The High Court has made rulings in a March 2022 crypto-fraud case which confirm that non-fungible tokens (NFTs) are to be treated as legal property under English law.
Lavinia Deborah Osbourne v. (1) Persons Unknown and (2) Ozone Networks, Inc. provides welcome confirmation that evolving legal remedies are available to NFT fraud victims who can satisfy the jurisdictional requirements to gain access to the English courts.
Lavinia Osbourne describes herself as a ‘blockchain, fintech and welltech specialist, consultant, and thought leader’, and is the founder of Women in Blockchain Talks, a networking and educational platform.
In January 2022, unknown perpetrators misappropriated two Boss Beauties NFTs from Ms Osbourne’s Metamask wallet, and subsequently sold them on the Opensea NFT trading platform (operated by a U.S. based company: Ozone Networks, Inc.).
At the time of writing, Boss Beauties are trading at a floor price of less than 1 Ether (approx. $2,800).
Blockchain analytics evidence was gathered in relation to the fraudulent transactions, which formed the basis of an application for interim remedies to the High Court in London.
At two hearings in March 2022, the court made orders preventing the unknown persons who misappropriated the NFTs from dealing with them, requiring Opensea to provide information about two accounts through which the NFTs were sold, and prohibiting the platform from listing them for further re-sale.
Bankers Trust orders, which require a financial institution to provide customer information from the KYC information it is required to collect, are an effective tool in crypto fraud cases. We have written about Bankers Trust orders in a separate article here.
NFTs as property
NFTs are pieces of code, most commonly written in the ERC-721 token standard on the Ethereum blockchain. They generally represent real-world assets such as works of art. The most expensive NFTs sold to date have achieved sums in excess of $90 million.
Interim remedies of the English courts such as proprietary freezing injunctions, Bankers Trust orders and Norwich Pharmacal orders are a precursor to litigation for the recovery of assets and other monetary losses, and are intended to protect the interests of the victims of civil fraud by preventing assets from being dissipated or otherwise dealt with.
Disclaimer: The contents of this article do not constitute legal advice. No warrant or guarantee is given as to the quality, accuracy or completeness of the information published in this article.