Ningxia Court in China Mediates a Virtual Currency Entrusted Investment Dispute Case

On April 2, the Xingqing District People’s Court in Ningxia concluded a dispute over entrusted virtual currency investment. Plaintiff Wei entrusted defendants Li and Hu to invest in virtual currencies. When he couldn’t secure a refund amid an urgent need for funds, he sued them for unjust enrichment. After reviewing the case, the court found a mismatch between Wei’s cause of action and the actual legal relationship. It proactively explained legal risks to guide the parties to recognize the underlying entrustment contract. Ultimately, Wei withdrew his lawsuit against Hu, Li returned the investment principal, and the two parties reached a settlement. During mediation, the presiding judge warned Wei of high risk of losing if he persisted with the unjust enrichment claim—he would need to gather new evidence and file a separate entrustment contract dispute, wasting significant time and energy. For the defendants, the judge noted: While Wei’s initial claim was misframed, a genuine entrustment investment relationship existed, and his refund request was fact-based. If the case proceeded as an entrustment contract dispute, Li was likely liable to refund based on evidence. The judge also reminded: Per the Supreme People’s Court’s judicial opinions, entrusted virtual currency investment contracts signed after September 4, 2017 are invalid, with losses shared based on fault. Investors must accurately identify the legal relationship to assert their rights and reduce litigation risks. Source: The Paper News