Crypto-related litigation has increasingly begun to use non-fungible tokens (NFT) to serve subpoenas and other orders.
Trials involving scams or stolen cryptocurrencies face the difficulty of holding the defendant accountable. Therefore, court orders are more often taking the form of NFTs in such proceedings, allowing even an unknown defendant to be notified of the case’s discovery. Cointelegraph reports this, citing legal sources.
In November 2022, the United States District Court for the Southern District of Florida (S.D. Fla.) approved the plaintiff’s request to notify the defendant in a case involving the theft of more than $958,000 in crypto-assets using an NFT. The judge deemed this way to hold the defendant accountable “reasonably calculated” because their identity remained unknown and traditional means of contacting them weren’t possible.
According to Agustin Barbara, Managing Partner of The Crypto Lawyers, which handled the plaintiff’s case in that lawsuit, it’s “virtually impossible to identify bad actors” in crypto crimes. However, one can send court orders as NFTs to the cryptocurrency wallet connected to the crime. Barbara said the NFT format could be used in such proceedings to send notices of court action, copies of subpoenas, complaints, and other documents and orders.
Michael Bacina, Attorney at Piper Alderman, argued that sending court papers to the defendant’s wallet didn’t guarantee at all that the defendant would read them. In his opinion, such measures aren’t primarily intended to hold the defendant accountable, but to limit the activity of the wallet associated with the crime. The thing is that court NFT orders stamp the wallet address with a black mark. This means that all other wallet addresses that have made recent transactions with that address or will do so in the future are also considered suspicious.
NFT lawsuits were also applied in other jurisdictions. For instance, in June 2022, the Supreme Court of the United Kingdom approved a request from the law firm Giambrone & Partners to send documents to a defendant in the NFT format.
Recall that NFTs are gaining more and more legal aspects. In China, the court ruled that an NFT is a virtual property.