On 13.05.2022, a Singaporean individual won a court injunction to stop any sale and transfer of ownership over a non-fungible token (NFT) that was previously owned by him. This marked the first time in Asia whereby a court of law has protected an NFT.
What are NFTs?
For those of us boomers who are still asking ourselves the same question “What are NFTs?”, simply put, NFTs are tokens that exist on blockchains. More commonly, NFTs are used to represents assets, be it physical or digital, such as music, videos and even art pieces.
So what happened?
According to news reports, the Singaporean High Court granted an injunction to protect a Bored Ape Yacht Club (“BAYC”) NFT, which a Singaporean man by the name of Janesh Rajkumar, was seeking to repossess from an online persona by the name of “chefpierre”.
Initially, Mr. Janesh (the “Plaintiff”) sought to repossess the NFT, as he had previously used the same as collateral for a loan from “chefpierre”. The Plaintiff had previously borrowed and repaid any previous loans that he obtained from other cryptocurrency lenders.
However, this time around, the Plaintiff was unable to repay the loan in time, which led to him seeking an extension of time from “chefpierre”. “chefpierre” agreed to refinance the loan but subsequently refused to lend the sums to the Plaintiff before foreclosing the BAYC NFT. ”chefpierre” has since listed the BAYC NFT for sale on OpenSea.
The Plaintiff then brought an action against the Defendant on the basis that the Defendant’s actions was a clear breach of the terms in the loan agreement whereby he is seeking reliefs such as an order to compel the Defendant to accept his repayment of the loan.
The Freezing Injunction
The Singaporean High Court, having heard the submissions from the Plaintiff’s counsel, granted a worldwide freezing injunction to prevent the sale of the BAYC NFT pending the outcome of the suit. It must be reminded that till now, the whereabouts and identity of “chefpierre” remain unknown.
How does it affect us in Malaysia?
Well although the case is still ongoing, this marks the first judicial ruling in Asia that recognises NFTs as a legal property and that there are certain rights that accompany such ownership. This is in line with the English High Court case of Lavinia Deborah Osbourne v (1) Persons Unknown and another, which held in March 2022 that NFTs are recognised as legal property.
As Malaysia is part of the common jurisdiction, the abovementioned cases in Singapore and the UK is most definitely bound to be persuasive precedent if and when such an issue arises in our beloved country. In this day and age whereby people are concern with their digital assets portfolio, it is sure to provide them with a breath of relief.
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