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The Legal Materialisation of NFTs

It is no secret that the interest surrounding Non-Fungible Tokens (NFTs) and cryptocurrencies in general has seen a rapid development in the recent years, with statistics claiming as high as 879% increase in the prices of blockchain-based virtual real estate. Signalling that a shift has been in the works, forcing and expecting the inevitable adaption of the law accordingly.

Perhaps the most pivotal development of the legal establishment of NFTs is the recent judgment given in the Enlgish case Lavinia Deborah Osbourne v Persons Unknown; Ozone Networks Inc [2022] EWCH 1021. Its significance lies in the fact that it recognised NFTs as property, which consequently allows for many different legal mechanisms to be available for the purposes of, inter alia, retrieving them.

In Osbourne, the claimant sought to retrieve digital works of art in the form of NFTs which were stolen from her digital wallet. She was able to track the stolen NFTs to a marketplace based in the United States and she therefore sought an injunction in order to deprive their alienation. In order to achieve that however, the Court found it appropriate to also grant a disclosure order which essentially aimed to enable the claimant to obtain information in regard to the location of the NFTs.

The Court, in alignment with a series of agreeing precedents, decided that the Courts of the UK did indeed have jurisdiction to hear the case since the residence of the claimant was enough to establish the necessary jurisdiction. Provided, of course that the information that would have been obtained pursuant to the aforementioned order, would only extend to access the necessary data to locate the NFTs.

This case is a catalyst for the reason that it encompasses many different legal angles which were never dealt with before in respect to NFTs. For example, the Court had to examine the existence of UK Courts’ jurisdiction as a preliminary issue which is a matter of importance to the business world and to the general public and to anyone who trades or deals with NFTs and cryptocurrency in general, because in effect, it broadens the scope of a Court’s jurisdiction for the purposes of retrieving or locating stolen NFTs.  It is at the very least, a revolutionary development which if necessary, grants any person, legal or natural, the right to claim their NFTs the same way they would claim their rest movable or immovable property.

What is also of great importance is the fact that in its judgment of awarding such an injunction, the Court in effect, recognised and highlighted that in such cases, damages would not be an adequate remedy for a claimant. Therefore, by granting such an injunction, the Court mitigated the high risk of the NFTs disappearing through a number of complex and swift transfers and allowed the claimant, to retrieve them, thus recognising the unique value of NFTs for a claimant.