Cryptocurrency trading losses can only be borne by oneself? Web3 lawyer interprets court ruling

Introduction

Recently, the official social media account of the Intermediate People’s Court of Tongling City, Anhui Province, published an article titled: “A Court Judgment Tells You: Why Losses from Virtual Currency Trading Can Only Be Borne by Yourself,” which introduced a civil case involving unjust enrichment caused by buying and selling virtual currency handled by its subordinate court (Congyang Court).

Based on the judicial documents related to virtual currency civil disputes that have been gradually published by courts nationwide in 2025, we can now confirm: civil disputes involving virtual currency are no longer confined to being unaccepted by mainland courts; they are beginning to be generally accepted and filed by court registration divisions. Although different courts across the country have varying approaches, compared to the previous difficulty in accepting cases related to coins, there has been significant progress.

1. Case Overview

In February 2025, the plaintiff, Mr. Ding, purchased 1,300 Tether (USDT) from a seller, Mr. Wu (the defendant), on a trading platform. The unit price was 7.44 yuan, totaling 9,672 yuan. After confirming the order, Mr. Wu sold his 1,300 USDT and received the payment of 9,672 yuan from Mr. Ding.

Subsequently, Mr. Ding filed a lawsuit, claiming that the amount received by Mr. Wu (9,672 yuan) was unjust enrichment, and demanded the defendant return it. The court held that “transactions related to virtual currency often operate outside legal regulation, and such trading behaviors can disrupt economic and financial order, fostering illegal activities such as gambling, illegal fundraising, fraud, pyramid schemes, and money laundering, which violate public order and good customs.” Ultimately, the court found that the virtual currency trading between Mr. Ding and Mr. Wu was invalid due to violating public order and good customs. Even if Mr. Ding suffered losses, he should bear them himself, and the law does not protect such transactions.

The court ultimately dismissed Mr. Ding’s claim for the return of the money paid for the coins.

2. Lawyer’s Analysis

This case is actually very straightforward. From a social effect perspective, the court’s judgment is not problematic (though I feel it’s somewhat lacking in legal effect). However, the reasoning process is too rough; if readers are unfamiliar with domestic regulations on virtual currency and judicial practice, they might still be confused. Therefore, the Congyang County Court’s decision feels like “the answer is correct, but the reasoning process seems like a lucky guess.”

In fact, to clarify the judicial path for civil and commercial cases involving virtual currency, one must address the following key question:

First, whether the transaction was completed. Essentially, the core of the unjust enrichment dispute between Mr. Ding and Mr. Wu is whether the virtual currency trade was successfully completed. If it is confirmed that Mr. Ding received the coins, then even if the contract is invalid, the restitution involves one party returning money and the other returning coins. In this case, the court considered both the invalidity of the transaction and the legal consequences arising from it (i.e., the buyer received virtual currency, and the seller received the consideration in RMB). This is somewhat contradictory. The most rigorous approach would be for one party to return RMB and the other to return virtual currency.

Second, the precise understanding of public order and good customs. For civil and commercial cases involving coins, a key issue is whether the involved behavior violates “public order and good customs.” According to the “Notice on Further Preventing and Disposing of Risks in Virtual Currency Trading and Speculation” (the “9.24 Notice”), behaviors involving domestic subjects investing in virtual currency and its derivatives are deemed “violating public order and good customs,” rendering relevant civil legal acts invalid, with losses borne by the involved parties themselves.

Public order and good customs include public order and good morals. In disputes involving coins, we only consider the former, specifically “economic and financial order.” Currently, judicial practice generally holds that investment, trading, borrowing, and exchanging virtual currency violate China’s social public order (economic and financial order). Therefore, behaviors related to virtual currency lending, investment, trading, and exchange are recognized as invalid under civil law.

Third, what legal basis exists for judgments. To date, China’s civil laws and regulations do not explicitly address virtual currency. Judgments in coin-related cases mainly rely on the aforementioned “9.24 Notice” (which was drafted with participation from the Supreme People’s Court but is a normative document).

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3. The Definition of Virtual Currency in Civil and Commercial Cases

In criminal judicial practice, China has long recognized the property attribute of virtual currency, especially mainstream virtual currencies. In civil and commercial judgments, courts’ understanding of virtual currency has been relatively lagging. Based on the author’s personal experience, in 2024, many domestic courts still refused to accept any civil or commercial disputes involving virtual currency. Since 2025, we have seen courts begin to accept the property value of virtual currency more openly, with an increasing number of judicial documents involving coin cases.

Last November, the Shanghai High People’s Court issued a document recognizing the property value of virtual currency (see: “Shanghai High Court: Virtual Currency Has Property Value, but the Fundraising Contracts for Issuance Are Invalid”). In June of this year, the People’s Court Daily also published an article stating that “virtual currency has corresponding property attributes, and a consensus has basically formed in judicial practice,” as detailed in the author’s previous article “Judicial Disposition of Virtual Currency: The People’s Court Journal Published an Article: Delegating to Third-Party Agencies Is Allowed.”

Additionally, the April 2023 “Minutes of the National Court Financial Trial Work Conference (Draft for Comments)” proposed a corresponding judgment approach for civil and commercial disputes involving virtual currency, stating: “Virtual currency possesses some attributes of virtual property on the internet.” Although this view is somewhat cautious and conservative, it is understandable given the time elapsed.

In summary, whether in criminal practice or civil and commercial trials, virtual currency’s property attributes/value have become a consensus among legal practitioners. If a restriction must be added, it would be limited to mainstream virtual currencies (such as Bitcoin, Ethereum, USD, etc.).

4. Final Remarks

Although the recognition of the property value of virtual currency, especially mainstream virtual currencies, is increasing in mainland China, this does not mean that all activities involving virtual currency are safe. As a practicing lawyer in the Web3 field, my recent experience is that regulation of the entire encryption industry in China is becoming stricter. Whether it’s the initiation of crypto projects, participants, or ordinary virtual currency “traders,” all face significantly higher legal risks than in other industries. If you are a conservative person seeking security, it is advisable to be cautious when engaging in virtual currency-related activities.