The Singapore High Court ruled on Friday affirming the court’s jurisdiction over a case in what some lawyers called a “huge decision”. Non-Fungible Token (NFT)despite the borderless and decentralized nature of the blockchain network that hosts the NFT.
According to court documents, the lawsuit involves a plaintiff who used Bored Ape Yacht Club NFTs as collateral for a US$150,000 Ethereum-based Decentralized Finance (DeFi) loan in March of this year. The NFT was worth $500,000 at the time.
The defendant, known only by his online pseudonym “chefpierre,” later foreclosed on loans in a debt refinancing dispute and moved NFTs from an escrow wallet to a personal wallet, according to court documents.
The judge in the case, Judge Lee Seiu Kin, issued an injunction in May blocking the sale and transfer of the NFTs in question – Bored Ape Yacht Club (BAYC) #2162 – and now has jurisdiction over the case. It ruled that the power resides in Singapore.
“If the Singapore court did not hear this case, there would be no other suitable forum. This was because the Bored Ape NFT existed as code stored on the Ethereum blockchain. Essentially, it is a distributed network of ledgers maintained by computers around the world.
Sean Leung, the plaintiff’s attorney, said the decision would have a major impact on the blockchain industry as a whole.
“For the first time in a purely commercial dispute, a court has been held… [send] It clearly demonstrates that NFT investors around the world have rights that they can protect. “ Forst.
Some proponents of the NFT, blockchain and cryptocurrency industries argue that they will not use centralized authorities to resolve disputes, but as the blockchain and Web3 industries grow and expand, regulation Authorities and courts are grappling with how to exercise power in a digital, borderless industry.
Mr Leong, partner in Singapore-based Withers KhattarWong LLP’s international arbitration and litigation team, said: Forst The court ruled that despite the borderless nature of blockchain, jurisdiction could be obtained because the plaintiff was based in Singapore.
Hong Qi Yu, CEO of Singapore-based cryptocurrency Tokenize Xchange, which operates NFT marketplace Elemint, said: Forst This “groundbreaking” decision will set a precedent for the NFT industry to drive adoption, the email says.
“NFTs are here to stay and NFT owners now enjoy full legal protection as purchasers and owners. This also helps validate NFT creators in creating a genuine asset class.” I will,” he writes.
Michael Bacina, a digital law expert and partner at Australian commercial law firm Piper Alderman, said the case was significant but still in the preliminary stages.
“As an interlocutory decision, the facts pointed out by the judge are not as strong a precedent as if both sides had had the opportunity to submit on the status of crypto assets,” he said. Forst on mail.
As in other jurisdictions, Australian courts are working on multiple cases involving disputes over crypto assets. Bacina said developments in the Singapore case could help inform other court decisions.
“If this case ratio (inference) is followed in other jurisdictions, it will have the same support in recognizing crypto assets as valuable and property in those jurisdictions,” he said.
The UK Law Commission released a consultative document in July proposing a new category of property rights covering digital assets as a court. address this questionThe consultation will end on November 4, 2022.
In another first-of-its-kind case in a Singapore court, Judge Kin ruled that an order freezing the potential sale of BAYC NFTs could be delivered via blockchain, given chefpierre’s identity is unknown. ruled that it is sexual.
Lawyer Leon uses the messaging capabilities of the Ethereum blockchain, as well as Discord and Twitter, to serve Chef Pierre on his thesis.
This follows a UK court granting permission to offer legal documents as NFTs. Airdrop to someone’s wallet in July.
“We are seeing how the law is catching up with technology in a unique and very interesting way,” said Leong.
The Singapore High Court also ruled that NFTs are not just information or code on the blockchain, they also have the attributes of property, giving their owners the same rights as any other property.
“[The] According to the court ruling, the nature of blockchain technology gives owners the exclusive ability to transfer their NFTs to another party, emphasizing the owner’s “rights.”
“It’s a great decision,” Leon said, adding, “Despite the fact that digital assets are on a borderless blockchain, it brings some order in the right circumstances and shows that there are courts that can apply legality.” there is,” he said. Private transactions people make on Web 3.0. “
“And I think it’s a great foundation,” he added.