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NFT Legal battle as defendant served notice via NFT
A legal battle is going on right now with potential implications for NFT technology. On Thursday, a federal judge upheld his decision to freeze $35 million in crypto assets held by SpartacusDAO after serving notice to defendants via NFT. What do we know about the SpartacusDAO lawsuit?
Image credit: Spartacus.finance
What do we know about the SpartacusDAO trial?
Last year, investors in the SPA token filed a lawsuit against Wei Wu, the founder of Spartacus. As a result, Judge Victor Marrero of the Southern District of New York placed a restraining order against Wu. This decision prevented Wu from handling the company’s own funds worth approximately $35 million.
However, Wu has not responded to any communication from the court. After repeated unsuccessful attempts to reach Wu and failure to appear for court-appointed appearances, the court came up with an interesting solution. The State of NY created an NFT with the legal notice and sent it to the founder as a means of sending notice.
A federal court using NFT technology is a big win for the crypto industry. It shows a real use case for the technology and is a rare example of the US government actually helping crypto adoption versus always trying to destroy it. In the future, this case can be seen as a precedent for the increased use of NFTs for further legal applications.
There have also been precedents for the use of NFTs to provide legal notice. In June, a New York court allowed a restraining order to be filed via NFT. The UK also recently ruled that NFTs can qualify as legal notice in a case against Binance Holdings.
Interestingly, the court also used Discord to reach out to Wu. The court joined the Spartacus Discord channel and posted the legal notice on the server. However, the post was immediately deleted.
Nelson Rosario, a crypto-focused lawyer, commented: “Especially in the crypto space, people have to take what they can get, and if the only manifestation of a party who has wronged you is via a Discord server, well, that’s where you have to go .”
What is Spartacus?
SpartacusDAO is an OHM fork on the Fantom blockchain. It became popular for a brief period last year thanks to its outrageous ROI, at times over 10,000% per year. Unfortunately, the protocol collapsed. Disgruntled investors used the DAO portion of SpartacusDAO to demand that the team lose control of the remaining treasury.
The Spartacus team ignored these requests. Instead, they redeemed the tokens and sold them for $4.3 million. Wu continues to avoid similar attempts by the community to regain control of the treasury. Consequently, investors have resorted to legal remedies to save some of their funds.
A prop trading company, Patagon, has led the charge against Spartacus. The company’s CEO Diogenes Casares supports the use of NFT and Discord to help return the money. Having used real records to identify the pseudonymous founder of Spartacus as Wei Wu, he felt these methods were sufficient legal notices.
Casares wrote: “It’s like if you serve somebody, put the letter on the doorstep with a giant thing that says ‘this is a legal letter’ and then they throw it out – it’s contempt of court.”
As of now, the SDNY Federal Court seems to agree with this sentiment.
