China Lifting Crypto Ban was Fake News - Same Ruling Made in 2017

leonoxme (29)in #leonoxme • 6 years ago

On October 25 a ruling by the Shenzhen Court of International Arbitration made some waves with a ruling by declaring that cryptocurrencies not only had a value, but were considered property. The full report from the courts can be read here (Chinese).

The Contract

This ruling took place due to a contract dispute involving three persons. Person A signed an "Equity Transfer Agreement" with Person B and Person C, in which Person B was to pay 550,000 CNY (~$79,150 USD) to Person A for a 5% share of a company. Of this 550,000 CNY, Person B had paid 250,000 CNY.

Also stipulated in the agreement between Person B and Person C in which Person B would manage crypto assets for Person C composed of Bitcoin (BTC), Bitcoin Cash (BCH), and Bitcoin Diamond (BCD). Due to the potential income of these assets, after a scheduled time Person B was to return these assets to Person C. In entrusting Person B with the managing of Person C's crypto assets, Person C would also pay the remaining 300,000 CNY for the equity transfer between Person A and Person B. At the scheduled date, Person B was to pay the 300,000 CNY and return the crypto assets to Person C.

Person B's argument was that the initial contract was invalid since it included the transfer of crypto assets. Since crypto is illegal in China and the core clause of the contract involved cryptocurrencies, the argument stipulated that this made the entire contract illegal and null.

The Good Crypto News

The courts declared that although it does not recognize cryptocurrencies as having the legal status of cryptocurrency, there is no law explicitly prohibiting parties from holding Bitcoin or making private transactions in Bitcoin. This is because the law that bans cryptocurrency in China is centered on illegal fundraising through actions such as an ICO.

Crypto news outlets quickly picked up this ruling as a lift on the ban for cryptocurrencies in China. The reason this news was would be such a positive mark for cryptocurrencies as a whole is because China was originally a very large source of transactions and drove a lot of the global prices.

Prior to the September 2017 ban, transactions in Chinese Yuan (CNY/RMB) and the subsequent BTC/RMB pair accounted for 90% of all global trades. After the ban, that percentage has fallen to just 1% of global trades.

The Reality of the Supposed Unbanning of Crypto

Besides the fact that this ruling was made in Shenzhen, a Special Economic Zone (SEZ) of China which would not be able to change the countrywide ban on cryptocurrencies, it's also nothing new.

In August 2017 a Beijing technology company had raised funds using Ethereum (ETH). When the government placed the ban in September 2017, the company began returning all of the ETH it had received to investors. However, due to a technical error by one of the company's employees, 20 ETH was returned to the incorrect investor. The investor who was the owner of this 20 ETH began contacting the company through text messages and letters from his lawyer to no avail.

In this scenario, the company used the same exact argument that since the ban was in place and cryptocurrencies were illegal, the company could not respect the original agreement without breaking the law and thus could not return the ETH.

Similarly, the courts in Shanghai ordered the company to return the ETH to the investor and stated that although the country did not recognize ETH as a a currency, it did not deny that it could still be protected under the same laws as property.

If the ban is ever lifted in China, it will not be through a court ruling such as the two occurences in Shanghai and Shenzhen. The lift will have to come directly from the government in Beijing. Take any other news with a grain of salt.

Posted from my blog with SteemPress : http://leonox.me/2018-11-23/posts/cryptocurrency/china-lifting-crypto-ban-was-fake-news-same-ruling-made-in-2017/