Global law firm Withers has obtained a freezing injunction preventing the sale of an expensive non-fungible token (NFT), in what would be a legal first in a trade litigation context.
The law firm, acting on behalf of a wealthy NFT investor, this week obtained the order in the High Court of Singapore, preventing the sale of a rare Bored Ape Yacht Club NFT on the Ethereum blockchain.
Withers says the decision to protect an NFT in this way is the first in Singapore and Asia, and the first in the world in a purely commercial dispute.
An NFT is essentially a piece of unique data – in this case a Bored Ape – that relies on blockchain technology to establish verified ownership. You can read more about NFTs on the Legal Cheek Diary.
The Bored Apes – of which there are only 10,000 in the world – are a big hit among celebrities with money to burn, with owners including Madonna, Justin Bieber, Eminem, Jimmy Fallon and Paris Hilton. Last month Bored Ape’s floor price hit a record high of £350,000.
The monkey in question, BAYC no. was not fed with mutant serum”. Your guess is as good as ours.
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The dispute itself concerns a loan agreement between a Singaporean NFT investor (plaintiff) and a Metaverse personality (defendant).
As part of the deal, the investor transferred the rare Ape to an NFT escrow account to be held until the loan was fully repaid. When the investor was unable to repay the loan, the other party would have moved the NFT to their personal Ethereum wallet, before putting it up for sale.
With an injunction now preventing the sale, the investor seeks an order compelling the metaverse personality to accept repayment of the loan and return the Ape.
Commenting on the unusual business case, Withers KhattarWong partner Shaun Leong said:
“We are the first law firm in Singapore, and one of the first in the world, to successfully obtain a worldwide exclusive injunction to freeze a Bored Ape Yacht Club NFT sale on the blockchain against a Metaverse personality. This landmark decision is also significant because it recognizes that Singapore courts can exercise jurisdiction over assets located on the decentralized blockchain.
In a similar case, Lavinia Deborah Osbourne vs. (1) Persons Unknown (2) Ozone Networks Inc. trading as OpenseaThe UK court earlier this year issued an injunction against an NFT that it provisionally ruled was illegally obtained by hackers.