Plaintiff lost over $10,000 in 2018 after China’s central bank banned financial institutions from supporting crypto transactions
The High Court of North Shandong Province in China has publicly stated that investments in digital assets such as cryptocurrencies are not protected by law. The comment was made while reviewing a Jinan Intermediate People’s Court decision in a case concerning fraud claims related to digital currency.
This ruling is the latest setback for China’s crypto sector, setting a precedent that could effectively prohibit legal protection for investments in digital assets like Bitcoin.
The plaintiff told the Jinan court that he had invested more than $10,000 in digital currency after receiving investment advice from three friends.
When the plaintiff attempted to transfer his funds, the relevant accounts had already been closed by the People’s Bank of China following the 2018 ban on institutions that facilitate cryptocurrency transactions. As a result, the plaintiff’s funds were lost during the process and he was unable to recover them either as fiat currency or as digital tokens.
The Jinan court did not side with the plaintiff in January 2021, finding that the fraud allegations lacked merit because digital assets do not have legal status. The Jinan Intermediate Court upheld that ruling in March 2021 and the plaintiff appealed to the High Court of North Shandong. The High Court affirmed the original decision, stating publicly that “investment and trading in cryptocurrency are not protected by law.”
The court’s announcement follows a broader crackdown earlier in the year, when Chinese authorities intensified measures against crypto-related companies and banned cryptocurrency mining. That clampdown forced many mining operations to relocate abroad, to regions including Africa and Central Asia.
Although this particular case did not result in criminal charges against the plaintiff, another case in Zhenjiang saw eight people arrested after allegedly using Bitcoin to circumvent foreign exchange limits that restrict annual withdrawals of foreign currency to $50,000. Authorities said the group used Bitcoin as an intermediary to convert yuan into other fiat currencies, including the South African rand, conducting transactions worth more than 1.4 billion yuan during 2019. Six of the suspects received prison sentences and investigations remain ongoing.
Cases like these reinforce perceptions that digital currencies are frequently used to facilitate criminal activity, strengthening the rationale for harsher regulation from China’s already crypto-adverse authorities.