Beijing Court Rejected 52.8567 BTC Compensation Lawsuit Against Huobi
Bitcoin has been around for almost 9 years but the relevant laws and regulations are still absent. In most country, Bitcoin has been ruled out as fiats but its tight connection to fiats gives rise to quite a number of disputes. A few days ago, Beijng Haidian court concluded a case that Bitcoin players claiming compensation of 52.8567 BTC and 815.9731 LTC from Huobi. The court rejected that the plaintiff’s complaint because of the arbitration clause in the user agreement.
The plaintiff, Mr. Chen, claimed that on November 21, 2013, he registered an account on www.bitvc.com through the link on Huobi.com. From November 2013 to June 2016, Mr. Chen deposited 322,966 yuan in total and withdrew 104,772 yuan from his account, a total loss of 217,194 yuan.
Mr. Chen claimed that the loss was caused by the 20x leverage trading via bitvc.com. Because bitvc website does not accept RMB deposit but cryptocurrencies, he could only deposit RMB to purchase bitcoin or litecoin on huobi.com and then transferred cryptocurrencies to bitvc. He claimed that Huobi was aware of the illegal nature of futures trading of cryptocurrency, the website still induces registered users to conduct such trading via link and phone call invitation. Chen has suffered loss from the fraudulent behavior of Huobi like manipulation of backstage data, fake transactions. Therefore he requested Huobi to compensate for the loss of 52.8567 BTC and 815.9731 LTC.
In the lawsuit, Huobi claimed that on November 21, 2013, Mr. Chen agreed with the “Huobi User Agreement” through Huobi.com and became a registered user. The “User Agreement” stipulates that any dispute between the user and Huobi Company shall be settled through friendly negotiation. If no settlement can be reached through negotiation, either party shall have the right to submit the dispute to the Beijing Arbitration Commission for arbitration in accordance with the Arbitration Rules of the Association. According to the arbitration agreement between both parties, the dispute in this case should be resolved through arbitration. The Haidian Court has no jurisdiction over the case. Mr. Chen argued that the above arbitration agreement was invalid. Both parties have different interpretation to the validity of the arbitration clause.
On September 13, 2017,the 3rd Intermediate People’s Court of Beijing ruled that the above arbitration clause was valid. The court has no right of control and the case shall be submitted to arbitrary authority.
The court also reminds that risk of investment in cryptocurrency. As the coin-to-coin trading is not involved with fiats, therefore it’s not against current regulations.
Bitcoin has experienced rapid growth in China in recent years. ICO (Initial Coin Offering, first currency issue) has attracted a large number of followers as a new funding channel, which also invites illegal activities around money laundering, illegal fund-raising, financial fraud, pyramid schemes and so on. In September, 2017, Chinese authority announced that ICO were illegal and three major bitcoin trading platforms have stopped operation.