A court in Beijing has ruled that three investment agreements for bitcoin mining operations in Sichuan are “invalid.” A compensation claim has been rejected in the case, viewed as an indication that the Chinese judiciary would not provide protection for crypto-related interests.
Beijing Court Invalidates Bitcoin Mining Contracts
The Chaoyang District People’s Court in the Chinese capital has recently rejected a lawsuit seeking damages from a crypto company. The lawsuit was brought by a client who did not receive a return for his bitcoin mining investments, according to the Hong Kong Daily South China Morning Post.
Beijing Phonf Marketing Technology was the plaintiff. In May 2019, Zyzc Blockchain Technology entered into three agreements for Sichuan’s deployment of mining equipment. The job cost Zyzc Blockchain Technology 10 million Yuan ($1.6 Million). The central government at the time was open to crypto mining. However, some local authorities allowed the use of surplus hydropower by bitcoin farms.
China had banned cryptocurrency-related activity such as trading, but until spring 2017, the government didn’t interfere with mining. In May, the State Council decided to clamp down on the industry following President Xi Jinping’s pledge to achieve carbon neutrality in the next four decades. Since then, the government offensive has spread to Sichuan and other provinces.
Beijing Phonf claimed that 18.35 BTC had been earned by it, which is roughly $904,000 at time of writing. However, it has received less over the years. It also demanded compensation for 278.17 BTC it shared with the firm. According to reports, in the first such case, the court declared that the mining contracts were illegal. This decision, according to the Chinese newspaper, suggests that the Chinese judicial system doesn’t intend to protect or recognize interests in cryptocurrencies.
Sichuan Moves to Close Down Mining Farms Concerned in Court’s Decision
After the court rejected the lawsuit, Chaoyang District Court notified Sichuan’s provincial branch to the National Development and Reform Commission. The economic planner took action to stop the remaining mining sites involved and focused on other coin minting activities.
Other countries have also been subject to inspections for illegal mining activity. Zhejiang authorities recently raided over two dozen government-run organisations, including universities. They discovered that 14 were engaged in mining crypto.
Besides Sichuan and Zhejiang, this year’s government crackdown on the mining sector has affected a number of provinces such as Xinjiang, Qinghai, Yunnan, Inner Mongolia, Anhui, and Hebei. In November, the NDRC also announced it’s going after state-run industrial enterprises involved in the extraction of digital currencies.
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