How To Protect Your NFTs ' Singapore Court Grants Landmark Injunction Over NFT

• Published date: 15 November 2022
• Subject Matter: Technology, Fin Tech
• Law Firm: Rajah & Tann
• Author: Mr Danny Ong, Jansen Chow, Yam Wern-Jhien, Rajesh Sreenivasan and Steve Tan

Introduction

The age of the crypto economy has brought about a marked shift in what the market ascribes value to. One of the more prominent examples of this is the non-fungible token ("NFT"). Once a niche investment, NFTs are now an increasingly ubiquitous digital asset. But as with all changes in technology, questions arise as to whether the existing laws are capable of accommodating its unique features - in particular, whether the law affords effective protection over ownership of NFTs.

In Janesh s/o Rajkumar v Unknown Person [2022] SGHC 264, the Singapore High Court issued a landmark decision granting an injunction over a Bored Ape NFT. In reaching its decision, the Court considered a slew of key issues - Do NFTs give rise to proprietary rights? Can an injunction be granted against a person known only by their pseudonym, and how should summons be served on such persons? When does the Court have jurisdiction over the matter?

The Court recognised that NFTs are capable of giving rise to proprietary rights which can be protected by an injunction. The Court chose to grant the requested injunction, finding that the NFT was sufficiently unique such that damages would not be adequate compensation for its loss.

The Court allowed the application despite the fact that the Claimant only knew the Defendant by his online handle, "chefpierre.eth". The Court further demonstrated the adaptability of its processes by allowing the summons to be served via the Defendant's Twitter, Discord, and cryptocurrency wallet address.

This decision follows the holding of the Singapore High Court in CLM v CLN and ors [2022] SGHC 46, in which the Singapore Court granted the first reported freezing injunction against "persons unknown" in Singapore for S$9.6 million worth of cryptocurrency assets. The Plaintiff in that case was successfully represented by our Fraud, Asset Recovery and Investigations team, led by Danny Ong and Jansen Chow of Rajah & Tann Singapore LLP. For more information, please see our earlier Legal Update on the decision here.

Brief Facts

The Claimant was the owner of an NFT from the popular Bored Ape Yacht Club collection of NFTs ("Bored Ape NFT"). He was a regular user on NFTfi, which is a community platform functioning as an NFT-collateralised cryptocurrency lending marketplace. He began dealing with the Defendant, whom he knew only by the pseudonym "chefpierre.eth".

The Claimant put up the Bored Ape NFT as collateral for a loan from the Defendant, who subsequently...