Service Of Process Via NFT Airdrop? So Cool! But I Have Questions'

Published date21 July 2022
Subject MatterLitigation, Mediation & Arbitration, Technology, Trials & Appeals & Compensation, Fin Tech
Law FirmFrankfurt Kurnit Klein & Selz
AuthorMr Jeremy Goldman

I've now seen two instances of courts authorizing service of legal process though the delivery'or "airdropping"'of non-fungible tokens (NFTs) to the Ethereum addresses of pseudonymous defendants, with the NFTs linking to the court papers.

In early June, law firm Holland & Knight, with the blessing of the New York Supreme Court, served a temporary restraining order on the Ethereum address of an anonymous hacker using a so-called "service NFT." Later that month, a UK court approved the same approach, authorizing the service of a summons and complaint on a stolen Ethereum address.

I applaud the lawyers for their ingenuity and the judges for their willingness to embrace new technology. And I understand the need for alternative service in the world of blockchain, where there's no shortage of lying, cheating and stealing, but identities are represented not by people with physical addresses, but by aliases and avatars with cryptographic wallet addresses. So the idea of NFT service is super cool.

Yet, I have serious questions.

First, does service via NFT comport with due process?

An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.

Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314-15 (1950).

Is airdropping an NFT with a link to legal papers "reasonably calculated" to notify the owner of the public address about the action?

Keir Finlow-Bates (@bcgandalf), one of my favorite blockchain technologists, thinks not. Among many other technical problems, @bcgandalf correctly observes that "a wallet is not an address." Rather, "a wallet contains addresses, and NFTs are minted to an address, not a wallet." A single wallet may have dozens of addresses under its umbrella, and folks typically don't check their addresses with any kind of regularity for newly airdropped NFTs. No pop-up notification appears when a new NFT arrives.

Even if you checked your various addresses periodically for unexpected arrivals (again, this is not really a thing), the platforms that most people use to view their NFTs, like OpenSea, don't always show you all your NFTs because they have spam filters and don't do a perfect job scraping the blockchain for signs of your NFTs. Because NFTs are not actually stored in a wallet or in an address'they are...

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