Courts and lawyers use NFTs to subpoena cryptocriminals: Report
The anonymity of blockchain technology has made it possible for fraudsters to steal users’ funds anonymously, but that hasn’t stopped victims from serving the anonymous thieves. Using NFTs, claimants now serve court orders on anonymous hackers on the blockchain.
NFT servings find momentum as cryptohacks spread
After filing against a defendant, the claimant must serve the defendant usually by sending paper documents to their address. If the physical address of the defendant is not known, the claimant can serve them by email, but they still need permission.
And in the event that there is in fact no email, the claimant can serve the defendant using any route available, including blockchain. This is not so rare as the crypto world is loaded with cases of digital assets being stolen or transformed into another account without permission.
That is the case of LCX AG v. John Doe No. 1-25, No. 154644/2022 (NY Sup. Ct. June 2, 2022), the oldest and first case in which service by NFT was permitted. In the case, the plaintiff had to serve the defendant with NFT because they had nothing else on them.
In a similar case, the High Court of England and Wales allowed an Italian engineer trying to recover around $2 million of stolen cryptocurrency to service the proceedings via NFTs in early July this year.
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Singapore Court allows court papers to be served via Blockchain
In a case involving a plaintiff who used a Bored Ape Yacht Club NFT as collateral for a $150,000 DeFi loan in March this year, a Singaporean court has ruled that the order freezing any potential sale of BAYC NFT can be served via the blockchain given that the defendant’s identity is unknown.
The defendant in the case, known only for using the alias “chefpierre” on social media platforms such as Twitter, foreclosed on the loan after the claimant was unable to repay the loan on time. However, as part of the agreement, it was stipulated that the claimant would never relinquish title to NFT, and if he was unable to repay the loan on time, an extension was to be granted before attachment.
Justice Lee Seiu Kin, the judge in charge of the case, issued an injunction in May to block any sale and transfer of the NFT in question. On Friday, the judge ruled that NFTs meet certain legal requirements to be considered property as an explanation for the injunction.
“If the Singapore courts did not hear the case, there was no other appropriate forum. This was because the Bored Ape NFT existed as code stored on the Ethereum blockchain, which is essentially a decentralized network of ledgers maintained in computers around the world,” according to the latest ruling.
Nevertheless, the market for NFTs has seen a slight uptick in trading volume over the past week, largely thanks to the hype around Reddit NFTs. According to data from NonFungible, USD NFT sales volume has increased by around 30% in the past week to $13 million.
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Do you think it is practical to serve defendants by NFTs? Let us know in the comments below.
About the author
Ruholamin Haqshanas is an accomplished crypto and financial journalist with over two years of experience writing in the field. He has a solid grasp of various segments of the FinTech space, including the decentralized iteration of financial systems (DeFi), and the emerging market for non-fungible tokens (NFT). He is an active user of digital assets for money transfers.
