Firm Loses $1.6M After Beijing Court Rules Bitcoin Mining Contracts ‘Invalid’
In what sets a landmark judicial precedent, the Chaoyang District People’s Court in Beijing has voided Bitcoin mining contracts signed in 2019, resulting in the plaintiff losing roughly $1.6 million.
Citing several state-run media outlets, including Xinhua News Agency and CCTV, the South China Morning Post reported that in May 2019 Beijing Phonf Marketing Technology entered into three agreements with Zyzc Blockchain Technology, paying 10 million yuan ($1.6 million) for the deployment of mining machines in the southwestern province of Sichuan.
In the lawsuit brought to court, Phonf Marketing argued that Zyzc Blockchain failed to pay it 278.1654976 BTC ($13.6 million in current prices) in compensation, demanding to return the money they initially invested in Bitcoin mining contracts.
According to the plaintiff, they earned only 18.5 BTC on the investment.
In its ruling on December 15, the Beijing court rejected the lawsuit, stating that the contract between the two entities was “invalid in the first instance.”
The court also brought the ruling to the attention of the Sichuan branch of the National Development and Reform Commission, recommending to close down any remaining mining farms involved in the case.
China’s Bitcoin crackdown
When the deal between Zyzc and Beijing Phonf was made, Sichuan and several other provinces offered incentives to companies to encourage Bitcoin mining by enticing businesses with access to excessive hydropower.
This changed in May this year when China’s State Council launched a massive crackdown on the crypto industry, banning cryptocurrency trading and forcing major Bitcoin mining operators to relocate their activities to other countries.
Prior to banning Bitcoin mining activities, China held roughly two-thirds of the world’s mining industry, however, it has now almost completely lost its foothold, with the U.S. taking the lead.
As reported by Decrypt last month, a member of the Chinese Communist Party has been expelled after turning a blind eye on the cryptocurrency mining activities in the province of Jiangxi.Source