The crypto world is yet to be regulated. The law is still torn about how to classify digital assets. Are they securities, commodities, or intellectual property? However, the recent hacking case has put digital assets in a place recognized by legal authorities. For the first time ever, an American federal court has allowed a defendant to be served via NFT court papers.
Plaintiff Wins Court Via NFT Court Papers
A plaintiff by the name of Rangan Bandyopadhyay has sued anonymous hackers and issued a formal notice via NFT court papers. The hackers reportedly stole around $1 million worth of USDT (Tether) from the plaintiff’s Coinbase wallet, according to Judge Beth Bloom of the United States District Court Southern District of Florida. Although Bandyopadhyay sued the hackers back in December 2021, the judge ruled in his favor just recently this year.
Wallet addresses on the blockchain don’t give the hackers personal information to know where they reside or who they are. However, the blockchain provides the necessary proof that indeed the funds were moved from Bandyopadhyay’s wallet, and that’s why Judge Bloom permitted the case via NFT court papers, which are the hackers’ on-chain addresses. This is huge because it marks the first time ever that a federal court accepted blockchain-based proof.
This step in NFT legislation marks a new era for legal systems that are trying to catch up with the crypto and Web3 wave. Although it doesn’t add much to the legalization of NFTs themselves, being acknowledged as a tool in federal court might tell us that federal organizations believe in the immutability of the blockchain.
But, Is It Easy to Get Away With Crypto Funds?
Many hackers resort to the blockchain for their illicit activities in hopes that their wallet address will be enough cover for their identity. This is false, however. Many governments have reached out to many exchange platforms to map each address to its owner.
“These fraudsters are usually outfits outside of the United States, and everything that they tell the victim is a lie about their own identity. But what they can’t hide is the transfer of the funds via the blockchain. The ledger is there and they can’t hide.” Fernando Bobadilla—the attorney who successfully represented Bandyopadhyay in last week’s case—told Decrypt.
The attorney is very confident about the turnout of this case. He claimed that he and his client would be able to trace back the funds to the hackers. And thus, recover at least a portion of the stolen funds. “Us knowing where the crypto is sitting makes the entire collection strategy viable,” he further claimed.
NFT Legal Stance
NFTs and cryptocurrencies in general still await court rulings on their classification. If deemed securities, NFTs would fall under the Commodity Exchange Act. Which will impose strict disclosure requirements, trading guidelines, and marketing standards. However, governments are still torn about these digital assets.
Recently, Biden proposed a 30% tax on all crypto firms that operate mining machines in order to reduce the general consumption of energy. However, you have countries like Romania, where the government is contemplating storing their legal documents on the blockchain. And now, we are witnessing NFT court papers being used as evidence in a federal case.
In short, things are all over the place regarding NFTs and where they stand. However, 2023 might be the year where we’ll witness Web3 being put under government regulation. Until then, all we have to do is wait.