TREE NEWS update: A Chinese court ruled that a virtual currency loan contract is invalid, and the borrower must compensate the lender based on the original cost of the coins. In July 2023, Chang borrowed one virtual coin from Jin, who bought 1.14 coins for 228,200 yuan. The court found the repayment clause giving the lender price appreciation benefits invalid, and ordered compensation of 199,600 yuan per coin.
Guangzhou court rules crypto lending contract void
AI take
This ruling underscores China's ongoing legal stance that virtual currency-related contracts lack legal protection, shifting disputes back to fiat-based principles. It affects lenders and borrowers in grey-market crypto lending, as repayment terms tied to price appreciation are void, exposing them to cost-based settlements. The open question is whether this precedent will push more Chinese crypto lending activity offshore or into informal arrangements, given the legal uncertainty around value recovery.
Generated by AI for reference only.
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