Ningxia Court Resolves Virtual Currency Investment Dispute

On April 2, the Xingqing Court in Ningxia, China, concluded a case involving a virtual currency investment dispute. The plaintiff, Wei, entrusted defendants Li and Hu with investing in virtual currency. Due to an urgent need for funds, Wei sought to reclaim the investment but was unsuccessful, leading to a lawsuit based on ‘unjust enrichment.’ Upon review, the court found discrepancies between the case’s title and the actual legal relationship, proactively clarifying the legal risks and guiding the parties to correctly understand the nature of the entrusted contract relationship. Ultimately, the plaintiff withdrew the lawsuit against Hu, and Li returned the principal investment, reaching a mediation agreement. During the mediation, the presiding judge explained the litigation risks to the plaintiff, asserting that the fundamental legal relationship in this case should be classified as an entrusted contract relationship. Continuing the lawsuit on the grounds of unjust enrichment posed a high risk of losing. If the plaintiff were to lose, they would need to gather additional evidence to refile based on the entrusted contract dispute, which would consume significant time and effort. The judge also analyzed the pros and cons for the defendants: although the plaintiff’s current claim of unjust enrichment was unfounded, there was indeed a genuine entrusted investment relationship between the parties, providing a factual basis for the plaintiff’s request for a refund. If the case escalated into a lawsuit over the entrusted contract dispute, the defendants would likely bear the responsibility for repayment based on the evidence. The judge reminded that according to the Supreme Court’s judicial viewpoint, contracts for entrusted investment in virtual currency are considered invalid (if signed after September 4, 2017), and losses should be shared according to the degree of fault. Investors need to accurately choose the legal relationship to assert their rights and reduce litigation risks. (The Paper)