UK Court Recognizes NFTs as ‘Private Property’

In early May, the UK Web3 community celebrated an important legal precedent. The London High Court, most similar to the US Supreme Court, ruled that Nonfungible Token (NFT) means “reason”. However, there are caveats. In the court’s ruling, this private property status does not extend to the actual underlying content represented by the NFT. Cointelegraph reached out to legal experts to understand what this decision could change in the UK legal environment.

boss beauty theft

February 2022 Lavinia D. Osbourne, founder of Women in Blockchain Talks, said: wrote Two digital artworks were stolen from Boss Beauties on Twitter. This piece is a privileged women’s collection of 10,000 NFT created by “Gen Z changemakers” and featured on the New York Stock Exchange.

The tokens come with several utility points such as access to exclusive events, free books and license fees. Osbourne claimed that pieces stolen from the MetaMask wallet later appeared on the OpenSea marketplace. She tracked down NFTs with the help of security and intelligence firm Mitmark.

The matter was brought to court in March, and on April 29, the Art Newspaper reported a ruling by British High Court judges recognizing the NFT as property protected by law. The court also issued an order to freeze the assets of the Ozone Networks (hosted OpenSea) accounts, which forced OpenSea to disclose information about the two account holders in possession of the stolen NFTs. After some time OpenSea stopped selling these NFTs — Boss Beauties number 680 And 691.

A restraining order has been issued against an ‘unknown person’ because the identity of the holder of the wallet is uncertain. In commenting on the decision, the Stevenson Law firm said: called A freeze order is a “very harsh (ie outdated and harsh) remedy” described as “nuclear weapons” in the law.

By court order, Osbourne victoriously declared:

“Women in Blockchain Talks was established to provide the opportunities that blockchain offers to anyone, regardless of age, gender, nationality or background. We hope this practice will help make the blockchain space a safer place and encourage more people to interact with interesting and meaningful assets like NFTs.”

Tokens and Assets

Attorney in the case, Racheal Muldoon, said: highlighted “The most important meaning” of the ruling, she said, “remove the uncertainty that the NFT is a property separate from what the NFT represents under English and Wales law”, she said. But it is the aforementioned details that have left other experts skeptical of the court’s groundbreaking significance.

NFTs already enjoy asset status with the US Internal Revenue Service, but the declared difference between tokens and underlying assets does little to fill the current legislative void in the UK and US. “So if you have a token, you have a token. But it’s not necessarily a right to something else,” said Juliet Moringiello, a professor at Widener University Commonwealth Law Schoo. famous Artnet News.

Emily Gould, Assistant Professor, Institute of Art and Law reminded In her opinion on the case, over the past few years, UK court decisions, regulatory developments and government research are increasingly consistent in classifying crypto assets as assets. She particularly pointed out 2019. AA vs. Unknown and “Legal Statements on Crypto Assets and Smart Contracts” reportIn the same year, it was presented by the UK competent task force of the LawTech-provided panel.

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Tom Graham, UK-based CEO and Web3 company, told Cointelegraph. “This decision doesn’t help clarify that distinction.”

But for Graham, the ruling still set an “interesting precedent” because the court had placed an injunction on OpenSea. This is important as the courts intervene to provide injunctive relief if the NFT is stolen. He added:

“It is now clear that the NFT is subject to the same property laws in the UK governing all other property. That the court system will protect property rights, at least in the UK, sets a good precedent for those who invest in NFTs.”

Anna Trinh, chief compliance officer at digital finance firm Aquanow, told Cointelegraph that while the ruling is not revolutionary, it is not without “executive importance.” Establishing a legal precedent confirming what is most already believed to be true would give NFT platforms more comfort in demanding that the accounts of malicious actors be frozen. Trinh said:

“I don’t think it’s surprising that NFTs are recognized as private or personal property. You can buy, sell or trade NFTs. This indicates that it is essentially a personal property according to the first principle. It would have been more shocking if the court had ruled that the NFT was not private property.”

Trinh does not believe that existing legal protections for underlying assets are problematic. Since this depends on the contract details at the time of purchase, the contract law and intellectual property law apply depending on the nature of the asset. In Trinh’s opinion, there are more pressing legal issues that regulators need to pay attention to, such as the rights of producers.

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