The Singapore High Court released a "huge decision" on Friday, confirming the court's authority to hear a case encompassing a non-fungible token amidst the borderless and decentralized existence of blockchain networks that host NFTs.
According to legal papers, the plaintiff used a Bored Ape Yacht Club as leverage for an Ethereum-based decentralized finance loan of US$150,000 in March of this year. At the time, the NFT was priced at $500,000.
The defendant, who goes by the online alias "chefpierre," later closed down on a loan in a disagreement over debt refinancing and transferred the NFT from an escrow wallet to a personal wallet.
Justice Lee Seiu Kin, the court's judge, issued an order in May to prevent any transfer or sale of the NFT in question - Bored Ape Yacht Club (BAYC) #2162 - and has since ruled that Singapore has jurisdiction over the case.
According to Shaun Leong, the plaintiff's lawyer, the choice has far-reaching implications for the blockchain space as a whole.
Although some supporters in the NFT, blockchain and cryptocurrency industries have contended against using centralized authorities to resolve differences, regulators and courts are struggling with ways to impose power in digital and seamless industries.
Amidst the borderless nature of blockchain, according to Leong, an associate on the International Arbitration & Litigation team at Singapore-based Withers KhattarWong LLP, the court decided it could take authority because the plaintiff was centered in Singapore.
Hong Qi Yu, CEO of Singapore-based cryptocurrency Tokenize Xchange, which functions the NFT marketplace Elemint, told Forkast via email that this "ground-breaking" choice sets an example for the industry and will promote the adoption.
According to Michael Bacina, a digital law expert and partner at the Australian law firm Piper Alderman, the case is important but still in its early stages.
Like other jurisdictions, Australian courts deal with a slew of cases involving crypto-asset disputes. According to Bacina, the advancements in the Singapore case may help inform future court decisions.
As courts progressively deal with this question, the United Kingdom Law Commission issued a consultation paper in July proposing a new category of property ownership to cover digital assets. The consultation will end on November 4, 2022.
Given that Chefpierre's identity is unknown, Justice Kin ruled that the order freezing any possible sale of the BAYC could be provided via the blockchain.
Lawyer Leong served the papers using messaging functions on the Ethereum blockchain, Discord, and Twitter.
This continues to follow a court decision in the United Kingdom allowing legal documents to be served as an NFT airlifted into a person's wallet in July.
The Singapore High Court also determined that digital assets are more than just information or code on the blockchain and have the property's characteristics, thus conferring the same rights on the owner as any other property.
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