UK Court Backs Suits to be Served as NFTs
- NFTs are used by most fraudsters for money laundering.
- Over $50 million have been stolen in NFT frauds from July 2021 to April 2022.
NFTs continue to be one of the most popular crypto assets and have a wide range of use cases. A recent ruling by a UK-based court means that NFTs now have a role in the legal system. Fabrizio D’Aloia, the creator of the Italian online gambling business, Microgame, has been given permission by the High Court of England and Wales to bring legal action against unnamed individuals using an NFT drop.
Fabrizio D’Aloia brought a case against Binance Holdings, Poloniex, gate.io, OKX, and Bitkub on allegations that someone was running a fraudulent clone online brokerage. The court presiding over the case authorized the airdropping of NFTs into wallets that had been stolen off of D’Aloia by unidentified people. D’Aloia claimed to have been tricked into depositing roughly 2.1 million USDT and 230,000 USDC into two wallets that later turned out to be fake.
The Judge’s Order also acknowledged that crypto exchanges, such as Binance and OKX, hold the missing crypto as trustees. These platforms are tasked with keeping a watchful eye, and ensuring the assets remain intact.
According to representatives of the law firm, Giambrone & Partners, which worked on the case, the ruling by the court is unique in many ways. It sets precedence enabling victims of fraud to seek compensation in situations that would have been difficult to obtain. The statement read,
This order is a noteworthy development in the area of service of court documents and a welcome example of a court embracing new technology. This judgment paves the way for other victims of cryptoasset fraud to pursue persons unknown who have misappropriated their cryptocurrency in situations where they otherwise would not be able to.
This ruling is also a positive start in the direction of stronger consumer protections and ethical behavior. The crypto industry has long been a safe spot for fraudsters due to the lack of proper regulation.
NFTs and Crypto Fraud
Demetri Bezaintes, an associate at Giambrone & Partners further expressed delight in the court’s decision, calling it a win for the blockchain space. In a statement shared in a blog post, the legal practitioner said using NFTs in its capacity has the potential to lead to more blockchain adoption. Demetri said,
I am confident that this latest judgment using NFT service has the potential to show the way to digital service over the blockchain, with all the benefits of immutability and authentication, becoming the usual practice in the future on legal matters related to the digital world. It is clear that this method of service has a far greater level of success over conventional means of service, such as post, in this sector.
While this ruling is a possible win for crypto enthusiasts, NFTs remain a tool for fraudsters. Multiple NFT-based scams have occurred since the year began. NFTs have also been used to launder funds according to the financial firm, Elliptic. Since 2017, NFT-based platforms have been used to launder about $7.4 million in criminal cash or 0.02 % of trading activity from recognized sources. According to Elliptic, between July 2021 and April 2022, NFTs worth more than $50.6 million were stolen as a result of fraud and theft.
NFTs are immutable digital assets that can be utilized to represent physical objects. Similar to rare baseball cards and collectible artwork, an NFT’s worth comes from its uniqueness. NFTs can be held as digital souvenirs or sold and exchanged for financial purposes.
With more regulation on the way, NFT scams and other forms of crypto fraud could be significantly reduced, giving crypto users an improved sense of safety.