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NFT collectables Regulation

May 19, 2022 at 08:00 am

An unprecedented precedent! – The UK Web3 community celebrated an important legal decision in May 2022. The High Court of Justice in London ruled that non-fungible tokens (NFTs) represent “private property”. However, according to the court ruling, this private property status does not extend to the actual underlying content that an NFT may represent . While this is not really a revolution, it will certainly help the industry to fight against fraud.

FROM NFT THEFT TO PRIVATE PROPERTY STATUS

In February 2022, two digital works are stolen from the Boss Beauties collection. These NFTs involved a number of utility points. They allowed, for example, access to exclusive events, free books and other benefits. The stolen tokens later appear on the OpenSea Marketplace.

The case ended up in court in March. On April 29, 2022, The Art Newspaper reported on the UK High Court's decision. Indeed, judges have recognized NFTs as property protected by law . The court also issued an injunction to freeze the assets on the accounts of Ozone Networks (the host of OpenSea). The court also forced OpenSea to disclose information about the two account holders in possession of the stolen NFTs.

As the identity of the holders of the wallets is uncertain, the injunction targets “unknown persons”. Law firm Stephenson Law called the freeze order a "pretty drastic remedy" , describing it as a "nuclear weapon" of the law. Racheal Muldoon, the lawyer in the case, stressed the "utmost importance" of the decision. According to the latter, it "removes any uncertainty that NFTs are property in themselves, distinct from the thing they represent, under the law of England and Wales" .

“If you have a token, you have a token. But not necessarily rights to anything else. »Juliet Moringiello, professor at Widener University Commonwealth Law School

NFTs already enjoy proprietary status through the US Internal Revenue Service. However, the difference between a token and its underlying asset creates a legal vacuum in both the UK and the US.

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AN UNPRECEDENTED PRECEDENT FOR NFTS

"The underlying property or asset that the NFT represents, whether a work of art or other copyrighted material, is always governed in the UK by the same copyright laws as in the United States. This decision does not help to clarify this distinction. »Tom Graham, CEO and Co-Founder of The Web3 Company Metaphysic.ai

For Tom Graham, this decision still created an “interesting precedent” because the court issued an injunction order to OpenSea. This is important in terms of court intervention and the granting of an injunction during an NFT theft.

“It is now clear that NFTs are governed by the same UK property laws that govern all other property. This sets a big precedent for people investing in NFTs. The legal system, at least in the UK, will protect their property rights. »Tom Graham, CEO and Co-Founder of The Web3 Company Metaphysic.ai

Establishing a legal precedent that confirms what most already believed to be the case could give more comfort to NFT platforms . Indeed, they can now legally require the freezing of the accounts of malicious actors.

“It's no big surprise that NFTs are recognized as private or personal property. You can buy, sell, or trade NFTs, which basically indicates that they are personal property. It would have been more shocking if the court had ruled that the NFTs were not personal property. »Anna Trinh, chief compliance officer at digital finance firm Aquanow

If owning a nude Madonna NFT meant her hodler owned the diva, it would no doubt create some controversy. However, the artist has created a collection of 3 NFTs for a good cause.

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Lipucciu

Fallen in love since 2017, I am passionate about blockchain and cryptocurrencies. Eternal curious, I constantly study this futuristic ecosystem and take great pleasure in sharing my knowledge and fascinating discoveries.

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