UK court recognizes NFTs as ‘private property’ – now what?
In early May, the UK Web3 community celebrated an important precedent – the High Court of Justice in London, which is the closest thing to the Supreme Court in the United States, has ruled that non-fungible tokens (NFT) constitute “private property”. There is one caveat, however: In the court’s decision, this private property status does not extend to the actual underlying content that NFT represents. Cointelegraph reached out to legal experts to understand what this decision could potentially change in the UK legal landscape.
The theft of Boss Beauties
In February 2022, Lavinia D. Osbourne, founder of Women in Blockchain Talks, wrote on Twitter that two digital works were stolen by Boss Beauties – a 10,000 NFT collection of empowered women created by “Gen Z Changemakers” and listed on the New York Stock Exchange.
The tokens came with a number of useful items such as: B. Access to exclusive events, free books and royalties. Osbourne claimed that the pieces stolen from her MetaMask wallet later turned up on the OpenSea market. She tracked down the NFTs with the help of the security and intelligence firm Mitmark.
The matter was brought to court in March and on April 29, The Art Newspaper reported on the UK High Court’s ruling in which judges recognized NFTs as proprietary property. In addition, the court issued an injunction to freeze the assets on the accounts of Ozone Networks (the host of OpenSea) and forced OpenSea to disclose information about the two account holders holding the stolen NFTs. Shortly thereafter, OpenSea stopped selling these NFTs – Boss Beauties number 680 and 691.
As the identities of the wallet holders remain uncertain, the injunction against “unknown persons” was issued. In commenting on the decision, the Stevenson law firm called an injunction a “rather draconian (ie, old-fashioned and harsh) tool” and described it as a “nuclear weapon” of the law.
After the court order, Osbourne victoriously proclaimed:
“Women in Blockchain Talks was founded to bring the power of blockchain to everyone, regardless of age, gender, nationality or background. This case will hopefully help make the blockchain space more secure and encourage more people to interact with exciting and meaningful assets like NFTs.”
The token and the asset
Racheal Muldoon, the case’s attorney, highlighted “the utmost importance” of the verdict, which she said “removes any uncertainty that NFTs are property in and of themselves that is distinct from what they represent, post-date Law of England and Wales.” But it was precisely the detail mentioned that made other experts skeptical about the landmark importance of the court ruling.
While NFTs already enjoy property status as they are treated by the US Internal Revenue Service, the proclaimed difference between the token and the underlying asset does little to fill the current legal vacuum in the UK and US. “So if you have a token, you have a token. But not necessarily any rights to anything else,” Juliet Moringiello, a professor at Widener University Commonwealth Law School, told Artnet News.
As Deputy Director of the Institute for Arts and Law, Emily Gould, recalled in her comment on the case, UK court decisions, regulatory developments and government studies have been increasingly consistent in categorizing crypto assets as property in recent years. She referred in particular to the AA v. Persons Unknown of 2019 and the report “Legal Statement on Cryptoassets and Smart Contracts” submitted by the UK Jurisdiction Taskforce of the LawTech Delivery Panel in the same year.
“The underlying property or asset that the NFT represents, be it the artwork or other copyrighted material, is still subject to the same copyright laws in the UK as it is in the United States,” Tom Graham, CEO and co-founder of in the UK Web3 company Metaphysic.ai, Cointelegraph explained. “This decision does nothing to clarify that distinction.”
But for Graham, the ruling still set an “interesting precedent” because the court had granted OpenSea an injunction. This is important in light of courts stepping in and seeking injunctive relief when NFTs are stolen. He added:
“It is now clear that NFTs are subject to the same property laws in the UK as any other property rights. It sets great precedent for people investing in NFTs that the court system, at least in the UK, protects their property rights.”
Speaking to Cointelegraph, Anna Trinh, chief compliance officer of digital finance company Aquanow, noted that the ruling was not revolutionary but was not without “executive significance.” Setting a precedent confirming what most already believed to be true could give NFT platforms more comfort when it comes to demanding the accounts of malicious actors be frozen. trin said:
“I don’t think the recognition of NFTs as private or personal property comes as much of a surprise. You can buy, sell, or trade NFTs, which essentially suggests that they are fundamentally personal property. It would have been more shocking if the court found that NFTs are not personal property.”
Trinh does not see the existing legal protections for the underlying assets as problematic. These are governed by the terms of the contract at the time of purchase, so depending on the nature of the asset, contract law and intellectual property law would apply. Trinh says there are more pressing legal issues that regulators could focus on, such as copyrights.
https://cointelegraph.com/news/uk-court-recognizes-nfts-as-private-property-what-now UK court recognizes NFTs as ‘private property’ – now what?