According to the court’s ruling, (play-to-earn) P2E games and their in-game assets do not offer the same level of investor protection as traditional investments. It requires players to conduct due diligence before investing. Alexie, a blockchain-based game that became popular in 2021, was the subject of a dispute in a Shanghai court.
The plaintiff Li Xiang spent nearly $70,000 ($101,700) with Wang Meng, the defendant, to create accounts and play. Meng failed to remit funds to Xiang after the first month’s return of 80,000 yuan ($11,724).
As a result of the discovery, Meng sells in-game assets worth 113,000 yuan ($16,485). Under Chinese law, the initial investment of 700,000 yuan ($101,700) with Meng is not protected, so the plaintiff does not have a legal claim.
Moreover, according to the court orders, they must refund the token sale’s 113,000 yuan ($16,485) profit. Due to the blanket ban on digital assets in China, all investments in the asset class are not secure.
Consequently, the relevant contracts are invalid and harm the public interest. According to the court, people should develop risk awareness, establish correct investment concepts, and avoid illegal financial activities like virtual currency speculation.
According to the First Intermediate People’s Court of Beijing, virtual currencies are secure under the law because no rules negate their protection.
Whether the court’s ruling will be adopted by the rest of China’s judicial system remains unclear. But the ruling on P2E games suggests the law still considers them illegal.
