According to CnLedger, a trusted news source within the Chinese cryptocurrency market, and local media outlets, Beijing Haidian District Court has dismissed a lawsuit filed against major cryptocurrency exchanges by a local investor.
A Chinese investor by the name of Wang accused local cryptocurrency exchanges of being responsible for the loss he had made while trading cryptocurrencies such as bitcoin. Wang claimed that he had lost $62,000 in the Chinese cryptocurrency market and filed a lawsuit against local trading platforms requesting his funds to be refunded in Chinese yuan.
Beijing Morning Post reported that Wang claimed “Bitcoin does not exist, according to Marxism it has no value and therefore the previous trades should be invalidated,” and that Wang requested the cryptocurrency exchanges which he used to trade bitcoin to cover the $62,000 loss he had made.
After careful consideration of the current state of the Chinese cryptocurrency exchange market and regulations that were in place during the time the plaintiff was trading cryptocurrencies, Beijing Haidian District Court dismissed the case, reaffirming that people have the right to freely participate in bitcoin or cryptocurrency trading at their own risk.
Emphasizing that traders must take responsibility for their investments and the risk involved in trading any asset or commodity, Beijing Haidian District Court stated, “[since] there are no laws that forbid the investment and trading of bitcoin, people have the right to freely participate in bitcoin tradings at their own risk.”
The initial ruling of Beijing Haidian District Court led cryptocurrency investors and businesses within the Chinese market to demonstrate a positive stance in regards to the regulatory roadmap of the Chinese government concerning cryptocurrencies. Although the Chinese government strictly enforced a cryptocurrency trading ban in September 2017, many investors within the Chinese market remained optimistic that the government would soon resume trading.
Many traders that moved to the Hong Kong over-the-counter (OTC) market following the cryptocurrency trading ban stated that strict regulations cannot prevent Chinese investors from trading cryptocurrencies due to offshore bank accounts. With the aforementioned bank accounts, local investors can easily migrate to other major markets such as Japan and Hong Kong to continue investing in the cryptocurrency market.
During an interview with South China Morning Post, New York University finance professor David Yermack explained that the Chinese government has banned cryptocurrency trading because local authorities see it as a threat against the country’s existing financial system. Yermack explained:
“They didn’t ban bitcoin, but banned exchanges from trading for speculative purposes. China has a long-term concern about capital flight. It has a lot to do with problems in the Chinese financial system, that they’re worried about this as a competitive threat in some way.”
This month, the Chinese government solidified its opposing stance on the cryptocurrency trading market by requesting banks to report to the People’s Bank of China (PBoC), the country’s central bank, if any sign of cryptocurrency trading is unraveled. Chinese financial authorities also asked commercial banks within its regulated finance industry to refrain from processing transactions for bank accounts primarily used for trading in the OTC cryptocurrency market.
An official document released by the PBoC translated by SCMP read:
“Every bank and branch must carry out self-inspection and rectification, starting from today. Service for cryptocurrency trading is strictly prohibited. Effective measures should be adopted to prevent payment channels from being used for cryptocurrency settlement.”
Banks should enhance their daily transaction monitoring, and the timely shut down of the payment channel once they discover any suspected trading of cryptocurrencies.
By Daniel Dalton via Crypto Insider