A Series of Victories for Skycoin in Court

Li Min pleads guilty and apologizes; Skycoin defends legal rights

Note: This is an English translation of a story which first appeared here: https://mp.weixin.qq.com/s/zu6z3AKiVfj-_qyTnrMtJg

The Skycoin team will not tolerate illegal efforts to harm it, and insists on using all the legal means at its disposal to protect its rights and project development.

On July 27, 2020, a defamation or “honour infringement” case against Skycoin was concluded in Skycoin’s favour. The defendant Li Min (WeChat name Li Zhen) confessed to the crime and expressed regret. He wrote an apology letter asking the Skycoin team for forgiveness. He was ordered by the court to pay 6000 yuan in damages, but filed a request for negotiation with Skycoin, hoping to exempt him from that payment.

This is the fifth court trial involving the Skycoin team, and Skycoin has emerged from all five hearings victorious. The trials, including one criminal case and two civil cases, are actually a series of related cases involving Li Min and the external marketing team hired by Skycoin, who subsequently stole funds from the Skycoin project and its founder Synth, in addition to other crimes.

The first trial dealt with a criminal case of illegal detention. It was alleged, and subsequently proven to the court’s satisfaction, that a marketing team with whom Skycoin had contracted, detained developers illegally and forcibly transferred Bitcoin and Skycoin assets from those developers into accounts they controlled. Skycoin’s lead developer, Synth, has described this event as a “kidnapping”.

At around 21:30 on June 12, 2018, the four defendants (Li Min and others) came to the residence of Synth, the intended victim. They ensured the occupants of the house, Synth and his fiancée, could not use a telephone to call for help, restricted their movement, and threatened them before they proceeded to physically abuse them both. The team led by Li Min ultimately forced them to transfer 18.88 Bitcoins and 6,466 Skycoin to the account designated by the defendant.

The court confirmed that the allegations of illegal detention and embezzlement of property were factually established. It was judged that although the two parties may have had a financial dispute, there was absolutely no evidence to prove that the victim was the party at fault in the dispute. The four defendants pleaded guilty to the charges, and all of them stated before the court that they would voluntarily return the Bitcoin and Skycoin illegally obtained from the victim. In the end, because the defendants had a cooperative attitude and agreed to voluntarily return the stolen property, the court issued a lighter sentence to the four defendants of imprisonment ranging up to eight months. However, the stolen funds that the defendants promised to return was not forthcoming, resulting in further trials.

The second and third court sessions were civil cases of property infringement and refusal to return stolen property. Here again, the court upheld Skycoin’s right to recover their stolen property in accordance with the law.

In May 2020, the Shanghai №1 Intermediate People’s Court publicly pronounced the appeal of the Bitcoin-related foreign property damage compensation dispute. The cause was that convicted criminal Li Min and four others people refused to return the Bitcoin and Skycoin they had illegally obtained and filed an appeal. In the first trial, the “illegal detention criminal case”, the four defendants had promised to voluntarily return the Bitcoin and Skycoin that were forcibly transferred from the victim in exchange for a light sentence, and indeed their sentences were completed in 6–8 months. After their release, they refused to return the property. Skycoin had no choice but to file a lawsuit in order to recover the property, and once again the court ruled in their favour.

After the trial, the court of first instance held that the perpetrator should bear the tort liability for infringing the civil rights of others. In the case of infringement on others’ property, the property loss was to be calculated according to the market price at the time of the loss. The court of first instance ruled that the four defendants must jointly return the victim’s 18.88 Bitcoin and 6,466 Skycoin. If they cannot be returned in full, then they must repay an amount equal to the value of those coins on June 12, 2018 as esablished by CoinMarketCap.com. The listed USD closing price that day for Bitcoin was equivalent to 42206.75 yuan per Bitcoin, and for Skycoin it was 80.34 yuan per Skycoin.

In spite of the court’s clear ruling, Li Min and his compatriots still refused to return the stolen funds, attempting another appeal. In the second trial on May 6, 2020, the court found once again that the Bitcoin obtained by criminals through illegal means should be returned in full or compensated at a discount. The results of these two appeals were basically the same, except the second trial, with Skycoin’s generous agreement, waived the right to have the stolen Skycoin returned, requiring only the return of the stolen Bitcoin.

It was confirmed by the court that Bitcoin should be protected by law in the same way any other property is protected. Acknowledging that Bitcoin and Skycoin are virtual assets, made this case a precedent setting in the industry for safeguarding the rights and interests of virtual assets. The landmark ruling received extensive attention from the media at home in China and abroad, including Shanghai News Channel, CCTV2 and other major news platforms.

Chinese media reporting on the outcome of Trial #3, which vindicates Skycoin and affirms the property status of cryptocurrency. (Turn on Closed Captions for English subtitles.)

Although the court ruled decisively for Skycoin, as of publication the project has yet to receive any property returned by Li Min or his co-conspirators, namely the 18.88 Bitcoin as ordered by the court. The four have since been added to a blacklist of “dishonest persons” in accordance with legal procedures.

Not only that, but after being released from prison, Li Min and the others not only did not return the property, but also spread false rumors about Skycoin on WeChat and other major platforms. This continued criminal behavior had a demonstrable negative impact on the project and led directly to the next case: a civil case of infringement of reputation.

The first instance of Li Min’s infringement of Skycoin’s reputation.

The former marketing team of Li Min and others were released from prison after serving 6–8 months. The defendant Li Min began to use major social media platforms to spread false statements and other disinformation about Skycoin, inciting negative public opinion, publishing team member passport photographs, along with many attempts to discredit the victim’s personal image, and violate the victim’s privacy and diminish Skycoin’s reputation. These actions had a far-reaching impact on the development of the Skycoin project and its market performance. The Skycoin team refuses to tolerate this behavior and took Li Min to court again.

At the conclusion of the fourth trial, the court ruled that the defendant Li Min violated the plaintiff’s right of reputation and privacy, and compelled him to issue a written apology to the victim of their slander within ten days according to the judgment, as well as compensation for the loss of reputation to the tune of 6,000 yuan.

However, Li Min did not write a letter of apology in accordance with the judgment and did not pay 6,000 yuan in compensation, again violating a direct court order. He refused to accept the judgment of the first instance and appealed again, leading to the fifth hearing.

Li Min filed an appeal because he was dissatisfied with the first-instance verdict delivered in Trial #4. On July 27, 2020, the fifth trial became the second-instance judgment of “Li Min’s honour violation of Skycoin”.

The result of the second instance: Defendant Li Min confessed and regretted the established facts of his crime, and requested the forgiveness of the Skycoin team and finally agreed to write a letter of apology. At the same time, Li Min also filed a request for negotiation with Skycoin, hoping to exempt him from paying the 6,000 yuan in damages as judged by the court. The Skycoin team believes that the prisoner Li Min must apologize and restore Skycoin’s reputation. For Li Min’s proposed exemption from 6,000 yuan compensation request, Skycoin was prepared to be lenient.

The following is the belated apology letter written by Li Min (English translation below):

“Sorry. I solemnly apologize here, because I have posted negative information on the Internet[…], which has damaged your reputation. I am very sorry. I have made a deep reflection, and I sincerely apologize for the mistakes I made. I did not have legal awareness before and attacked you online. I regret that I will face my mistakes and assume my own legal responsibility. I cannot attack others online because of my negative emotions. The final result is to myself and others. Both have caused particularly serious damage. I apologize to you again, sorry. I hope you can understand my previous wrong behavior.
Li Min
July 27, 2020"

Although justice will be late, it will not be ignored. The four former marketing team members in the illegal detention and theft case have completed their months in jail. The criminal Li Min (alias Li Zhen) also pleaded guilty and apologized to Skycoin in the case of attempting to damage Skycoin’s reputation.

To date, Skycoin has still not received the Bitcoin and other property Li Min and others have been ordered to return, and the four have been included in the blacklist of untrustworthy persons according to legal procedures. These criminals have repeatedly damaged the rights and interests of the Skycoin project. The Skycoin team firmly will not tolerate such behavior. The Skycoin team will insist on defending the reputation of the team and the project in accordance with the law, restore the reputation of the Skycoin project, convey the facts, and ensure the legitimate rights and normal development of the Skycoin project’s ambitious and revolutionary ecology.

The Skycoin team has always been firm and hardworking in maintaining the development of the project and the legitimate rights and interests of community members. The robbery had a profound and negative impact on the public opinion of the Skycoin project, and the subsequent false smears and unfair slanders were even more damaging.

Although the lawsuit has been won, the illegal actions of the defendants and others have brought huge losses to the Skycoin development team and Skycoin holders. This kind of loss and damage caused to the project and many community members and fans of the project’s technology cannot be calculated with specific numbers. This judgment once again proves that violations of the law will eventually be punished!

The Skycoin project did not forget its original intention to continue its active development. In spite of the negative speculation surrounding the so-called “kidnapping” event, Skycoin has never strayed from its focus on developing its techonolgy and realizing its vision. After the difficulties stemming from the theft and kidnapping arose, the Skycoin project quickly optimized management and allocated resources to ensure the rapid advancement of technology development. In the time since, an industry-first hardware wallet has been released, work on a Skywire hardware antennae has been 90% completed, and the Skywire mainnet was released in April 2020. In addition, the CXO 2.0 distributed storage protocol has been open-sourced. The technology and strength of the Skycoin project has been witnessed and recognized by the market, and it is only a matter of time before people realize that the distraction of the criminal case did nothing to impede the vision and progress of this groundbreaking project.

Skycoin aims to develop a truly decentralized and distributed network without any central authority. Skycoin was founded in 2011 by early developers of Bitcoin and Ethereum, and has quickly developed into an exciting and ambitious ecosystem. Including the new decentralized Internet Skywire; CX, a revolutionary and fully-functional blockchain application programming language; Obelisk consensus protocol, self-developed advanced “trust network” blockchain consensus algorithm; Skyminer, etc. On the hardware front, Skycoin has self-developed high-performance hardware devices that are all open-source. And of course, there is Skycoin the cryptocurrency; an easy-to-use, secure and private cryptocurrency whose transactions are virtually free and can achieve transaction speeds comparable to Visa. Skycoin is not only a project but also a complete blockchain ecosystem, aiming to better serve the development of the blockchain industry.

Note: This is an English translation of a story that was first published here: https://mp.weixin.qq.com/s/zu6z3AKiVfj-_qyTnrMtJg