Xiao Sa: Types of USDT Civil Disputes and Judgment Ideas

Last week, a friend asked us about the risks associated with USDT transactions. Sister Sa's team believes that, at present, regarding issues such as the validity of relevant contracts in USDT transactions, although courts in various places have different determinations and reasons for judgment, the overall risk is relatively high. This article will analyze the types of civil disputes involving USDT and the judicial views of courts in various places, in order to remind readers of the risks. (For the criminal legal risks of USDT, please refer to the historical article "Original | Illegal Business? Analysis of USDT Criminal Law" by Sister Sa's team) The legal attributes of USDT and the identification of transactions currency. Tether promises that USDT and U.S. dollars can be exchanged 1:1, that is, every time Tether issues a USDT coin, its company account will deposit 1 U.S. dollar as a security deposit, which has the characteristics of stable exchange. According to the provisions of my country's "Bank Law", the only legal currency in my country is RMB, and the issuing body is the People's Bank of China, which prohibits any currency issued by any other subject in any form to circulate as legal tender in the Chinese market. The "Notice on Preventing Bitcoin Risks" (hereinafter referred to as the "Notice") issued by the central bank and other five departments and the "Announcement on Preventing the Financing Risks of Token Issuance" (hereinafter referred to as the "Announcement") issued by the central bank and other seven departments The act of private issuance and circulation of digital currency has made prohibitive regulations. Privately issued digital currency does not have the attributes of legal tender, and any privately issued digital currency does not enjoy the same status as legal tender for circulation in the market. Xiao Sa: The frequent transactions of Bitcoin and fiat currency have seriously affected the order of economic management: In response to the news event of "China Banking Association and other three institutions jointly issued a document clarifying that financial institutions and payment institutions are not allowed to carry out business related to virtual currency", Xiao Sa said that in 2013 for Bitcoin is legally defined as a "specific virtual commodity". After ICO, thousands of virtual currencies came. Many of these virtual currencies have become criminal tools for illegal fundraising and organizing and leading pyramid schemes. Self-regulatory organizations are semi-official self-regulatory organizations The association reminded members in time after seeing the problem, which played an exemplary role. Although it is not illegal to hold bitcoins, the frequent transactions between bitcoins and fiat currencies have seriously affected the order of economic management, and the operation of non-mainstream digital currencies has also threatened the property rights of ordinary people. The price of the currency collapsed, triggering mass incidents, etc. [2021/5/18 22:16:12] The "Announcement" prohibits the organization or any individual from engaging in token issuance or financing, and any platform engaging in intermediary business such as token exchange, trading, etc. In essence, it is an act of illegal public financing without approval. However, in the "Announcement", "Notice" or other mandatory provisions of current laws and administrative regulations, there is no prohibition on individual holding by investors, nor is there any clear restriction on the transaction of USDT. Article 127 of the "Civil Code" stipulates: "Where the law has provisions on the protection of data and network virtual property, follow the provisions." What is virtual property is controversial in theory and practice. "It is not specific about this. Whether USDT can be identified as network virtual property, and whether the property rights and interests generated by it should be protected by law, the courts in various places have different judgments. Voice | Xiao Sa: The illegal application of blockchain technology may involve four types of criminal acts: On January 21, Xiao Sa, director of the Bank of China Law Research Association, published an article "The Legal Boundary of Blockchain" to analyze the legal boundary of blockchain. The article reminds speculators in the "coin circle" to beware of being "cut leeks"; secondly, in response to the legal regulation of the "chain circle", my country has successively promulgated laws and regulations such as encryption law, network security law, and blockchain information service management regulations to adjust related fields. social order. Finally, generally speaking, the illegal application of blockchain technology may involve four types of criminal acts, namely, "crime of refusing to perform network security management obligations", "crime of aiding information network criminal activities", "crime of infringing on citizens' information", "crime of endangering public security" type of crime". [2020/1/21] USDT Civil Dispute Types and Judgment Ideas Private lending disputes: individual citizens transfer USDT on a specific trading platform, which is not deemed to fulfill the obligation of private lending and capital contribution. Judging from the cases retrieved on the Chinese Judgment Documents website, the judging ideas for such cases are relatively unified. The courts all believe that after one party pays USDT, the other party issues an IOU for receiving the corresponding RMB. Payment of USDT does not constitute delivery and does not belong to the performance of private loans. Therefore, if the party paying USDT requests the court to support the party receiving USDT to return RMB, the court will not support it. In the private lending dispute case between Zhu and Ren (case number: (2020) Yu 11 Min Zhong No. 2674) heard by the Intermediate People's Court of Luohe City, Henan Province, the court found that on the afternoon of August 25, 2020, Zhu's husband passed the Its network virtual wallet transfers USDT coins to Ren's virtual wallet. On September 4, 2020, Ren issued an IOU to Zhu, stating that he received Zhu's RMB 400,000 in cash today, and will pay it off in a week, and the overdue one-day late fee will be charged at 5‰ interest. The court held that, according to the "Announcement", USDT currency, as a "virtual currency", does not have monetary attributes such as legal compensation and mandatory, does not have the same legal status as currency, and cannot and should not be used as currency in circulation in the market. The act of transferring USDT coins on a specific trading platform should not be deemed as fulfilling the obligation of private lending and capital contribution in this case. Voice | Lawyer Xiao Sa: Reverting the currency to its original token function, etc. Maybe there is still a chance to do it well: Xiao Sa published a column article on Sina, "Why is the currency circle still so popular?" ", the article stated that if the currency circle is only the one of "hype" and "cutting leeks", it will definitely die ugly. Restore the currency to its original token function, let the geeks who contribute the workload get the "pre-authorization" for future technology use, or use the token as a means and method of publicity and promotion in a business kingdom, maybe there is still a chance You can do well. [2019/7/24] Labor disputes: whether the employer pays wages in the form of USDT is protected by law, and the opinions of the courts in various places are opposite. Viewpoint 1: Using USDT to pay wages violates the "Labor Law" and "Foreign Exchange Regulations". In the labor dispute case between Zhang and a limited company heard by the People's Court of Chaoyang District, Beijing (Case No.: (2019) Jing 0105 Min Chu No. 63366), a company claimed to pay Zhang a virtual currency worth 22,200 yuan, and Zhang A denial is of wages paid. The court held that Article 50 of the "Labor Law" clearly stipulates that wages should be paid to the laborer himself in currency on a monthly basis. Article 8 of the "Regulations on Foreign Exchange Administration" stipulates that the circulation of foreign currency is prohibited within the territory of the People's Republic of China, and foreign currency denomination and settlement are not allowed, unless otherwise stipulated by the state. In this case, a company’s payment of wages in virtual currency violated the aforementioned two laws, and the company’s claims are not accepted. Voice | Xiao Sa: The community of blockchain projects will become a legal "public place": According to People's Daily Online, Xiao Sa, director of the Bank of China Law Research Association, said in an interview with the Blockchain Channel of People's Daily Online that based on ordinary Internet technology None of the blockchain vertical traditional media or information service providers are in the category of providing "blockchain information services". Such media and information service providers are still traditional content-zce providers, and are subject to other regulations of the Cyberspace Administration of China and the supervision and management of news management departments. Even if the blockchain information service provider is abroad, but has a technical support department in the country, the technical organization also needs to accept the new rules of the blockchain. As far as digital currency exchanges are concerned, they have been classified as illegal since the "Announcement on Preventing Financing Risks of Token Issuance" on September 4, 2017, and have nothing to do with this "Regulations". Tech media and blockchain companies. The Internet is never a place outside the law, and the blockchain is the same. Once the new regulations become the current and effective rules, the community of the blockchain project will become a legal 'public place, and no one can fabricate false news or spread rumors. [2019/1/11] Opinion 2: USDT is a network virtual property. If both parties agree to pay wages in USDT, the law should protect it and the payment is valid. In the (2020) Hu 01 Min Zhong No. 12524 case heard by the Shanghai No. 1 Intermediate Court, after negotiation between Wang and Li, Wang paid Li a monthly salary of 8,000 USDT in USDT, but due to an operational error during the transfer, After changing 8,000 to 80,000, Wang asked the court to order Li to return the extra 72,000 USDT. The court first affirmed that USDT is a network virtual property and should be protected by law according to Article 127 of the Civil Code. The court held that USDT (USDT) is a virtual object based on data, and the right holder can exclusively possess, control and use it. It is exchangeable and has the characteristics of the object of rights. In addition, as far as the intention of the two parties to replace Li's remuneration with USDT and the equivalent value of the US dollar in RMB settlement, the two parties also recognize and agree on the property rights and interests of USDT. Secondly, the court held that the 72,000 USDT collected by Li constituted unjust enrichment. On the premise that Li was unable to return and had no legal basis for the market price, the court recognized the USDT and RMB exchange rate confirmed in the "Settlement Agreement" reached by the two parties. According to the discount standard (1USDT=6.9 RMB), Li was ordered to return the corresponding RMB. Dentons Lawyer Xiao Sa: Re-read the "9.4 Token Announcement", these points that should not be forgotten: Today, Xiao Sa, a partner of Beijing Dentons Law Firm, published an article "Rereading the "9.4 Token Announcement", These Points That Cannot Be Forgotten", which pointed out that last year Some details of the "Announcement on Preventing Token Issuance and Financing Risks" on September 4 are worth reviewing: 1. The nature of token issuance; 2. The status of token financing trading platforms is awkward; 3. The public is vigilant against risks [2018/4/ 3] Viewpoint 1 of the unjust enrichment dispute case: The debt generated by USDT is an illegal debt, so the interests that the plaintiff seeks to protect are illegal interests, which are not within the scope of the people's court to accept civil lawsuits, and the plaintiff's lawsuit is dismissed. In some cases, the court held that, according to the provisions of the "Announcement", raising "so-called virtual currencies" such as bitcoin and ether from investors was essentially an act of illegal public financing without approval, and was suspected of illegal sale Illegal and criminal activities such as token coupons, illegal issuance of securities, illegal fundraising, financial fraud, and pyramid schemes cannot and should not be used as currency in the market. Therefore, according to the relevant provisions of the "Civil Procedure Law" and the "Interpretation of the Civil Procedure Law", it was ruled to dismiss the plaintiff's lawsuit. (Civil Judgment (2020) Su 0903 Minchu No. 2887 Civil Judgment of Yandu District People's Court, Yancheng City, Jiangsu Province) Viewpoint 2: The contract for buying and selling USDT is invalid, and the consequences and risks caused by the transaction shall be borne by the investor. The overpayment of RMB due to operational errors in this contract should be at its own risk, and the defendant should be required to return it to the court and the court will not support it. (Lingshan County People's Court of Guangxi Zhuang Autonomous Region (2020) Gui 0721 Minchu No. 564 Civil Judgment) Viewpoint 3: USDT has the value, scarcity, and controllability of property, and belongs to virtual property. Property rights should be protected by law. The contract for the entrusted purchase of USDT is valid, and there is a legal basis for collecting the RMB used to purchase USDT, which does not constitute unjust enrichment. (Civil Judgment (2020) Gan0702 Minchu No. 2353 Civil Judgment of Zhanggong District People's Court, Ganzhou City, Jiangxi Province) Disputes over sales contracts and entrusted wealth management contracts Viewpoint 1: The contract of buying and selling USDT and entrusting the purchase of USDT violates the "Announcement" and is a violation of the law. The mandatory provisions of the administrative regulations are therefore invalid, and the property acquired due to the contract should be returned. Judgments holding this point of view are not uncommon, such as the Civil Judgment (2020) Xin 01 Min Zhong No. verdict. Viewpoint 2: The entrusted purchase contract of USDT is invalid, and the entrusting party has no right to ask the entrusting party to return the paid RMB. This judgment holds that, according to the "Announcement", virtual currency is not legal tender in my country, does not have currency attributes such as legal compensation and mandatory, and does not have the same legal status as currency. Although citizens' investment in virtual currency is personal freedom, this behavior is not protected by our country's laws, and the consequences and investment risks arising therefrom should be borne by investors themselves. (For example, Civil Judgment (2020) Min 08 Min Zhong No. 1855 of the Intermediate People's Court of Longyan City, Fujian Province) Viewpoint 3: The contract for buying and selling USDT is invalid because it damages social public interests or violates public order and good customs. After the contract is invalid, the property acquired due to the contract shall be be returned. The court held that, according to the "Announcement", the issuance of tokens seriously disrupts the economic and financial order, and no organization or individual may illegally engage in token issuance financing activities. Therefore, the behavior of buying and selling USDT disturbs the social and economic order, damages the social and public interests, and violates Article 7 of the Contract Law. public interest" and the provisions of the announcement, so the contract is invalid. (Weihai Intermediate People's Court of Shandong Province (2020) Lu 10 Min Zhong No. 3142 Civil Judgment, Shanghai Baoshan District People's Court (2020) Hu 0113 Min Chu No. 2912 Civil Judgment) Viewpoint 4: The contract for buying and selling USDT, the entrusted purchase of USDT The contract does not violate the mandatory provisions of laws and administrative regulations, is legal and valid, and the breaching party shall bear the liability for breach of contract. If the RMB is received but the delivery obligation is not fulfilled, the abiding party may request the return of the RMB; if the USDT is received but the RMB is not paid in full, the RMB shall be paid (The People's Court of Qinyang City, Henan Province (2020) Yu 0882 Min Chu No. 848 Civil Judgment, Civil Judgment (2020) Henan 0402 Minchu No. 3580 of the People's Court of Xinhua District, Pingdingshan City, Henan Province); those who fail to fulfill the obligation of purchasing on behalf of others shall return the corresponding RMB (People's Court of Xiangzhou District, Xiangyang City, Hubei Province (2019) Hubei 0607 Minchu Civil Judgment No. 44). Written at the end From the above USDT dispute judgment ideas, we can see that under the existing legal framework, the relevant USDT transactions are relatively risky. Sister Sa's team hereby reminds readers: first, the employer should pay wages in RMB in accordance with the law, and try not to pay in USDT even if the laborer agrees; second, the existence of a contract to purchase or entrust the purchase of USDT is determined In order to avoid the possibility of invalidity, even if you bear the risk completely, you have no right to claim the return of the paid RMB; third, in some cases, you can consult a lawyer and choose a jurisdiction court that is beneficial to you by agreeing on the jurisdiction in the contract. Degree of Risk Aversion.

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