Shanghai Hongkou District Court: Ether (ETH) Crypto is Not Money, Yet has Property Law Protection

The Shanghai Hongkou District Court has issued a statement on the heels of crypto-related case, stating that Ethereum and other virtual currencies are protected by law as property although they can’t be considered as money.

The ruling was also announced on Twitter.

Shanghai Hongkou District Court: Ether ($ETH) as a property in the general legal sense is under the protection of the laws.

— cnLedger (@cnLedger) September 28, 2018

This is not the first time the Court is handling a crypto-related case. In August 2017, the court heard the case of failed crypto transaction between an individual investor and a Beijing-based technology company.

The company had issued tokens to raise Bitcoin and Ether but a few months later they decided to return the raised funds in Ethereum to one of the investors as a response to the new rectification requirements issued by the state. Unfortunately, there were operational errors with the account of another investor that the company attempted to return Ethereum to.

Upon discovering the error in the payment, they made for the amount of 20 ETH, the company attempted to contact the investor and request a refund, but the investor became incommunicado. Since the investor refused to cooperate, the incident quickly became a District Court case.

The Shanghai Hongkou District Court decided that the company’s request is justified and that they have the right to request the return, according to law but the investor wouldn’t budge. The Investor claimed that there is no legal basis for the case given the country’s ban on Ethereum circulation.

However, the court insisted that Ether ($ETH) is a property in the general legal sense is under the protection of the laws.

During the hearing the court stated:

“China does not recognize the monetary properties of “virtual currencies” including Ether. However, we cannot deny the fact that Ether should be protected by law as a general property”

When hearing a case involving the ownership of 20ETH, the court states: China does not recognize the monetary properties of "virtual currencies" including Ether. However we cannot deny the fact that Ether should be protected by law as a general propertyhttps://t.co/AnK7QlocGz

— cnLedger (@cnLedger) September 28, 2018

Therefore the new law states that after mistakenly transferring the virtual currency, its recipient can be asked to return the property, which, in this case, involves 20 ETH. If the other party refuses to cooperate, the first party has the right to sue. Therefore, the investor’s argument regarding the lack of the legal basis for the lawsuit was rejected.

Should the investor not have used its name for their trading account, the company would not have been able to identify the investor or sue thereby highlighting the need for better regulations.