A New Model for Cryptocurrency Litigation
Are your impressions of NFTs still limited to art auctions or meme culture? When everyone thought NFTs were dead, they failed to realize that NFTs are becoming one of the indispensable technologies. A recent 'legal service case' has directly overturned most people's traditional understanding of NFTs and legal procedures.
This case comes from the cryptocurrency lending company - Celsius Network, which announced its successful exit from bankruptcy at the end of last year after experiencing a year-long shadow of bankruptcy, and has begun to repay creditors more than $3 billion in cryptocurrency and fiat currency according to its restructuring plan.
However, Celsius, after bankruptcy, urgently needed to recover assets to repay creditors, and according to their investigation, there was a fund transfer suspected of fraud involving several wallet addresses, but due to the anonymous nature of blockchain, Celsius could not determine who the actual holders of these wallets were, and could not find basic contact information.
In a traditional legal framework, such situations usually lead to a deadlock in legal procedures, but Celsius proposed a refreshing solution: directly airdropping the complaint in the form of an NFT to the relevant wallet address.
Why use NFTs to deliver legal documents?
This NFT is not a typical digital collectible as we understand it, but contains an embedded hyperlink leading to a dedicated website that lists the complaint and related legal documents in detail.
To track whether documents have been received and reviewed, Celsius also hired the professional digital consulting company FTI Consulting, which will monitor whether the wallet received the NFT, track on-chain activities, and record the specific date and time the hyperlink was clicked, ensuring that documents are delivered while also satisfying legal due process requirements.
According to New York State law, when traditional delivery methods are infeasible, the court may allow 'substitute service', and the alternative method must be reasonable and able to notify the defendant of the relevant litigation to the greatest extent possible.
In this case, the bankruptcy judge of the Southern District of New York (SDNY), Martin Glenn, believed that due to the anonymous nature of blockchain, traditional mailing or face-to-face delivery is completely unfeasible, thus NFT airdrop is the best method.
Finally, Martin Glenn agreed that Celsius could serve legal documents to anonymous defendants via NFT airdrop. This is not only a new example of blockchain technology application but also a bold innovation of blockchain technology in traditional legal services.
Martin Glenn specifically pointed out that the use of NFTs not only meets technical feasibility but also complies with legal requirements for due process, as these NFTs are airdropped directly into the wallet used by the defendant, and their opening status can be tracked throughout, ensuring that the document is received and reviewed: 'Email addresses paved the way for legal delivery in the internet age, while wallet addresses are a continuation in the blockchain era.'
The Potential of NFTs as Legal Tools
This ruling is undoubtedly a groundbreaking case, highlighting the unique advantages of blockchain technology - transparency and traceability. Compared to emails or other digital methods, NFT airdrops can more intuitively ensure the recipient's receipt and effectively avoid emails being misclassified as spam or completely ignored.
But this new model also comes with challenges. For example, can the receipt of an NFT be equated with traditional delivery? Suppose the defendant argues that they cannot understand the intention of the NFT due to technical or language barriers; can the law recognize this as effective notice?
In addition, how to prevent NFTs from being maliciously tampered with or intercepted is also a problem that needs further exploration.
However, through this case, it is not difficult to see that the application of blockchain technology has long since gone beyond the financial sector and has the potential to impact various industries including law, healthcare, and education.
[Disclaimer] The market is risky, and investment should be cautious. Analyst opinions are for reference only. Users should refer to more diverse indicators to judge whether to invest and consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Invest at your own risk.
'A New Model for Cryptocurrency Litigation? Celsius Wants to Recover Funds but Can't Find People, Can the Complaint Be Sent via NFT?' This article was first published on 'Crypto City'