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A Chinese court has ruled that a contract regarding Filecoin (FIL) mining violates the principles of green development and social and public interests and is therefore invalid.
This is yet another example of how many civil contracts related to cryptocurrencies and mining are not recognized and deemed invalid by Chinese courts, according to court documents.
According to the case details, plaintiff Zhou and the defendant, a technology company, signed a “Storage Server Purchase Agreement” on July 7, 2021. The contract stated that Zhou would purchase an IPFS storage server for 179,800 yuan and that the server would be managed by the technology company at a computer center.
The technology company guaranteed that the server could provide services on the IPFS network and earn Filecoin rewards, and promised to close the gap if coin production was lower than the market average level.
However, Zhou later realized that the virtual currency generated by the server was expressly banned by the Chinese state, and appealed to the court, demanding that the invalidity of the contract be confirmed, all contract funds returned, and capital occupation interest paid.
The court ruled that Filecoin is a virtual currency that is not issued by a state monetary authority, does not have any fiat status or compulsory circulation capabilities, and its transaction activities are not protected by law.
Additionally, according to court documents, Filecoin mining consumes large amounts of electricity and resources, which is against the national green development policy and harms social and public interests. Therefore, the court ruled that the contract violated the mandatory provisions of the law and regulations and was invalid. The court also ordered the technology company to return all contract funds to Zhou and pay interest for the capital occupation.
*This is not investment advice.