Is the cooperation agreement for the judicial disposal of Virtual Money valid? Let's discuss the disputes in the court ruling.

Recently, a case concluded by a court in Urumqi, Xinjiang has attracted widespread attention. The case involves a cooperation protocol for the judicial disposal of Virtual Money, and the court ultimately determined that the protocol is invalid, providing several controversial reasons. This article will delve into the legal effectiveness of cooperation protocols for the judicial disposal of Virtual Money, as well as offer suggestions for relevant practitioners.

1. Case Summary

In November 2023, Sun signed a "Virtual Money Asset Handling Cooperation Contract" with Lu, agreeing that both parties would utilize their respective resources to carry out cooperation in the judicial disposal of virtual money. Sun paid 200,000 yuan as a performance deposit, which was to be held by Lu, to be settled after the cooperation ended. However, a dispute arose during the cooperation, and Sun filed a lawsuit against Lu in December 2024, requesting the termination of the cooperation contract and the return of the deposit along with interest.

II. Court Judgment and Reasoning Analysis

(I) Discussion on Invalid Contracts

The court ruled that the "Virtual Money Asset Disposal Cooperation Contract" is invalid. The reason is based on the announcement issued by seven ministries in 2017 regarding the prevention of risks associated with token issuance financing, stating that virtual money does not belong to legal currency, and no platform is allowed to engage in exchange services between legal currency and virtual money, nor provide pricing, information intermediary and other services for virtual money.

The court believes that the actions of Sun and Lu essentially supported the exchange of Virtual Money and fiat currency in a disguised manner, which violates the regulations of the announcement and the public interest; therefore, the contract is invalid.

(2) Basis for not returning the margin

Although the contract was deemed invalid, the court still did not support Sun's request for the return of the 200,000 deposit. The court held that, based on the evidence provided by both parties, it should be recognized that Sun and Lu constituted an actual partnership. According to the legal provisions of partnership, before the termination of the partnership, partners cannot request the division of partnership property.

3. Controversial Points of the Court's Judgment

There are some points in this case judgment that are worth discussing:

1. Nature of Contract Identification: The court directly deemed the cooperation agreement between two individuals invalid, a judgment that may be overly arbitrary. In fact, similar agreements may be closer to a cooperation agreement between intermediaries rather than a business contract directly involving Virtual Money transactions.

2. Legal applicability issue: The court cited regulatory documents from 2017 as the basis for its judgment, but these documents primarily target token financing trading platforms rather than individuals or disposing companies. The updated regulatory notice issued in 2021 may be more suitable for this case, but even so, it cannot directly lead to the conclusion that such cooperation contracts are necessarily invalid.

3. Ignoring the specificity of judicial disposal: The compliant virtual money judicial disposal is usually realized overseas, and then the funds are converted back into the country, a process that complies with existing regulatory requirements. The court seems to have not fully considered the special nature of judicial disposal business.

4. Partnership Determination: The court recognizes that the two parties constitute an actual partnership, but this determination may require more substantial evidence to support it. If there is a lack of direct evidence, categorizing a simple cooperative relationship as a partnership may be inappropriate.

4. Conclusion

The judicial disposal of Virtual Money has become an emerging and increasingly normalized business. In the current regulatory environment, the legal and compliant disposal of involved Virtual Money has become an industry consensus. Therefore, intermediary agreements or cooperation agreements related to judicial disposal should not be easily deemed invalid.

With the popularization of knowledge about Virtual Money and blockchain technology, we expect judicial authorities to further enhance their understanding of Virtual Money, so as to make more accurate and fair judgments in similar cases. For those engaged in related businesses, it is advisable to be more cautious when signing protocols, clearly stipulating the rights and responsibilities of all parties, and fully considering the potential legal risks they may face.