• The Shanghai Qingpu court in China declared that investments in cryptocurrency-powered play-to-earn (P2E) games are not legally protected.
• The Beijing First Intermediate People’s Court ruled in September 2022 that digital currencies can be protected by the law as virtual assets.
• A 2022 global crypto adoption index chain analysis shows that China is in the top 10 ranking positions despite Beijing’s blanket ban on all crypto-related activities in 2021.
In January 5, 2023, the Shanghai Qingpu court in China declared that investments in cryptocurrency-powered play-to-earn (P2E) games are not legally protected. This ruling came after plaintiff Li Xiang 2021 invested 700,000 yuan (US$101,700) in an Alexie P2E game in 2021 through the defendant Wang Meng. After the crypto winter of 2022, the defendant had sold the cryptocurrencies in the gaming accounts run by the team and pocketed 110,000 yuan in earnings, unbeknownst to the plaintiff.
The court decided that although the plaintiff’s 110,000 yuan profit was considered property lost due to misuse, the defendant was nevertheless told to restore the initial 700,000 yuan. The Shanghai court maintained that the initial 700,000 yuan investment was not legally protected. This judgement adds credence to the existing Chinese regulations that state that all investments in cryptocurrencies and their derivatives are not legally protected.
Surprisingly, a 2022 global crypto adoption index chain analysis shows that China is in the top 10 ranking positions despite Beijing’s blanket ban on all crypto-related activities in 2021. A possible justification for the top 10 ranking and crypto resurgence in 2022 can be ascribed to the September 2022 court judgement, in which the Beijing First Intermediate People’s Court ruled that digital currencies can be protected by the law as virtual assets.
The latest judgement of the Shanghai court is a reminder that while the Chinese government may be open to the idea of crypto adoption and blockchain technology, investors should be aware that the law does not protect their investments in the event of any misuse or fraud. As such, investors should always be vigilant and research their investments thoroughly before investing their hard-earned money.