New York Court Approves Service Of TRO Via Non-Fungible Token
With approval from the New York Supreme Court, Miami attorneys with Holland & Knight’s asset recovery team recently served a defendant with a temporary restraining order in the form of a non-fungible token (“NFT”).
The underlying lawsuit is based on the unauthorized access to, and theft of, approximately $8 million worth of virtual assets on the Ethereum blockchain. The idea to serve the defendants via NFT emerged when the anonymous defendants allegedly attempted to tamper with their fraudulent transaction history that is visible on the blockchain. By serving the defendants via NFT 24 hours before filing the complaint, plaintiff’s counsel was able to preserve the transaction history reflecting millions of dollars of cryptocurrency.
Plaintiff filed an Order to Show Cause seeking a temporary restraining order against defendants, and the Court permitted plaintiff’s attorneys to serve a copy of the Order to Show Cause and supporting papers upon the person controlling the Address via a special-purpose Ethereum-based token airdropped into the Address. The Service Token contained a hyperlink to a website created by plaintiff’s counsel wherein they would publish the Order to Show Cause. The hyperlink also included a mechanism to track when a person clicks on it. The court found that such service “shall constitute good and sufficient service for the purposes of jurisdiction under NY law on the person or persons controlling the Address….” This decision is significant in that it sanctions a unique and novel approach to service of process in litigation involving the cutting-edge subjects of NFT/Cryptocurrency.
Thank you to Alexandra Deplas for her contribution to this post. Please contact Andrew Gibbs with any questions.