Court Sides With Crypto Exchange Despite Allegation It Violated China Ban

A Chinese cryptocurrency trader who was sent bitcoin in error must repay an exchange even if it broke domestic rules, a Beijing court has ruled.

In a judgement made on July 31 and released on Thursday, an intermediate Beijing court upheld a decision made by a district court early this year that a bitcoin trader named Li Jianfeng must return the proceeds he received from selling five bitcoins he obtained by accident.

The case reportedly stemmed from a system bug on a then China-based bitcoin exchange named Coinnice, which issued the bitcoins to Li on March 10, 2017.

Based on the court document, Li subsequently liquidated the bitcoins for around $6,100.

After Li declined Coinnice's request that he return the funds, the company brought a lawsuit against him in a Beijing district court.

The plaintiff further presented the bitcoin address that was assigned to Li on the exchange, proving the transactions to the court.

Li later appealed to the intermediate court making the counter-argument that Coinnice was based in China and should have been be regarded as an illegal operation to begin with, since the People's Bank of China has explicitly prohibited bitcoin trading platforms from providing services to domestic investors.

"In this case, whether or not Coinnice's establishment as a bitcoin trading platform has violated relevant rules, does not have any impact on Li's liability to return the profits he received with no legal basis. ... As such, the court denies his appeal and the decision is final."

In a similar case, crypto exchange OKEx is also facing a lawsuit in which a bitcoin trader is claiming for 38 bitcoin cash that he did not receive after the cryptocurrency's hard fork from bitcoin in August 2017.

The divergence meant that anyone with bitcoins at the time would, in theory, also own the new bitcoin cash to an equal amount.