The Guangzhou Intermediate People’s Court said yesterday it voided a sales contract for offshore virtual currency mining machines after a press conference marking the 20th anniversary of its Foreign-Related Commercial Tribunal.
Two Chinese citizens were the buyer and the seller, and the machines were sold for 1,024,000 yuan and sent to Mongolia for mining, but control stayed with the seller, and the rigs often went offline.
The court said the deal harmed China’s financial order and public interests, so it ruled the contract invalid.
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Case details
The dispute began after two Chinese citizens, identified as Wang Mouming and Zheng Mou, agreed on a sale over WeChat.
Zheng paid 1,024,000 yuan for 24 dedicated servers meant for Bitcoin mining. The plan was for the machines to run in Mongolia and for Zheng and a third person, Chen Mouxiong, to cover electricity.
Once the equipment arrived in Mongolia, Zheng said the machines often went offline. He also said they were kept under Wang’s control and were never handed over. Zheng asked the court to rule the contract invalid.
Wang said Mongolian law should apply and that the deal was valid. Chen said he had no sales link with Wang and did not claim ownership of the machines.
Court ruling
The court found that the parties were Chinese citizens, and it said that fact alone meant Chinese law could govern the dispute even though the machines were sent abroad.
The judges looked at public interest factors, and they said the contract touched on issues like the environment and financial stability in China.
The court described the mining machines as specialised, energy-intensive equipment. It said trading in virtual currency is an illegal financial activity that harms the country’s financial order.
For those reasons, the sale was void. The court also took into account how much each side was at fault and how much of the deal had been carried out when setting relief.
Why is this important?
The ruling clarifies that sending equipment overseas does not let Chinese citizens avoid the country’s rules. The court made clear that transactions tied to overseas virtual currency mining can still come under Chinese law.
That point is aimed at stopping firms or people from sidestepping oversight by pointing to foreign operations.
The judges also said the result helps curb illegal finance related to virtual tokens. The verdict gives a legal basis for rejecting similar contracts that try to hide risky activity behind cross-border arrangements.
What this means?
For people who buy mining rigs and send them to operate abroad, this case is a warning. It shows that the location of the machines does not remove legal risk at home. Companies and individuals will likely have to think more carefully before joining such deals.
For courts and regulators, the case offers a reference, and it makes it clearer how judges might treat transactions that affect the environment or financial stability.
For the wider public, the ruling signals a focus on preventing harmful financial activity even when it takes place partly overseas.
The Guangzhou court’s decision comes as the tribunal marks its 20th year handling cross-border commercial disputes. The ruling will be watched by traders, courts, and regulators.
It sets a legal tone that Beijing’s public order rules can reach transactions that use foreign venues to carry out virtual currency work. Parties involved in such deals may now face closer scrutiny and stiffer legal risks.
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