Shanghai Court Halts Token Fundraising in Legal Blow to Crypto
A recent ruling from the Songjiang District People’s Court in Shanghai has dealt a significant blow to token fundraising efforts in China.
The court invalidated a contract between an agricultural company, Company X, and an investment firm, Company S, that involved token issuance and fundraising. The court found that the agreement violated Chinese financial regulations, specifically laws prohibiting public fundraising via token issuance.
Despite Company X paying 300,000 yuan ($41,398) for services, including the creation of a white paper, Company S failed to deliver the tokens, citing unexpected development costs. The court ruled that both parties lacked proper authorization to issue tokens, deeming their contract a form of illegal public fundraising. As a result, the court ordered Company S to refund 250,000 yuan to Company X.
The judgment underscores China’s firm stance against token-based fundraising, highlighting concerns over financial risks and potential fraud. While virtual currencies like Bitcoin are recognized as property in some contexts, this case reinforces that activities involving unauthorized crypto transactions remain illegal under Chinese law.
Clever Robot News Desk 21st November 2024
