A landmark court ruling against one of China’s largest bitcoin exchanges poses far-reaching ramifications in the country’s digital currency sector.
Last July 29, a Chinese civil court ordered the parent company of bitcoin exchange OKCoin, Lekuda, to pay up in connection with a 2014 case that Lekuda. In its lawsuit, defendant Huachen Commercial and Trading Co. Ltd. claimed it lost some $1.8 million to a fraud, who laundered the money by buying bitcoin, which was then withdrawn to an account in Macau.
The initial ruling awarded Huachen Commercial 80 percent of the damages, but the appeal reduced the amount to 40 percent.
In its appeals ruling, the Heilongjiang Provincial Higher People’s Court called out OKCoin for failing to strictly review its users “real identities.” The court said the person who defrauded Huachen Commercial was “able to set up a number of accounts on OKCOin using fraudulent identity documents purchased online.”
But what’s even more troubling was that the court suggested that OKCoin.cn was operating illegally, claiming that Lekuda’s operating license doesn’t cover the bitcoin exchange side of the business. The ruling ordered OKCoin to “register at the administration of Industry and Commerce and get a business license.”
The decision affects only OKCoin’s China-based OKCoin.con, and not the Singapore-registered OKCoin.com, which is a separate business. Still, the ruling will undoubtedly put other digital currency exchanges in China on guard, especially since the Chinese government has already tried to stop bitcoin exchanges from performing direct transfers in and out of banks in 2014.
There were indications, however, that the Chinese government has been keeping up with the times. In June, reports surfaced that Beijing is drafting a law that aims to consider digital currencies as properties “almost on par with physical and financial assets,” meaning they will be under the scope of the civil rights related to property in general.
Bitfinex offers $3.5M reward for bitcoin heist info
Meanwhile, Hong Kong-based Bitfinex is pulling out the big guns to get into the bottom of the hack that caused it to lose over $61 million worth of bitcoin.
If you recall, the bitcoin exchange was forced to stop all trading operations earlier this month after discovering a security breach in the system, leading to a loss of 11,756 bitcoins.
When asked if there was a bounty for the stolen bitcoins, Bitfinex community director Zane Tackett indicated that the reward sum would be around $3.5 million.
“Five percent of recovery and for information leading to recovery (but no bounty if no recovery); if multiple persons lead to recovery, share pro rata,” Tackett wrote in reply on Reddit.
Current bitcoin price and transaction volume
The popular digital currency traded at $571.99 per bitcoin on Monday, with a market cap of close to $9 billion and trade volume of $15.82 million.