The legal status of Bitcoin virtual property was first recognized, what is the significance?

Although the Internet Court affirmed the legal status of Bitcoin as a virtual property, it embodies the court's affirmation of Bitcoin as a digital currency, but this does not mean that it has the legal status of the so-called currency and the value attribute of the currency.

Recently, the Hangzhou Internet Court has complied with Wu’s v. Shanghai technology company, Taobao’s network bitcoin and other “tokens” or “virtual currency” in accordance with the constituent elements of virtual property. Although it does not have the legality of currency, it acts as a virtual property. The property of the commodity and the corresponding property rights arising from it shall be affirmed. In the case of a tort liability dispute (property dispute), the second online public hearing was held and the court pronounced the judgment. The plaintiff’s claim against the defendant Shanghai Science and Technology Company and Taobao Company for the infringement liability was insufficient, and the plaintiff’s all claims were rejected.

This is the first case of the Internet Court of Hangzhou involving the bitcoin network property infringement dispute. It is also the first time that the Chinese court has determined the virtual property of the digital currency such as Bitcoin.

Du Qian, president of the Hangzhou Internet Court, told the reporter of the Legal Daily that bitcoin and other "money tokens" or "virtual currency" are in line with the constituent elements of virtual property. Although they do not have the legality of money, they are virtual property. The property attributes and corresponding property rights arising from the product shall be affirmed.

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In 2013, Wu purchased 2.675 bitcoins from the “FXBTC” website operated by a technology company in Shanghai through Taobao.com.

On May 7th, 2019, Wu bought the goods "MXBTC recharge code ¥497.5 (suitable for credit cards, ordinary users can also buy) through the Taobao shop operated by the outsider Huang, and paid the price of 500 yuan. The transaction order was on the same day. Display delivery, confirm receipt and complete. The above stores indicate that they are official stores of the Bitcoin Trading Platform (www.FXBTC.com). On November 30, 2013, Wu also paid a total of 19,920 yuan to the Alipay account of the above-mentioned stores.

After that, he forgot about it. Until May 2017, when Wu wanted to log in to the “FXBTC” website again, he found that the website had been shut down and the website operators could not contact.

Wu believes that when the website was closed, a technology company in Shanghai did not give any hints to it. This inaction did not lead to the recovery of the bitcoin it bought, which caused huge economic losses.

At the same time, Internet virtual currency such as Bitcoin and Litecoin and related commodities were banned from Taobao. Taobao did not fulfill its audit obligation, which caused it to buy prohibited goods on Taobao and suffered losses. Therefore, the lawsuit required the two defendants, a technology company in Shanghai and Taobao Company, to bear joint and several liability for the loss of 76,314 yuan (the transaction price of 2.675 bitcoins at the time of prosecution).

On May 22nd, the Hangzhou Internet Court held a public hearing to hear the case. On July 18th, a judgment was issued. The plaintiff’s claim to the defendant’s claim of infringement was insufficient to dismiss all the plaintiff’s claims.

The Hangzhou Internet Court found the virtual property status of Bitcoin, but rejected the plaintiff’s claim, mainly because Wu did not fulfill his burden of proof.

Regarding Wu’s claim that Taobao Company bears joint and several liability, the court held that there was no obvious illegal or infringing situation in the case involving the commodity information in this case. Wu did not submit any evidence to prove that he had given any notice to Taobao Company in the case. Taobao Company is not the party involved in the transaction or the perpetrator of the infringement. There is no known or known violation of the infringement and no timely measures are taken. After Wu’s request, the certification information of the party involved in the transaction has been disclosed in time. Therefore does not constitute infringement. However, the platform should further strengthen the audit responsibility for the release of commodity information.

The legal status of virtual property was recognized by the court

From the establishment of China's first bitcoin trading platform "Bitcoin China" in 2011, and the launch of the bitcoin trading platform "OkCion" in 2013, China has become one of the most active markets for bitcoin transactions. At the same time, however, there are widespread concerns and heated debates about the legal nature of Bitcoin and the issue of risk regulation.

China's "General Principles of Civil Law" has established that virtual property of the Internet is protected by law, but there is no clear regulation on the attributes of virtual currency such as Bitcoin generated in the Internet environment. In order to regulate the bitcoin trading market and prevent financial risks, in 2013 and 2017, the "Notice on the Prevention of Bitcoin Risk" and the "Announcement on Preventing the Risk of Subsidy Issuance Financing" were released, using "tokens" and "virtual". The term “currency” defines Bitcoin as a virtual commodity, but the concept of “virtual commodity” itself is vague and it is difficult to determine the specific properties of Bitcoin.

As a kind of virtual currency composed of code, its value geometry? Chen Ying, the trial judge of this case, said that the most crucial point of dispute in this case is whether Bitcoin is a legally recognized virtual property, and whether it has the corresponding elements of virtual property, including Value, scarcity, and dominance.

Chen Ying, the trial judge of the case, said, “In 2013 and 2017, the supervision has an announcement to prevent the risk of tokens and to deny the currency status of Bitcoin, but there is no denial of the legal status as a virtual property. In the case, the legal status of Bitcoin is determined by combining the elements of the virtual property."

The Hangzhou Internet Court held that, from the perspective of the constituent elements of property, first of all, Bitcoin possesses the economic or value of property. Bitcoin’s process of “mining” and “mining” and the acquisition of labor products have condensed the abstract human labor. It can be used as a consideration for price transfer, transaction, income generation, and property that the holder actually enjoys in real life, with use value and exchange value;

Secondly, Bitcoin has the scarcity of property, its total amount is constant at 21 million, and supply is limited. As a resource, its acquisition is difficult and cannot be obtained at will;

Finally, Bitcoin has the exclusive and disposable nature of property. As a property, it has clear boundaries and content and can be transferred and separated. Its holders can possess, use and earn income from Bitcoin.

The judgment is important for handling disputes

This is not the first legal interpretation of virtual currency such as bitcoin in China. In October last year, the Shenzhen International Court of Arbitration ruled on a bitcoin return dispute, but for Bitcoin, the judgment of the Hangzhou Internet Court, Previously, it had different meanings. This is the first time that our courts have made a comprehensive discussion on the virtual property of Bitcoin.

The judiciary’s determination in the judgment is of great significance to the handling of disputes and disputes arising from other virtual currencies such as Bitcoin in the future, so that future domestic laws have a definition of digital assets like Bitcoin. More valuable reference.

The reporter found out that in the past, due to the different legal attributes of the virtual currency such as Bitcoin, the same virtual currency dispute may produce completely different referee results.

In 2018, the Intermediate People's Court of Lishui City, Zhejiang Province, in the “Ding Jianqiang and Chen Yingguang Contract Dispute Appeal Case”, believed that the mark written by the parties was a virtual currency that was prohibited from circulation. Due to the illegality of the subject matter involved in the case, the The trading of the subject matter is also not protected by law.

In the contract dispute between Zhou Zhenmei and Jinan Manvi Information Technology Co., Ltd. in 2017, the Jinan Intermediate People's Court held that “the debts generated by Bitcoin are illegal debts and are not protected by law”, so the plaintiff is required to return bitcoin. The claim is not supported.

Wang Hongying, dean of the China (Hong Kong) Financial Derivatives Investment Research Institute, pointed out that although the Internet court affirmed the legal status of Bitcoin as a virtual property, it reflected the court’s affirmation of Bitcoin as a digital currency, which does not mean that it has The legal status of the so-called currency and the value attribute of the currency. The digital currency such as Bitcoin currently has no clear laws and regulations in China, nor has it established a related digital currency exchange. Therefore, it is similar to virtual currency such as Bitcoin. It is difficult to get clear support from the legal disputes. China still has a long way to go in the formulation of legal norms related to virtual currency such as Bitcoin.

Reporter | Wang Chun Correspondent | Tong Yuxia

Source | Legal Daily

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