Cooperation Mining Farm Equipment Dispute Claim Lawsuit, Hunan Province Court in China ruled virtual currency related contract invalid, losses borne by oneself

November 21st. Recently, in Guiyang County, Hunan Province, China, the People's Court reached a conclusion in a virtual currency "mining" contract dispute case. The plaintiff, Mr. Hu, collaborated with others to engage in virtual currency "mining" activities. Later, due to the loss of mining equipment, he sued the court, demanding the return of 570,000 yuan in investment. The court ruled to reject all of the plaintiff Mr. Hu's claims. Mr. Hu and Mr. Zhou are friends. In May 2021, a certain technology company was established, with Mr. Zhou as one of the shareholders. Mr. Li and Mr. Peng participated in the company's "mining" business through an affiliated relationship. The two parties agreed to cooperate in "mining." Mr. Hu transferred 55,000 US dollars to Mr. Zhou through a virtual currency APP (equivalent to 357,082 yuan as agreed by both parties) and entrusted Mr. Cao to transfer 198,000 yuan to Mr. Zhou's bank account, totaling 555,082 yuan. All this was used to purchase servers, hard drives, and other "mining" equipment, which were hosted and operated by the technology company. In July 2022, the equipment was transferred to Mr. Zhou's kitchen for storage. After that, Mr. Hu only paid the electricity bill to Mr. Zhou. In November 2023, due to an economic dispute with Mr. Zhou, Mr. Li removed some hard drives. Although the police station mediated and Mr. Li returned 82 hard drives, Mr. Hu claimed that some hard drives were still missing, and the two parties failed to reach a settlement through negotiation. In 2024, Mr. Hu sued the four defendants on the grounds of equipment loss, demanding the return of 570,000 yuan in investment. After trial, the court believed that according to the joint announcement of the People's Bank of China and ten other departments titled "Notice on Further Preventing and Disposing of Risks Associated with Virtual Currency Trading Speculation," Article 1 states: Virtual currency does not have the same legal status as fiat currency and does not have legal tender status and should not and cannot be used as currency circulating in the market. Virtual currency-related business activities constitute illegal financial activities. Participating in virtual currency investment and trading activities carries legal risks. Any legal person, non-legal person organization, or individual investing in virtual currency and related derivatives, contrary to public order and good customs, makes the related civil legal acts invalid, and any resulting losses should be borne by the parties themselves. In this case, the equipment purchased by Mr. Hu for "mining," using virtual currency for payment and settlement management fees, undermines the legal status of fiat currency and violates public order and good customs. The entrusted contract in question should be deemed invalid.