NFTS PROPERTY ENGLISH LAW
English Court declares that NFT are property
The English High Court has recognized the existence of an arguable case in which NFTs should be considered property under English law.
This implies that victims of NFT fraud have access to the same powerful patented cures as victims of bitcoin fraud.
In September 2021, Boss Beauties, a collection of NFT avatars that raises funds for mentoring development programs and scholarships for women, sent NFTs representing digital artwork to the creator of Women in Blockchain Talks (the plaintiff).
The NFTs had been taken from her wallet without her knowledge in January 2022.
The NFTs were then linked to two accounts on the peer-to-peer marketplace of NFT Ozone Networks Incorporated t/a Opensea (Opensea), controlled by unidentified persons (the first defendant).
The plaintiff filed an unannounced request for:
- a short-term technology patent injunction preventing dissipation of the NFTs in question;
- a disclosure order, known as a Bankers Trust Order, which required Opensea to provide information that would enable the insured to trace or identify those who controlled the portfolios into which the NFTs had been transferred.
Unknown parties held the NFTs in "constructive trust" for the claimant. In conclusion, when property was obtained by fraud, the fraudulent beneficiary receives a constructive trust that allows him or her to hold legal title to the property on behalf of the victim.
This conclusion is consistent with the English court's earlier statement that digital assets can be held in trust.
The use of strong remedies, such as disclosure orders against cryptocurrency exchanges that operate outside the United Kingdom, can be used to violate the level of anonymity provided to users of cryptocurrency wallets and make enforcement action against persons in possession of stolen assets easier.
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