The High Court in Singapore has decreed that an NFT is a property, not simply information on the blockchain. It also ruled that it retains the jurisdiction to hear trials of conflict about blockchain.
The Court Case
The claimant, Mr. Janesh Rajkumar, is a Singaporean who possessed an NFT from the Bored Ape Yacht Club (BAYC). He bought it from a Twitter user for 15.99 Ether.
Janesh had utilized the NFT as collateral for a loan to borrow crypto from someone on Twitter, “chefpierre.eth.” He borrowed a DeFi loan worth $150,000 and placed the $500,000 worth of NFT as collateral.
Incidentally, it wasn’t his first time. It was standard practice for him to borrow crypto while using NFTs as collateral.
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According to the court documents, the defendant —“chefpierre” — foreclosed the loan in a conflict over the debt payment. It was claimed that Janesh needed extra time to pay the loan and “chefpierre” agreed, then changed his mind later. The defendant then moved the NFT from an escrow wallet to a personal wallet, gaining full access.
Janesh later saw that his NFT had been listed for sale online. Enraged, he filed a suit and asked for an injunction to protect the NFT.
Singapore Court Rules in Favor of NFT
The judge in the case, Justice Lee Seiu Kin, placed an order to prevent any sale and transfer of the NFT. He said, “there had to be a court which had the jurisdiction to hear the dispute.”
Further adding, “if the Singapore courts did not hear the case, there was no other appropriate forum.” This was because the claimant was based in Singapore. “Where disputes may arise over digital assets sited in the blockchain, the Singapore Courts can take jurisdiction,” the judge affirmed. “Should a claimant be barred from seeking interim relief unless he can name the defendant? I think not.” This was about the pseudonym nature of blockchain — in this case, NFT — transactions.
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Judge Lee also ruled that NFTs have property traits and are not just code on the blockchain. “Blockchain gives the owner the ability to transfer the NFT to another party, which underscores the ‘right’ of the owner.”
Shaun Leong, the lawyer for the complainant, declared that the ruling had importance for the wider blockchain industry. “We now have a court of law … [send] a signal to NFT investors that their rights can be protected.”
The court ruling is monumental, not just for the claimant but for the world. This development sets a positive precedent for NFTs. It simply means that they are protectable via the law.
“If NFTs are recognized legal assets, then all valid contracts pertaining to them will also be recognized.” This was stated by Mark Teng, a director at a reputable law firm, That.Legal LLC. He added that the NFT space would flourish more now, with users knowing their digital assets recovered by law.