A technology company was sued in court for operating a digital collection trading platform that induced irrational transactions among users, resulting in the failure of 11 users to recover their investment funds. On May 15, the Beijing No. 3 Intermediate People's Court (hereinafter referred to as: Beijing No. 3 Intermediate People's Court) held a public hearing and pronounced a verdict. It determined that the platform failed to fulfill its risk warning and transaction restriction obligations and made major mistakes. The final judgment rejected the appeal and upheld the original judgment. The platform assumed 70% liability for compensation.
The scene of the trial. Source: Beijing No. 3 Middle School
"Blind box" and "fragment synthesis" gimmicks divert traffic, and platform outage causes user losses
A technology company sells blind boxes containing digital collections to users through its APP applications, WeChat mini programs and other platforms, and provides display, browsing, settlement and other services for users to trade digital collections on the platform, and charges a certain percentage of handling fees.
From May to October 2022, Zheng and 11 other people purchased blind boxes containing digital collections multiple times through an APP and WeChat applet operated by a technology company, and participated in transactions such as "fragment synthesis". Later, the operating platform of a technology company ceased operations, and the digital collections held by users could not be traded and liquidated. Zheng and 11 other people sued for the return of investment funds and interest.
The court of first instance found that the platform engaged in behaviors such as inducing consumption and exaggerating earnings during transactions. Because the platform transactions have basically stagnated, the digital collections held by users cannot actually continue to be traded and the value of the digital collections cannot be realized. A certain technology company was obviously at fault and was ordered to bear 70% of the liability.
After the first-instance court's ruling, a technology company believed that it should not bear responsibility and appealed to the Beijing No. 3 Intermediate People's Court.
The platform has a higher duty of care, and 70% of the responsibility remains unchanged
The Beijing No. 3 Intermediate People's Court held after trial that a compound contractual relationship consisting of a sales contract and a network service contract was formed between a technology company and 11 people including Zheng. From the perspective of the digital collection transaction model involved in the case, a technology company’s ability to control transactions, profit model, and promotion of healthy industry development and risk prevention, compared with general commodity transactions, a technology company, as the issuer, seller, and transaction service platform provider of digital collections, should have a higher duty of care.
A technology company failed to provide evidence to prove the economic value of the digital collections it sold, failed to provide rational consumption risk warnings, failed to limit possible speculation and hype, and even clearly induced users to trade irrationally. A technology company had obvious faults and should be liable for compensation to 11 people including Zheng.
Accordingly, the Beijing No. 3 Intermediate People's Court made a final judgment, rejecting the appeal and upholding the original judgment. This judgment has taken effect.
The judge reminded that in recent years, with the upgrade of blockchain technology, my country's digital collection industry has continued to heat up, playing an important role in promoting traditional Chinese culture, enriching digital economic models, and promoting the development of cultural and creative industries. However, there are also risks and dangers such as speculation, money laundering, and illegal financial activities. Buyers should view digital collections rationally, establish correct consumption concepts, and avoid blind speculation. Digital collection trading platforms have a relatively higher duty of care than general commodity traders. They should consciously abide by national laws and regulations, put an end to false propaganda, speculation and other behaviors, resist and prevent the financialization of digital collections, and promote the healthy development of the industry.
Beijing News reporter Wu Mengzhen and editor Liu Qian proofread Zhang Yanjun
