Lawyers are now ditching NFTs to serve court orders – Trustnodes

The dusty wigs of yesteryear roaming the stuffy chancery halls still play with most new things, like Non Fungible Tokens (NFTs) which are suddenly put to a service no one quite thought of.

“The order was served on the digital wallet provider and ‘air-dropped’ into the wallet using NFT, the third time worldwide this has been used as a service method.

Within a couple of weeks, the client received 100% of their BTC, which together with costs meant a recovery in the region of £1.85 million.”

So says Steven Murray, a lawyer at HCR Law, after describing a somewhat typical legal process in relation to the freezing of assets, in this case some stolen/fraudulent coins that had ended up on Huobi.

In law, a defendant must be served by the plaintiff. That is, the defendant, in this case the thief, needs to be told by the plaintiff, the person who had his/her coins stolen, that they are filing a freezing order, giving the defendant the opportunity to defend themselves in order to maintain the right to a fair trial.

This is usually by sending paper documents to the address of the defendant. Today they can also be emailed, but often you need permission (a good reason) to just email them because people generally don’t see their email as often as they see their mail.

In this case they also had an email, but there are cases where there is actually no email, you just have a blockchain address.

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 the NFT was permitted, and in this case it was only by NFT because they had nothing else on the defendant, another thief in this case through hacking.

So this is not an NFT, is probably the first impression of any Kryptonian because there are no colorful jpegs here, no dancing monkeys and no court document which is what we thought we would find.

But of course it’s an NFT, a unique token, just a sad, boring, lawyer NFT with gray all over it.

Also, instead of the court document(s) being JPEGs that might even allow you to read it, this NFT is a link (highlighted) to a regular website where all the documents are located.

If we did not know that we were looking at a court order NFT, and had actually received this out of the blue, it is not so clear that we would have been able to understand what it is, and since we we are not in that situation we can’t say for sure, but we might have dismissed it as some kind of spam or weird nonsense.

That’s why, if we did this, we would have wanted to be sure that the NFT image actually shows something beyond the generic words NFT, and that something makes it clear that this is a serious matter, a court case, related to us specifically , and therefore we should click on the link, or ideally we should have sufficient information to be able to google the parties who approach us and therefore establish the credibility and authenticity of the matter because precisely links are of course a rather dangerous thing in crypto.

So much so that we had to think twice or more about clicking this link ourselves, even though we got to it through actual attorney guides, until the claimant gave it a decent level of legitimacy:

First time in history and important for legal and the crypto industry as a whole: a temporary restraining order (TRO) of a defendant had been served via NFT #Consensus2022
7/11 pic.twitter.com/70LeeE0mMO

— LCX (@lcx) 7 June 2022

That means we are both impressed and disappointed. Impressed because lawyers dropping NFTs to do their job is pretty cool, but not so impressed with the way it was done which shows they are lawyers and too new to the technology.

However, it is a minor point as a jpeg could very easily be added to this, with a more relevant question whether the defendant would ever see this.

With these cases of proven hacks and thefts where there is substantial evidence, no one would really care, but if this increases in use, then of course there may be more contentious cases where you want the defendant to see it because otherwise he can file for crushing the order when he eventually learns about it increases costs and wastes time.

The interesting part here is that you can see how much the address checks the NFTs. If it’s a blank address on OpenSea, then you’re just wasting your time, but still, maybe he’ll get into NFTs, and so it’s better to send one than nothing if there’s no other way to communicate.

However, if their OpenSea is very active, given the global and mobile nature of crypto, an NFT may well be the fastest way to reach them.

In that case, the strength of this method will be that you can prove service in an indisputable way because the judge himself can go to the address and see the NFT.

With mail, you need a certificate by a human and usually its professionals, but if the defendant contests the service, it gets complicated because humans can obviously lie or make mistakes, professional or not.

Here there would be no room for lying, but whether the defendant actually saw it is something else and the only way you can move towards proving it, at least on balance, is if they traded some NFTs after your is sent because they obviously wanted to check the new NFT, and see the one you sent.

In this specific case of the first court service NFT, it is a blank address as far as NFTs are concerned, and so we have no reasonable way of having a good guess as to whether the defendant has seen it or not.

However, his assets have been frozen and returned to the rightful owner, so it is obvious that he knows what has happened, and NFT is better than nothing even in this case because he or she can get into NFTs by claiming on one of the new Reddit avatar NFTs , for example, and see this court order.

All of this makes for quite an interesting development because NFTs now have a new dimension as a communication medium.

The pseudo-anonymous nature on the other hand can make spam quite easy, which is why links really shouldn’t be used, especially when the court order itself can be NFT.

But as a first attempt, the legal system clearly shows that there is recourse in crypto and that the law still applies to it, especially in cases of theft, and the legal system can still function reasonably well in the crypto arena, especially where there is a third party that can satisfy the order.

That includes Circe of Tether, and thus any USDc or USDt assets as they are under centralized control, and therefore transferable as you can order a bank to transfer.

It also includes exchanges and other centralized custodians, all of which are more traditional databases such as banks rather than blockchain, and can therefore satisfy court orders regarding ownership.

The legal system has also proved open to adapt, with two English courts and one New York court so far allowing such service.

And for crypto in general, as well as ethereum more specifically, this development may well show that the more reputable law firms may need to start developing some sort of eth address reputation, or a way to prove that a work address is theirs by perhaps linking it through their official site – links here and says this address belongs to us – so that if they send anything through it, it can be determined that it came from an actual law firm.

All this basically means is that they need to get some eth, especially if they are going to serve customers in this area, which in itself could well further increase the adoption of ethereum.