’m inclined to believe that they are doing this just so that they can ban it again in the future.”
A crypto trader named Cryptix said:
“Ban during bear market, unban during bull market. Nice strategy China”
The case was concluded by all the parties agreeing on the case to be arbitrated by the Shenzhen Arbitration Commission.
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