Cooperative "mining" equipment loss compensation lawsuit, Hunan Province court in China rules virtual currency-related contracts invalid, losses borne by the parties themselves

Recently, the People's Court of Guiyang County, Hunan Province, China, concluded a case involving a dispute over a virtual currency "mining" contract. The plaintiff, Hu, collaborated with others to conduct virtual currency "mining" activities. After the "mining" equipment was lost, he filed a lawsuit in court seeking the return of 570,000 yuan in investment funds. The court ruled to dismiss all of Hu's claims.

Hu and Zhou are friends. A technology company was established in May 2021, with Zhou as one of the shareholders. Li and Peng participated in the company's "mining" business through related connections. The two parties agreed to cooperate in "mining," and Hu paid Zhou 55,000 USD (both parties acknowledged it as equivalent to 357,082 yuan) through a virtual currency app. Additionally, he entrusted Cao to transfer 198,000 yuan to Zhou's bank account, totaling 555,082 yuan, all used for purchasing servers, hard drives, and other "mining" equipment, which was managed and operated by the technology company. In July 2022, the equipment was moved to Zhou's kitchen for storage, and Hu subsequently only paid Zhou for electricity. In November 2023, due to an economic dispute with Zhou, Li removed some hard drives. Although 82 hard drives were returned after mediation by the police station, Hu claimed that there were still hard drives missing, and the two parties could not reach an agreement. In 2024, Hu sued four defendants, claiming the loss of the equipment and seeking the return of 570,000 yuan in investment funds.

After hearing the case, the court found that according to the "Notice on Further Preventing and Handling Risks of Virtual Currency Trading Speculation" jointly issued by the People's Bank of China and ten other departments, the first article states: virtual currency does not have the same legal status as legal tender, does not have legal compensation, and should not and cannot be circulated as currency in the market. Activities related to virtual currency are considered illegal financial activities. Participating in virtual currency investment and trading activities carries legal risks. Any legal person, non-legal entity, or individual investing in virtual currency and related derivatives violates public order and good customs, and the relevant civil legal acts are invalid, with any resulting losses borne by the parties themselves. In this case, the equipment that Hu entrusted to purchase was used for "mining," with payments made in virtual currency and management fees settled, which undermines the status of legal currency and violates public order and good customs. The entrusted contract in question should be deemed invalid.