The London’s barristers club, Lincoln’s Inn
The dusty wigs of times gone by that roam the stuffy chancellery halls doth still play with most new things, like Non Fungible Tokens (NFTs) that are suddenly put to a service no one has quite thought of.
“The order was served on the digital wallet provider and ‘air-dropped’ into the wallet by way of NFT, the third time worldwide this has been used as a method of service.
Within a couple of weeks, the client received 100% of his BTC, which, together with costs, meant a recovery in the region of £1.85 million.”
So says Steven Murray, a solicitor with HCR Law, after describing a somewhat typical court process in regards to freezing of assets, in this case some stolen/scammed coins that had ended up on Huobi.
In law, a defendant needs to be served by the claimant. That is the defendant, in this case the thief, needs to be told by the claimant, the one that got his/her coins stolen, that they are filing a freezing injunction, giving the defendant the opportunity to defend himself to uphold the right to a fair trial.
That’s usually by mailing paper documents to the address of the defendant. Nowadays they can be e-mailed as well, but often you need permission (a good reason) to only e-mail them because people in general don’t see their e-mail as often as they see their mail.
In this case they did have an e-mail as well, but there are instances when there is actually no email, you only have a blockchain address.
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, and in this case it was only by NFT because they had nothing else on the Defendant, another thief in this case through hacking.
So this isn’t an NFT, is probably the first impression of any cryptonian because there’s no colorful jpegs here, no dancing apes, and no court document which is what we thought we would find.
But it is an NFT of course, a unique token, just a dreary, dull, lawyery NFT with grey all over.
In addition, instead of the court document/s being JPEGs that can even allow you to read it, this NFT is a link (highlighted) to a normal webpage where all the documents are found.
If we didn’t know we were looking at a court order NFT, and had actually received this out of the blue, it isn’t too clear we would have been able to make much sense of just what it is, and since we’re not in that situation we can’t say for sure, but we might have just dismissed it as some sort of spam or weird nonsense.
Which is why if we were doing this, we would have wanted to be sure that the NFT image does actually show something beyond the generic words NFT, and that something makes it clear this is a serious matter, a court matter, related to us specifically, and therefore we should click the link, or preferably we should have sufficient information to be able to google the parties that are addressing us and therefore establish the credibility and authenticity of the matter because just links are of course quite a dangerous thing in crypto.
So much so that we had to think twice or more to click this link ourself even though we were coming to it through actual lawyers directions, until the claimant gave it a decent level of legitimacy:
First time in history and important for Legal and Crypto Industry as a whole: a temporary restraining order (TRO) to a defendant had been served via NFT #Consensus2022
7/11 pic.twitter.com/70LeeE0mMO
— LCX (@lcx) June 7, 2022
Which means we’re both impressed and disappointed. Impressed because lawyers dropping NFTs to do their job is pretty cool, but not too impressed by the way it was done, showing they are lawyers and too new to the tech.
However, that’s a small point as a jpeg can very easily be added to this, with a more relevant question being whether the Defendant would ever even see this.
With these cases of proven hacks and thefts where there’s significant evidence, no one would really care but if this grows in usage, then naturally there may be more contestable cases where you do want the Defendant to see it because otherwise he might file to squash the order when he eventually learns of it, increasing costs and wasting time.
The interesting part here is that you can see just how much the address checks the NFTs. If it’s a blank address on OpenSea, then you’re just wasting your time, but still maybe he’ll get into NFTs, and so sending one is better than nothing if there’s no other way of communicating.
If however their OpenSea is very active, considering the global and mobile nature of crypto, an NFT may well be the quickest way to reach them.
In that instance, the strength of this method would be that you can prove service in an indisputable way because the judge himself can go to the address and see the NFT.
With mail, you need a certificate by a human and usually its professionals, but if the Defendant disputes service, it gets complicated because obviously humans can lie or make mistakes, professional or not.
Here there would be no room to lie, but whether the Defendant has actually seen it is something else and the only way you can move towards proving that, at least on balance, is if they traded any NFTs after yours is sent because obviously they would check the new NFT, and see the one you sent.
In this specific case of the first court service NFT, it is a blank address where NFTs are concerned, and so we have no reasonable way of having a good guess on whether the defendant has seen it or has not.
His assets have been frozen however and returned to the rightful owner, so obviously presumably he knows what has happened, and the NFT is better than nothing even in this instance because he or she might get into NFTs by claiming one of the new Reddit avatar NFTs, for example, and sees this court order.
Making all this a fairly interesting development because NFTs now have a new dimension as a communication medium.
The pseudo-anonymous nature on the other hand may make spam quite easy, which is why links shouldn’t be used really, especially when the court order can itself be the NFT.
But as first attempts, the legal system is clearly showing that there is recourse in crypto and that the law does still apply to it, especially in cases of theft, and the court system can still function to a reasonable extent in the crypto arena especially where there is a third party that can satisfy the order.
That includes Circe of Tether, thus any USDc or USDt assets as they are under centralized control, and therefore can be transferred like you can order a bank to transfer.
It also includes exchanges and other centralized custodians, with all of these being more traditional databases like banks rather than blockchain, and therefore can satisfy court orders in regards to ownership.
The legal system has also shown itself open to adapting, with it being two English courts and a New York court so far that have allowed such service.
And where crypto in general is concerned, as well as ethereum more specifically, this development may well show that the more reputable law firms might need to start developing some sort of eth address reputation, or some way of proving some work address is theirs by maybe linking it through their official site – linking here being stating this address belongs to us – so that if they send anything through it, then it can be established that it came from an actual law firm.
All of which basically means they need to get some eth, especially if they are going to serve clients in this area, something that in itself may well increase the adoption of ethereum further.
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