A court in Beijing has declared a Bitcoin mining contract to be invalid, following an intensification of efforts by regulators to scourge cryptocurrency activity from the Chinese economy.
On 15 December the Beijing Chaoyang District Court dismissed a lawsuit from a plaintiff demanding the payment of income derived from Bitcoin mining, marking the first time that a Beijing court has declared a cryptocurrency mining contract to be invalid.
In May 2019 Fengfu Jiuxin Company (丰复久信公司) signed several contracts to entrust Zhongyan Zhichuang Company (中研智创公司) with Bitcoin mining services as well as the payment of related profits, in exchange for a management services fee.
Following the signing of the contracts Fengfu paid Zhongyan 10 million yuan, with Zhongyan subsequently purchasing cryptocurrency mining equipment and signing a contract with a third company to engage in Bitcoin mining activities at various locations in Sichuan province.
Zhongyan paid Fengfu 18.343 Bitcoins as revenue from the arrangement, which Fengfu deemed inadequate, prompting its decision to take the matter to the Chinese court system.
The Chaoyang district court said because both parties were clearly apprised of the risk in relation to mining and Bitcoin transactions and Chinese authorities had clearly banned Bitcoin-related transactions, the contract was deemed to be invalid, and any property rights arising from it were not subject to legal protections.
The Chinese central government stepped up efforts to purge the country of cryptocurrency mining and trading in 2021, after first cracking down on virtual currencies in late 2017 with the launch of a ban on initial coin offerings (ICO’s) and domestic exchanges