According to crypto lawyers, non-fungible tokens (NFTs) are becoming an increasingly popular solution to serve those accused of blockchain-based crimes that would otherwise be unattainable.
In the past year, there has been an increase in NFT litigation in cases where those accused of blockchain crimes have been unreachable by traditional means of communication.
In November 2022, the United States District Court for the Southern District of Florida granted US law firm The Crypto Lawyers its request to have its client serve the defendant through NFT.
While the defendant’s identity was unknown, the plaintiff accused the defendant of stealing approximately $958,648.41 worth of cryptocurrency.
After the plaintiff submitted to the court an affidavit from a cryptocurrency investigator confirming the stolen cryptocurrency transactions, the judge accepted a request to serve that defendant via NFT, as it was deemed a “reasonably calculated” way to give notice.
Agustin Barbara, managing partner of The Crypto Lawyers, told Cointelegraph that service to the defendant through NFTs is a powerful tool for blockchain crime, where it is “virtually impossible to identify bad actors.”
Barbara explained that invoking an unknown identity via NFT is done by transferring the NFT to the defendant’s blockchain wallet address where it was stolen assets are held.
He noted that this method is a way to reach the accused when other traditional methods such as email or post are not viable due to unknown identity.
Barbara explained that the content of an NFT court notice typically includes a notice of legal action with the language of the summons, a hyperlink to a designated web page containing the notice, and copies of the summons, complaint, and all pleadings and orders in the action.
Michael Bacina, a digital asset lawyer at Australian law firm Piper Alderman, said that while “the wallet may not be used by the defendant” and therefore the subpoena notice may not reach the defendant’s knowledge, it can drastically limit activity on wallets and other wallets , who have recently interacted with him.
Bacina suggested that it blackmarks the wallet address, meaning that all other wallet addresses that have made recent transactions with that address could be considered suspicious and affect their activity. He noted:
Businesses may not want to accept transactions where a wallet is too close to a wallet that is accused of being involved in a lawsuit.
Bacina added that the advantage of the “open nature of public blockchains” means they are easy to see if a wallet is usedand it turned out to be a good way to see if the NFT feed was potentially seen.
Further injunctions were delivered via NFT in 2022.
An an international law firm issued a court order through NFT in June 2022 between when the asset recovery team brought the NFT to the wallet address and $1.3 million USD (USDC) frozen on the chain.
That same month, UK law firm Giambrone & Partners announced it had become the first law firm in the UK and Europe to be granted permission by a High Court judge to serve document proceedings via NFT.