Singapore High Court grants injunction in respect of an NFT against an anonymous party

2022 has been somewhat of a rollercoaster year for the crypto - and particularly the NFT - markets. However amongst the market turmoil there were moments of legal clarity. A key development was the English and Singapore High Courts' indication that NFTs are legal property capable of being protected by freezing injunctions. The cases also served as examples of how anonymous parties can be the subject of such injunctions – a key development in the digital assets space.

NFTs as property 

As we previously wrote, the English High Court in Osbourne v Persons Unknown & Anor strongly indicated that English courts are open to treating NFTs as property under English law.

Shortly thereafter, in Janesh s/o Rajkumar v Unknown Person (“Chefpierre"), the Singapore High Court granted a proprietary injunction in respect of a “Bored Ape Yacht Club NFT, noting that NFTs bear the hallmarks of legal property, including being definable, identifiable by third parties and having a degree of permanence.

The Bored Ape NFT case

The Singapore case concerned the “Bored Ape Yacht Club ID #2162” NFT, purchased by the claimant on OpenSea, a major NFT marketplace. The claimant regularly entered into loan transactions on NFTfi, a cryptocurrency lending marketplace. He would often use the Bored Ape NFT as collateral.

The claimant entered into several loan agreements with the defendant, known only as “chefpierre.eth”. Under one agreement, the claimant requested an extension of time for repayment. “chefpierre.eth” agreed, but later changed his mind and foreclosed on the Bored Ape NFT, which was then transferred into his cryptocurrency wallet.

The claimant made an urgent application for a proprietary injunction to stop the defendant from dealing with the Bored Ape NFT in any way.

Injunctions against anonymous parties 

This case also makes clear that injunctions can be granted against anonymous parties.

As to whether the Court has jurisdiction against an anonymous person, the Court found that, despite the decentralised nature of blockchains posing difficulties to jurisdiction, there must be a court which has jurisdiction. Given the claimant was located in Singapore, and carried on his business in Singapore, the Singapore Court had jurisdiction.

In taking jurisdiction, the Court granted the claimant’s application to serve legal papers on “chefpierre.eth” through his Twitter and Discord messaging accounts, and through the messaging function of his cryptocurrency wallet.

Key takeaways

This is the latest instalment in a series of Singapore and English judgments finding various forms of digital assets to be property and echoes earlier decisions relating to cryptocurrencies in the cases of AA v Persons Unknown and CLM v CLN. It will be interesting to see how the court applies its reasoning to the ever-increasing forms of digital assets, such as purpose-bound digital money and virtual property in the metaverse.

The confirmation that injunctions can be granted against anonymous persons is also significant in a digital age where real-world identities are often unknown.  However, enforcement remains a challenge as an anonymous defendant might have little incentive to comply.  It may be that the effectiveness of such orders would be best achieved by compelling the relevant third-party platforms to suspend the defendant’s accounts or restrict his activity, similar to freezing injunctions requiring banks to block a defendant’s accounts. 

In this case, the Court permitted the claimant to share the injunction papers with “certain entities” (presumably NFT exchanges) for the purposes of enforcement. NFT exchanges therefore risk breaching the court order if they facilitate trades in the Bored Ape NFT. In the Osbourne v Persons Unknown & Anor case, the crypto platform was a named defendant against whom a disclosure order was made, requiring the platform to provide information to enable the NFTs to be traced.

See our further analysis of the Bored Ape NFT case for a more in-depth consideration of the issues raised.