NFT lawsuits from around the world | Ingram Yuzek Gainen Carroll & Bertolotti, LLP

Earlier this year, courts in England and Singapore made decisions that were hailed by the crypto community as landmark decisions. In both decisions, because the defendants were unknown or outside the court’s jurisdiction, the orders were given on a ex parte basis (ie no appearance of the defendants). The case in England, Osbourne v. Persons Unknown, involved two stolen “Boss Beauties” NFTs found in the wallets of unidentified users with OpenSea accounts. The plaintiff sought to enjoin the unidentified persons and OpenSea from passing on her NFTs. The court held that “there is at least a realistic arguable case that such symbols should be treated as property under English law.” According to the court, the test for granting an injunction was met, partly because it found that money alone could not provide a sufficient remedy, since it was unclear whether the unknown defendants had the means to replace her, and the stolen NFTs. held sentimental value incalculable in monetary terms (they are reportedly worth around $5,000 in total).

The court also granted what in England is called a Bankers Trust disclosure order requiring OpenSea to disclose certain information about unidentified wallet holders, subject to an application by OpenSea to vary such order and the plaintiff to give an undertaking. The court allowed service of the disclosure order on OpenSea even though OpenSea has no presence in England (and the court thus recognized the difficulty of enforcing the order), but on the condition that OpenSea would cooperate in remedying the fraud. It is unclear whether OpenSea complied with the order, but plaintiff Boss Beauties is currently listed as “Reported for Suspicious Activity” on OpenSea.

The ruling from Singapore is also called the first of its kind in Singapore and Asia. The dispute involved an individual who put up his Bored Ape Yacht Club NFT No. 2162 (claimed to be rare and valuable for being the only monkey wearing a hat and not injected with a mutant serum) as collateral for a loan to borrow cryptocurrencies from an unidentified person known only as “chefpierre.” Despite specifying in the loan documents that the lender would not foreclose on the NFT, when the plaintiff defaulted on the loan, Chefpierre transferred the NFT to his wallet and listed it for sale on OpenSea. In response to the application by the plaintiff, it is reported that the court has recognized BAYC No. 2162 as property, and issued a worldwide injunction against the unknown person from transferring it. The court is also said to have given permission to serve legal papers on Chefpierre via his social media and the Ethereum platform. Currently on OpenSea, BAYC No. 2162 is listed as owned by chefpierre, but also states that NFT has been “reported for suspicious activity.”

Another decision described as a landmark comes from China. An unknown user of a popular Chinese NFT marketplace called NFT China minted an NFT of an artwork of a cartoon tiger receiving a vaccine shot and sold it for 899 Yuan ($137). Instead of going after the unknown user, the copyright holder of the artwork sued BigVerse, the platform’s parent company, and the court in the Chinese city of Hanzhou reportedly held NFT China liable for violating the copyright owner’s “right to disseminate works through information networks” and failing to verify that the user had the copyright to the artwork. BigVerse was ordered to pay the copyright holder 4,000 Yuan ($611) and NFT China was also ordered to remove the NFT from circulation by “burning” it or sending it to an inaccessible address. Although the damages that awarded are minimal, the ruling may have the effect of requiring NFT marketplaces to implement more stringent vetting procedures in the future. It is notable that this result would likely not have been achieved in the United States, where the Digital Millennium Copyright Act operates to provide safe harbor immunity from claims on infringement of copyright to online service providers based on user genes rt content.

Last but not least, recent decisions in New York and English have been making rounds in the news circuit based on the courts allowing plaintiffs to serve unknown parties via an NFT airdrop. IN LCX AG v. John Do No. 1-25, the plaintiff, a virtual asset service provider, filed suit against unknown hackers for stealing nearly $8 million in virtual assets it held on the Ethereum blockchain. The court signed an order to preliminarily enjoin and temporarily restrain the defendants from transferring the assets, and also allow service of legal papers on the defendants by sending them to their Ethereum accounts via an NFT, with a hyperlink to a website publishing the order and everything. papers. Court records reflect that this attempted service has at least served to summon an attorney on behalf of the anonymous defendants, who now oppose the injunction, dispute the validity of the service, and ask to dismiss the case based on jurisdictional grounds, and oppose the motion to to force the disclosure of their identities.

The English decision in D’Aloia v. Persons Unknownn involves a fraud victim whose Tether and USD coins valued at 2.175 million were misappropriated by unknown defendants. Plaintiff opened an account with an online brokerage site purporting to be TD Ameritrade, transferred significant sums of crypto assets, and when he attempted to withdraw them, his account was blocked and induced to make additional deposits to release the assets without success. As a result, the claimant’s crypto assets wound up at several private addresses said to be controlled by crypto exchanges, which are the other six defendants. Similar Osbourne In the event, the English court found that the plaintiff’s case had merit and granted the injunction sought by the plaintiff against all but one of the defendants. And the court granted the claimant’s application to serve the unknown defendants by alternative means, namely by email and airdropping an NFT (with the legal papers) into the wallet of those behind the fraudulent website, which the court found had a “higher prospect that Those behind the tda-finan website will be notified.”

These cases illustrate the burgeoning development of NFT jurisprudence worldwide, indicating that not only are courts not hesitant to grant injunctions against unknown defendants, but are willing to adopt practical solutions and adapt to new technologies. Emphasis will be placed going forward to see how these and other future cases will shape this developing practice area.