Chinese Jiangsu Court Tries Virtual Currency Loan Dispute Case, Determines That Tether Does Not Have Legal Tender Status

February 11th. According to a report from The People's Court Daily, recently, the People's Court of Tongzhou District, Nantong City, Jiangsu Province, China, heard a civil lending dispute involving virtual currency. Eventually, the court rejected the plaintiff's lawsuit demanding repayment. Han and Ji were friends. Ji informed Han about an investment opportunity in a virtual currency called Tether which was very profitable. Subsequently, Ji used Han's phone on a certain platform to help him purchase 2000 Tethers and claimed to help manage them for Han, then transferred the 2000 Tethers to his own account. When it was time to receive the returns, Ji failed to fulfill the promise. Unable to even get back the principal, Han reported the matter to the police. Later, an agreement was reached between Han and Ji to transform their previous virtual currency transaction into a loan relationship. Ji issued a promissory note of 15,000 yuan to Han, promising to repay. However, Ji still did not repay the loan, leading Han to sue Ji in court. After the trial, the court held that, in accordance with the "Notice on Further Preventing and Disposing of Risks Associated with the Hype of Virtual Currency Transactions" issued by ten departments including the People's Bank of China, the Cyberspace Administration of China, and the Supreme People's Court, virtual currencies are not issued by monetary authorities, do not have legal tender status, and should not and cannot be used as currency circulating in the market. Any legal person, unincorporated organization, or individual investing in virtual currencies and related derivatives, if it violates public order and good customs, the relevant civil legal actions are invalid, and any resulting losses shall be borne by the individual. In this case, Han argued that in his loan agreement with Ji, he delivered Tether to Ji through a certain investment platform and used this as the basis for the loan delivery. However, Tether is not a legal tender, does not have legal tender status, and cannot be used as currency circulating in the market, so it cannot be considered that Han has fulfilled the obligation of delivering the loan under the loan agreement. Therefore, the loan agreement between the two parties is not established. Han's claim for Ji to repay based on this loan agreement lacks factual and legal basis.