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Courts and Lawyers are Using NFTs to Summon Crypto Criminals: Report

Ruholamin Haqshanas

Published: October 26, 2022 8:01 pm

The anonymity of blockchain technology has made it possible for scammers to steal users’ funds anonymously, but it has not prevented claimants from serving those anonymous thieves. Using NFTs, claimants now serve court orders on anonymous hackers on the blockchain.

NFT Servings Find Momentum as Crypto Hacks Proliferate

After filing against a defendant, the claimant needs to serve the defendant usually by mailing paper documents to their address. If the physical address of the defendant is not known, the claimant can serve them through email, but they still need permission.

And in case there is actually no email, the claimant can serve the defendant using whatever route available, including blockchain. This is not that infrequent since the crypto world is loaded with instances of digital assets being stolen or transformed into another account without permission.

That’s the case of LCX AG v. John Doe Nos. 1-25, No. 154644/2022 (N.Y. Sup. Ct. June 2, 2022), the oldest and the first case where service by NFT was permitted. In the case, the claimant had to serve the defendant by 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 serve proceedings via NFTs in early July this year.

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 DeFi loan of $150,000 in March this year, a Singaporean Court has ruled that the order to freeze any potential sale of the BAYC NFT could be served via the blockchain given that defendant’s identity is unknown.

The defendant in the case, known only to use the alias “chefpierre” on social media platforms such as Twitter, foreclosed the loan after the claimant was unable to repay the loan in time. However, as part of the agreement, it was stipulated that the claimant would never relinquish ownership of the NFT, and if he was unable to repay the loan in time, an extension should be granted prior to foreclosure.

Justice Lee Seiu Kin, the judge in charge of the case, placed an injunction to block any sale and transfer of the NFT in question in May. 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 by NonFungible, NFT sales volume in USD has increased by around 30% over the past week to $13 million.

This article originally appeared on The Tokenist