Chinese court rejects claim for 278 BTC over ‘anti-social’ contract

A Beijing court has deemed the bitcoin mining contract invalid and rejected the plaintiff’s request for compensation of 278 BTC from the defendant, according to the court ruling.

In May 2019, Fengfu Jiuxin Company signed an agreement with Zhongyan Zhichuang Company to mine cryptocurrency. The latter undertook to purchase, install and operate the equipment, and Fengfu wired 10 million yuan under the contract to Zhongyan.

As part of the agreement, Zhongyan transferred to Fengfu Jiuxin 18.3463 BTC (~$901,760) as mining revenue, but later ceased the payments.

Fengfu filed suit, seeking to compel the defendant to pay 278.1654976 BTC (~$13.67 million). The amount included unpaid revenues and compensation for equipment.

The judge stated that mining consumes a lot of electricity and leads to higher carbon emissions — not contributing to the real economy and conflicting with China’s ecological goals. Also, in his view, the companies knew at the time of signing the contract that the relevant authorities ‘clearly prohibited’ bitcoin-related transactions.

In the ruling, the judge deemed the contract contrary to public interest and unlawful, and its provisions are not legally protected.

As reported in September, the People’s Bank of China, together with nine government agencies, published a statement in which cryptocurrency operations were classified as illegal financial activity.

Media reported that the relevant authorities began studying the prospects of criminal prosecution of miners and traders.