On 10 October 2018, Hangzhou Court of the Internet was publicly sentencing of the first bitcoin “mining machine” case in China. This is a new movement by the Hangzhou Court of the Internet court, following the first online sentencing of unfair competition disputes involving hadoop products and the first judgment which confirm the electronic storage of evidence in blockchain as a way of legal review.
itcoin “mining machine” is a machine which is used exclusively to calculate and generate bitcoin. In recent years, investment and trading in virtual currency (led by bitcoin) has been booming. For such newly generated virtual items in the internet environment after the development of the internet technology, the relevant transaction not only has commercial risks, but also has policy risks. The PBC, the CBRC, the CSRC, the CIRC and other departments have jointly issued relevant announcements and notices to restrict the circulation and use of bitcoin in China’s currency market, which bringing huge fluctuations to the transaction price of bitcoin, which has also generated new legal disputes.
In this case, the plaintiff citing the People’s Bank of China’s document which requires to stop all kinds of tokens issue financing activities. The plaintiff argues that the transaction of the mining machine used for the production of bitcoin exclusively is illegal, and the consumers have the right return goods without reason within seven days after receiving the goods. Thus, the plaintiff claimed that the defendant, Zhejiang Ebang Communication Co., Ltd, return the full payment and pay the interest.
The court held that the bitcoin does not have monetary attributes such as legal compensation and compulsion, but it has goods attributes. The subject matter of the transaction in this case is the "mining machine", which is a machine equipment exclusively used to calculate and generate bitcoin. It has property properties. Chinese laws and administrative regulations do not prohibit the production, possession and legal circulation of bitcoin, nor do they prohibit the trading of bitcoin "mining machine". Therefore, the plaintiff's argument for illegal trading of bitcoin miners cannot be established, and the contract involved in the case is legal and valid.
The purpose of the plaintiff’s purchase of the goods in question is to produce bitcoin products. The plaintiff’s action belongs to the act of input funds to purchase means of production. The plaintiff does not purchase the goods for the purpose of living consumption, as a result of this it is not covered by the Consumer Protection Act. The plaintiff claims to terminate the contract on the basis of studying the financial policy after signing the contract rather than commodity information asymmetry, which does not conform to the original intention of applying the seven-day no-reason return policy and cannot terminate the contract according to the Consumer Protection Act. The judgment in the first instance rejected all the plaintiff's claims.
Lawyer Zhou Jianzhong (Partner of Guantao Law Firm Hangzhou Office) and lawyer Yang Xiaona (Internship Lawyer) were the litigators of Zhejiang Ebang Communication Co., Ltd. which won the case.
As the first case of bitcoin mining machine in China, the judgment in Zhejing province has novelty. The case mainly involves the particularity of the subject matter of the transaction which leads to the legal problem of the validity of the contract and the termination of the contract.
