In the rapidly evolving world of blockchain and digital assets, legal frameworks often lag behind technological innovation. A landmark case in China—widely referred to as the first legal dispute over a cryptocurrency fork—has shed light on how courts interpret rights related to digital asset ownership, platform responsibilities, and financial compensation in the volatile crypto market.
This case centers on Li Jun (a pseudonym), an individual investor who held Bitcoin (BTC) on the OKCoin exchange during the 2017 Bitcoin Cash (BCH) fork. Despite being entitled to an equal amount of BCH due to the fork, Li Jun missed the claim window and subsequently sued the exchange operator, Lekuda Company (OKCoin’s parent entity), for failing to ensure access. The court ultimately ruled in his favor regarding entitlement to the coins but denied compensation for market price losses.
This article explores the legal reasoning, implications for crypto investors, and key takeaways about digital asset rights when regulatory clarity is still emerging.
The Timeline of Events: How a Missed Claim Turned Into a Lawsuit
In January 2017, Li Jun purchased 38.748 BTC through the OKCoin platform. At that time, Bitcoin was gaining momentum, but few anticipated the seismic shifts that would follow later that year.
On July 18, 2017, OKCoin issued a public announcement titled “Handling Plan for Bitcoin Fork,” informing users that a split—commonly known as a hard fork—was imminent, which would result in the creation of Bitcoin Cash (BCH).
The exchange made a clear promise: any user holding BTC in their account by August 1, 2017, at 20:20 would receive an equivalent amount of BCH. Furthermore, OKCoin committed to distributing these newly created tokens directly into users’ OKEx spot accounts upon claim.
👉 Discover how major crypto platforms manage hard forks and safeguard user assets.
However, when Li Jun attempted to claim his 38.748 BCH in November 2017, he discovered the claim button had disappeared, and customer service confirmed the withdrawal channel was permanently closed due to missed deadlines.
At the time of attempted withdrawal (November 25, 2017), 1 BCH was valued at approximately ¥9,017.78 (~$1,340). By the time of the first trial in July 2018, its value had dropped to around **¥4,631.25** (~$685). This sharp decline formed the basis of Li Jun’s claim for ~¥170,000 in damages.
Court Rulings: What Was Decided and Why
First Instance: Partial Victory
On August 10, 2018, the Haidian District People’s Court in Beijing delivered its verdict:
- ✅ Lekuda Company must deliver 38.748 BCH to Li Jun.
- ❌ No compensation for price depreciation was awarded.
The court acknowledged that while Bitcoin and similar cryptocurrencies are not recognized as legal tender or physical property under Chinese law, they possess civil interest value and are protected under contract law as legitimate transactional objects.
Thus, OKCoin’s public commitment constituted a binding obligation. Failing to facilitate access to forked coins violated contractual principles.
However, the court rejected Li Jun’s damages claim based on two core legal doctrines:
- Lack of Transactional Basis: Since Li Jun never actually sold the BCH, there was no realized economic loss tied to a completed transaction.
- Unpredictable Market Volatility: Given the extreme price fluctuations typical in crypto markets, future gains or losses were deemed too uncertain to qualify as “foreseeable damages” under contract law.
Final Appeal: Upholding Precedent
Li Jun appealed, seeking full financial restitution. On December 10, 2018, the Beijing No.1 Intermediate People’s Court upheld the original ruling, reinforcing the lower court’s interpretation.
The appellate court emphasized:
- The highly speculative nature of cryptocurrency values.
- The absence of predictable causality between the delayed distribution and specific financial harm.
- The principle of foreseeability in breach-of-contract damages: parties can only be held liable for losses they could reasonably anticipate at the time of agreement.
Key Legal Questions Addressed
🔹 Is Bitcoin Legally Protected?
While Chinese law does not classify Bitcoin as a formal “object” under property law (物权法), courts have acknowledged it holds civil rights value (民事利益) when used in transactions.
“Virtual assets like Bitcoin may not be ‘property’ in the traditional sense, but they represent enforceable interests under contract law.”
This means individuals cannot assert ownership based on property rights alone—but can pursue claims based on platform promises or agreements.
👉 Learn how modern exchanges protect user rights during network forks.
🔹 Why Was Price Loss Compensation Denied?
Despite apparent financial loss, courts applied strict legal standards:
- No actual sale occurred, so no concrete damage could be measured.
- Crypto prices are inherently unstable; expecting stable valuation goes against market reality.
- Damages must be both directly caused and reasonably foreseeable—neither condition was fully met here.
As legal expert Pang Lipeng from Chain Law Team noted:
“The platform’s failure delayed access, but proving direct causation between that delay and final sale price remains legally complex.”
He added that while the ruling followed existing precedent, it raises questions about fairness in fast-moving digital markets.
Broader Implications for Crypto Investors
This case highlights several critical lessons:
- Exchange announcements matter: Public statements can create binding obligations.
- Timing is crucial: Users must monitor fork events and claim procedures closely.
- Legal protection exists—but within limits: You can enforce platform commitments, but recovering speculative losses is unlikely.
- Documentation is key: Save all communications and policy updates from exchanges.
Moreover, this case underscores a growing trend: even without formal recognition of crypto as property, courts are increasingly willing to protect user interests through contractual and civil liability frameworks.
Frequently Asked Questions (FAQ)
Q: Does this mean I own new coins after a hard fork?
A: Technically yes—if you control your private keys. On exchanges, entitlement depends on their policies and whether they support the new chain.
Q: Can I sue if an exchange doesn’t distribute forked coins?
A: Possibly. If the platform made a public commitment (like OKCoin did), you may have grounds for a claim based on breach of contract or failure to perform a promised service.
Q: Will I get compensated for lost profits if prices drop?
A: Unlikely. Courts typically require actual damages tied to real transactions. Speculative or opportunity-cost losses are rarely recoverable.
Q: How can I protect myself during future forks?
A: Withdraw funds to a personal wallet before a fork occurs. This gives you full control over both original and new assets. Always read exchange announcements carefully.
Q: Is Bitcoin legally recognized in China?
A: Not as legal tender. However, personal possession is tolerated, and civil disputes involving crypto are adjudicated based on civil law principles like contract and tort liability.
👉 Stay ahead with real-time alerts on upcoming blockchain forks and airdrops.
Conclusion: A Precedent in Progress
The "Bitcoin fork lawsuit" sets an important precedent—not because it revolutionized crypto law, but because it demonstrated how existing legal tools can adapt to digital realities.
While Li Jun won recognition of his right to BCH, he bore the brunt of market volatility without recourse. This outcome reflects a cautious judicial approach: supporting user claims where platforms make promises, yet limiting liability in unpredictable financial environments.
For investors, the message is clear: don’t rely solely on exchanges to safeguard your forked assets. Understand platform policies, act promptly, and consider self-custody for maximum control.
As blockchain technology continues to evolve, so too must legal frameworks—and cases like this one pave the way forward.
Core Keywords:
- Bitcoin fork
- Cryptocurrency legal case
- Bitcoin Cash distribution
- Crypto investor rights
- Blockchain hard fork
- Digital asset ownership
- Exchange liability
- Contract law and crypto