Chinese Court: Investors Bear Full Responsibility for Crypto Losses

A Chinese court in Shandong province has dismissed a lawsuit concerning losses incurred from a cryptocurrency investment. The court ruled that the investor alone is responsible for the financial consequences, as such activities are illegal in China.

The case involved an investor named Liu, who entrusted a friend, Zhang, with investing funds in a project called Alpha Coin. Initially, the platform appeared profitable, generating around 700 yuan per day and giving the impression of stable returns. However, the situation quickly deteriorated. Before the agreed investment period ended, access to the platform was blocked, and recovering the funds proved impossible. Zhang later informed Liu that the project’s operators were under police investigation.

Liu brought the case to court, seeking reimbursement from Zhang. However, the court focused not on the relationship between the two parties, but on the nature of the investment itself. It concluded that cryptocurrency trading violates Chinese financial regulations and that the agreement between them was invalid from the outset.

In its reasoning, the court emphasized that such activities disrupt financial order and pose a threat to economic security. Since cryptocurrencies are not recognized within China’s legal system, any agreements related to them are not protected by law. As Zhang did not profit from the investment, the court assigned full responsibility for the losses to Liu.

The ruling aligns with China’s long-standing policy on cryptocurrencies. As early as September 2017, authorities banned crypto fundraising and restricted exchange platforms. In 2021, it was reaffirmed that cryptocurrencies do not have the legal status of money and that trading them is illegal.

The court also noted that investing through an intermediary does not change the legal assessment. Individuals engaging in such activities do so at their own risk and cannot expect legal protection or reimbursement. The case highlights how easily investors can suffer permanent losses in an environment lacking regulation and oversight.