In a groundbreaking ruling, Wuhan City’s Wuchang District People’s Court rejected a Filecoin mining contract. It also banned virtual currency activities. This ruling highlights China’s pledge to green growth and public safety.
Zhou Seeks Contract Cancellation and Refund Over State-Prohibited Virtual Currency
The complaint mentioned Mr. Zhou’s July 7, 2021 contract with a tech business. The IT company installed and managed Zhou’s 179,800-yuan IPFS storage server in a computer room. The contract relied on the technology company’s promise that the IPFS storage server would provide IPFS network services, hardware upgrades, Filecoin awards, and above-market investment returns.
Zhou recognized that the storage server’s virtual money was state-prohibited after the operation. Knowing the legal effects, he filed to cancel the contract, recover all payments, and reclaim the occupied cash.
According to the court ruling, Filecoin token-mining storage servers were offered through the “Storage Server Purchase Contract”. Mining operations’ high energy consumption and carbon emissions are vulnerable to China’s industrial structure optimization, energy preservation, emission reduction, and carbon neutrality goals.
The court recognized virtual currency production and trading asset concerns, company failures, and investment speculation risks. In this way, risks hurt social and public interests. The court rejected the contract for administrative and regulatory industrial structure adjustment violations.
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Both parties caused this invalid contract. The virtual currency mining storage equipment provider should have recognized the policy and legal complications. Zhou should have been careful owing to the legal risks of virtual currency investment. Consequently, both parties were accountable for the unlawful contract.
Chinese Court Orders Compensation in Filecoin Mining Contract Case
The court ordered the IT company to compensate Zhou 120,000 yuan at its pleasure. Zhou’s claim for interest on the occupied funds was declined since there was no interest agreement.
This ruling supports China’s virtual currency prohibition and green development. In September 2021, 10 Chinese government departments, comprising the People’s Bank of China, confirmed virtual currencies were unlawful and banned related commercial transactions. This order risks abolishing civil cases and losing money. Financial disorder and security will also be penalized.
The court found virtual currency mining costly and harmful for the environment, especially when using energy-exhaustive crypto mining machines. This marks economic and social progress, energy savings, pollution lessening, and industrial and technical innovation.
Buying storage servers for virtual currency mining is unlawful and invalid under this directive. The court clarified mining’s illegality and destruction for both sides following the ruling. All parties decided to follow the ruling’s norms and regulations, respecting the court’s stance.