Chicago Business Litigation Lawyer Blog
Bitcoin is a cryptocurrency which is an electronic form of cash. It is decentralized without the need for a central bank or administrator. The need for an intermediary is none, as it can be sent
from user-to-user. Since its technology is relatively new, litigation surrounding this type of exchange is being closely followed by those who have invested in it and those who are wanting
to know of the direction of the future in exchange. Of course, it would not be long until the way transactions took place would be tested in the courts on an international and local level.
Since its reach has no real boundaries, we will look to a decision held in Shenzhen, China. A ruling was made involving the dispute over an equity transfer case. The matter then went before
the International Court of Arbitration. The currencies that the case concerned included: Bitcoin, Bitcoin Cash, and Bitcoin Diamond. There was so much of a buzz that the decision generated
that the Cryptocurrency news provider posted:
“Chinese court confirms Bitcoin protected by law. Shenzhen Court of International Arbitration ruled a case involving cryptos. Inside the verdict: CN law does not forbid owning & transferring bitcoin, which should be protected by law bc its property nature and economic value.”
The case, therefore, has reached to affect property and economic rights as viewed by the law. How it affects us here in the USA is yet to be seen. The decision applied followed a ruling held
in Moscow. The very classification of Bitcoin and other digital currencies as “property” could even lead to tax implications. Let’s remember this: Bitcoin and cryptocurrencies are not
considered currencies, and are not backed by the government or law. However, they are not illegal. That is the backdrop that is being worked within the dealing with the relatively new medium
of exchange. Basically, the ruling means that there is no prohibition against Bitcoin ownership and transfer in China.
The situation they were working within this case was an Equity Transfer Agreement was signed by 3 parties which included 2 individuals and a partnership. The center of the fight was in
relation to the additional amount of share in the company held by one of the applicants. According to the case filed, one investor trusted a party to hold digital assets and they signed an
agreement to return these assets to the other party. However, the transfer of the amount never took place, which led to the other two shareholders signing a petition. Arbitration requests
included the holding of shares, to account for losses and a request for the implication of penalties.
Certain key points are of note:
1. The contract was considered valid, it did not violate regulatory and legal provisions.
Chinese laws do not prohibit the transfer of bitcoin;
2. Though virtual, Bitcoin is an object of delivery it is not currency issued by a monetary
authority. It is also not electronic of legal tender and does not generate interest;
3. It is legal currency and does not prevent it from being protected by law as a property.
Bitcoin has property attributes such as economic value and can bring economic
benefits to the parties’
Overall, meaning and context were given to the agreement. Since there is no monetary authority on the matter, the court didn’t approve the request for payment of interest on the part of the
defendant. How this all plays out within the next few years is yet to be seen. Cases like this may push for some clearer legislation when it comes to dealing with grey areas.
Super Lawyers named Carol Stream and Hisdale Illinois closely held corporation law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorney Patrick Austermuehle a Rising Star in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois breach of contract, partnership, shareholder rights, and business trial lawyers have over thirty years of experience in litigating complex business disputes, shareholder freeze-outs and squeeze-outs, breach of fiduciary duty and partnership dispute claims and many different types of business and commercial litigation disputes. Our Kane and DuPage Counties business dispute lawyers, civil litigation lawyers, and copyright attorneys handle emergency business lawsuits involving injunctions disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud. You can contact us by calling at 630-333-0333. You can also contact us online here.