You’ve Been Airdropped: Courts Approve New Method of Service | The Rodman Law Group, LLC

This summer, two courts – one in the US, the other in the UK – allowed service of legal documents by airdrop in separate NFT cases.

From in-game assets to a new form of event ticketing, the range of utilities and use cases for non-fungible tokens (“NFTs”) have only just begun to grow in recent years and appear as vast as the imagination. human.

Now, NFTs may also have legitimate use in the legal system as a form of service for lawsuits that are not served on the defendant by other means.

As blockchain technologies have advanced, scam techniques have also advanced to better steal crypto users. Fortunately, legal tools are also progressing in this direction, particularly in the area of ​​NFTs.

Two courts in the US and UK now allow the service of legal documents via NFT airdrop under certain conditions against such scammers who maintain anonymity.

The first court to allow service of court documents by airdrop was the New York State Supreme Court in early June 2022. This landmark decision follows a lawsuit filed by LCX AG (“LCX”), a cryptocurrency exchange that lost nearly $8 million due to a hack in January 2022.

The court allowed the plaintiff to serve a copy of the court order, including the complaint, on the unknown defendant by airdropping a “special purpose token” (“service token”). The token itself includes a hyperlink with access to the complaint and the court order.

Although the identity of the hacker(s) is currently unknown, LCX was able to track the stolen funds to two Ethereum wallets. The hyperlink provided in the service token also contains the ability to detect if the link has been opened to ensure that the complaint and order are seen by the respondent.

Due to LCX’s inability to serve its complaint through a traditional service method due to the anonymity of the hacker(s), the New York Supreme Court allowed service by airdropping the service token onto the wallets of hackers identified.

It is currently unclear whether other jurisdictions in the United States will allow NFT airdrop service of a service token, as New York now allows.

Rather than relying on traditional means of document service, the use of airdrop can handle the delivery of NFT or cryptographic pursuits to anonymous users.

That said, a UK court also upheld the service of legal documents by airdrop on a defendant of unknown identity in July 2022.

The UK court allowed Italian business owner Fabrizio D’Aloia to serve an unknown person with a service token on the person’s known wallet for a disputed sum of crypto funds.

Founder of an online gaming company called ‘Microgame’, D’Aloia’s dispute centers on around $2.33 million he deposited in two crypto wallets that were fake and operated by a scammer who ran a brokerage fraudulent online.

Giambrone & Partners LLP, the firm representing D’Aloia uploaded a Publish to social media, which clarifies that the authorization obtained by the High Court judge enabled proceedings to be initiated to obtain a possible worldwide freezing injunction to prosecute in the face of the unknown identity of the scammer.

Although the above cases are pending further action, the development of airdrop service licensing is an important step in bringing the courts of cryptocurrency’s complex relationship closer to traditional legal process. Broadly speaking, this international shift reflects the acclimatization of some courts to blockchain technologies as a way to better assist defrauded consumers in prosecuting unknown hackers and scammers with definitive wallets or wallets known to be the crook’s wallet.

If this were to extend to updating the delivery methods permitted by other jurisdictions that constitute a service (as directed by federal rules of civil procedure), procedures against scammers and anonymous hackers have better chances of moving towards an eventual resolution.

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