A court in China announced on Tuesday that it ruled that investments in cryptocurrency-powered play-to-earn (P2E) games are not protected by law.
See related articles: China’s two systems for crypto: Trading is banned, but virtual assets can be protected
- In a case in Shanghai, a plaintiff invested 700,000 yuan (US$101,700) in the defendant in 2021, who led a team dedicated to earning crypto rewards in an unnamed P2E game.
- As assets devalued throughout the 2022 market plunge, the defendant sold the cryptocurrencies held in the game accounts managed by the defendant’s team without informing the plaintiff, pocketing 110,000 yuan in profits.
- The Shanghai court ruled that the initial 700,000 yuan investment was not protected by law, but the defendant must return the 110,000 yuan profit to the plaintiff, which was regarded as property lost due to misuse.
- Under Chinese regulations, all cryptocurrency-related investments and their derivatives are not protected by law.
- In December 2022, the Supreme People’s Court published a “guiding case,” where a court in Shenzhen ruled that transactions between cryptocurrencies and fiat are not permitted.
- However, in September 2022, the First Intermediate People’s Court of Beijing said in a verdict that although China prohibits crypto trading, cryptocurrencies themselves can be protected by law as virtual assets.
- Despite Beijing’s blanket ban on cryptocurrencies in September 2021, crypto-related activities in the country saw a significant rebound in 2022, allowing China to reclaim a top 10 spot in Chainalysis’ Global Crypto Adoption Index.
See related article: Asia dominates Chainalysis’ 2022 crypto adoption index, China returns to top 10