A bitcoin is currently marketed at more than $30,000, and an investment of 10 million can be mined to nearly 300 a year... Due to the huge temptation of interests, the online virtual currency Bitcoin has attracted many profit seekers to flock to the market and opened the "mining" activity of calculating and producing virtual currency through a dedicated "mining machine". However, the promise could not be fulfilled, and the delay in seeing the benefits made investors panic, hoping to sue for tens of millions of losses. On December 15, the Chaoyang Court in Beijing held a public hearing and pronounced judgment on the first case of bitcoin mining in Beijing, and the court also sent judicial suggestions to the Sichuan Development and Reform Commission where the mining machine is located, feedback clues, and recommended that the mining behavior be cleaned up and rectified.
event
Invest 10 million in mining The 296 bitcoins that are said to be good will only cash out 18
A beijing marketing technology company ("marketing company") complained that in 2019, a blockchain technology company ("blockchain company") peddled bitcoin mining projects to it, indicating that it had the ability to operate a mining machine. On May 6, 2019, the marketing company, as Party A (the buyer), signed the "Computer Equipment Procurement Contract" with the blockchain company, stipulating that the name of the goods is computer equipment, and the model specifications and quantity are T2T-30T specifications and models of micro storage space servers (hereinafter referred to as "mining machines") with a unit price of 5040/ unit; the contract amount is 7771680 yuan. Later, the two parties also signed the Service Contract and the Cloud Data Server Hosting and Data Value-added Service Agreement (hereinafter referred to as the Value-added Service Agreement) to further clarify the rights and obligations of both parties. Including warranty, maintenance, server equipment operation management, and payment of server-related costs such as electricity bills, the total amount of service fees is 2228320 yuan.
After the above contract is signed, the blockchain company purchases and entrusts a third-party mine to actually operate the "mining machine".
The marketing company paid 10 million yuan according to the contract. According to the Value-added Service Agreement signed by the two parties, the proceeds generated by the data value-added services are settled on the same day, of which 7% is distributed to the blockchain company as the proceeds of its entrusted management and operation of the cloud data server, and the rest is transferred to the receiving address provided by the marketing company, and the contract period is from June 30, 2019 to June 30, 2020. During the performance of the Value-added Service Agreement, the blockchain company did not provide the marketing company with an original record of the bitcoin mining machine revenue during the service period, and only paid 18.3463 bitcoins.
Marketing companies have repeatedly failed to urge, so with reference to the bitcoin price calculated by the industry's famous bitcoin data website (bitinfocharts), during the service period, the marketing company can obtain 296.5117976 bitcoins in accordance with the "value-added service agreement", in addition to what has been collected, the blockchain company should still pay 278.1654976 bitcoins to it. At the same time, the blockchain company did not return the bitcoin mining machine to the marketing company after the expiration of the service period of the Value-added Service Agreement.
To this end, the marketing company sued the court, requesting the court to order the blockchain company to deliver 278.1654976 bitcoins, or to deliver 9550812.36 US dollars at the price of 34335 US dollars per bitcoin on January 25, 2021, and at the same time, compensate for the loss of occupied mining machines after the expiration of the service period. The issue of the return of mining machines will be advocated separately.
The blockchain company argued that it had fulfilled the corresponding obligations in accordance with the contract between the two parties, but the marketing company did not pay the electricity bill in time, resulting in the server not being able to operate, and the fault was not in the blockchain company, so it should not be liable.
Trial
Claims that each coin is worth $34,335 and that the claim for $9.55 million in proceeds was rejected
After trial, the court held that the facts of the case occurred before the implementation of the Civil Code, and according to the provisions, the provisions of the laws and judicial interpretations of the people's republic of China should be applied to civil dispute cases caused by the legal facts before the implementation of the Civil Code, so the relevant provisions of the Contract Law of the People's Republic of China should be applied.
According to the Notice on Rectifying virtual currency "Mining" Activities of the National Development and Reform Commission and other departments on September 3, 2021, the virtual currency "mining" activity refers to the process of calculating and producing virtual currency through a special "mining machine", with large energy consumption and carbon emissions, low contribution to the national economy, limited driving effect on industrial development, scientific and technological progress, etc., coupled with the increasingly prominent risks derived from virtual currency production and trading, and its blind disorderly development has an adverse impact on promoting high-quality economic and social development and energy conservation and emission reduction. Rectifying the "mining" activities of virtual currency is of great significance to promoting the optimization of China's industrial structure, promoting energy conservation and emission reduction, and achieving carbon peak and carbon neutrality goals on schedule. "It is strictly forbidden to invest in the construction of incremental projects, and it is forbidden to develop virtual currency 'mining' projects in any name; accelerate the orderly withdrawal of existing projects." "Strictly implement relevant laws, regulations and rules and regulations, and seriously investigate and rectify illegal virtual currency 'mining' activities in various places."
According to the performance process of the parties involved in the case and the main content of the three contracts, the transaction model is actually the "mining" behavior of the marketing company entrusting the blockchain company to purchase and manage the special "mining machine" to calculate and produce bitcoin. The three contracts are organic, and the purpose of the contract is to be signed by the two parties for the final "mining" activities, and the two parties establish a contractual relationship. The transaction mode of bitcoin "mining" belongs to the scope of control of the relevant administrative organs of the state, and it is necessary to strictly comply with relevant laws and regulations and rules and regulations.
In this case, the two companies signed an agreement to form a commissioned "mining" relationship when they knew that "mining" and Bitcoin transactions were risky, and the relevant departments explicitly prohibited Bitcoin-related transactions. "Mining" activities and related transactions of virtual currency have many risks and hazards discussed above, interfering with the normal financial order and economic development order, so the "mining" contract harms the social public interest and should be invalid.
Because the "mining" contract was invalid from the beginning, the benefits obtained by the marketing company through the performance of the invalid contract should not be protected by law, and the court did not support its corresponding litigation claims. Its claim claims the loss of Bitcoin during the occupation of the equipment of the "mining machine", which is based on the loss of bitcoin generated by its continuous use of the "mining machine" to engage in "mining" activities, which should not be protected by law, and the court did not support its corresponding litigation claims.
The court rejected all the litigation claims of the marketing company in the first instance, and the case acceptance fee of 450 892.68 yuan was borne by the marketing company and has been paid. The marketing company appealed the verdict in court.
Follow-up
A mine has tens of thousands of mining machines in its possession The court issued a judicial proposal to clean up and rectify the situation
Li Zenghui, president of the Second Civil Division of the Chaoyang Court in Beijing, introduced that nationwide, transaction precedents on the downstream of bitcoin are relatively common, such as lending, trading, entrusted financial management, etc. "This case is an upstream mining case, which is also the first case in Beijing." He explained that the case is based on the principle of violating the social public interest to determine the invalidity of the contract, from the current departmental laws and administrative regulations, the level of adjustment of Bitcoin and mining related policy documents is relatively low, there is no clear departmental legal provisions. However, these policy documents are issued at a relatively high level, and they are issued by the Chinese Bank of China in conjunction with at least five ministries and even ten ministries.
Energy security, financial security, economic security, etc. are all important components of national security, to prevent and resolve related risks, deepen the rectification of related market chaos, are related to China's industrial structure optimization, financial order stability, social and economic stable operation and high-quality development, so the social and economic order, financial order, etc. are involved in the social public interest.
Regarding the risk prevention and rectification of virtual currencies such as Bitcoin and "mining" activities, since 2013, the relevant state departments have repeatedly issued policy documents such as "Notice", "Announcement" and "Risk Tips". According to these documents, the bitcoin involved in the case is a network virtual currency, not a legal tender issued by a state authority, does not have the same legal status as legal tender, does not have legal compensation, should not and cannot be used as a currency in circulation in the market, as a consumer should improve the awareness of risk prevention, the consequences caused by investment in virtual currency and the losses caused by the relevant parties are borne by the relevant parties.
The transaction model in this case is a "mining" activity, and with the development of virtual currency trading, the harm of "mining" behavior has become increasingly prominent. The energy consumption and carbon emissions of "mining" activities are large, which is not conducive to the optimization of China's industrial structure, energy conservation and emission reduction, and is not conducive to China's carbon peak and carbon neutrality goals. In addition, virtual currency-related trading activities have no real value support, prices are easily manipulated, and "mining" behavior also further derives false asset risks, business failure risks, investment speculation risks and other related financial risks, endangering the foreign exchange management order, financial order, and even easily triggering illegal and criminal activities and affecting social stability. Precisely because the "mining" behavior is harmful and the risk is high, and its blind disorderly development has an adverse impact on promoting high-quality economic and social development and energy conservation and emission reduction, the relevant policies clearly intend to add virtual currency "mining" activities to the "Elimination Category" directory of the "Industrial Structure Adjustment Guidance Catalogue (2019 Version)", requiring effective measures to be taken to comprehensively rectify the virtual currency "mining" activities.
Li Zenghui said that the prudent conclusion of the judgment in this case is also based on the court's investigation and combing of some courts in the eastern region around the judgment of bitcoin exchanges in recent years. "It is understood that mining machines are mainly concentrated in Yunnan, Guizhou, Sichuan, Xinjiang, Inner Mongolia and other areas where wind power, hydropower and coal power are relatively cheap, and there are more than 1,000 mining machines in a mine, because there are a lot of third parties that will hide equipment together for unified operation, and the number can reach 10,000 or 20,000 units."
He introduced that the treatment of more than a thousand "mining machines" in this case is that the relevant computer equipment is still kept by the blockchain company, but in the lawsuit, the marketing company clearly stated that it would make a separate claim, so the court no longer handled it in the case. However, in the civil judgment, it is clear that the company involved in the case shall not continue to engage in "mining" activities and comply with relevant national laws and regulations and industrial policies.
On November 10, 2021, the National Development and Reform Commission once again organized a special video conference on the governance of virtual currency "mining", clearly requiring all provinces, autonomous regions and municipalities to clean up and rectify the virtual currency "mining" activities in their regions in accordance with the principle of territoriality.
According to the parties involved in the trial of the case, the addresses of the third party operating the "mine" involved in the case were located in Shuiluo Township and Shawan Township, Muli County, Liangshan Prefecture, Sichuan Province.
In accordance with the principle of territoriality set forth in the above-mentioned documents, in order to prevent the "mining machine" involved in the case from continuing to be used for "mining", the Chaoyang Court in Beijing issued a judicial recommendation to the Sichuan Provincial Development and Reform Commission: First, investigate the Bitcoin "mining" project involved in this case, and prohibit the company involved in the case from continuing to engage in "mining" activities. The second is to investigate the "mining farms" involved in the case and other local virtual currency "mining" projects and clean up and rectify them.
Li Zenghui also reminded that bitcoin transactions are risky and not protected by national laws, and the Supreme People's Court has clearly stated that the relevant transactions should be invalid and the losses should be borne by themselves. Investors who have already entered the trading market are advised to exit the liquidation in a timely manner.
Intern Liu Jingyi
Text/Beijing Youth Daily reporter Song Xia
Edit/White Dragon