Reed Smith Client Alerts

Key takeaways

  • High Court allowed for proceedings to be served ‘outside of the jurisdiction’ via transmission of non-fungible tokens to digital wallets
  • Service via non-fungible tokens is particularly useful in the context of cryptocurrency fraud claims where claimants have little or no information about the defendants
  • The courts’ approach to service via non-fungible tokens continues to be refined, with novel requirements for password protection on documents that would otherwise be publicly available on the blockchain

Autoren: Eleanor Ruiz Katie Grace Jamie Fryer Imogen Harding

NFT concept art

Introduction

Recent years have seen English courts on occasion allowing service of proceedings on defendants via non-fungible tokens (NFTs). An NFT is a unique digital asset that records the ownership of some digital or physical asset or right associated with it.

NFTs exist on a blockchain, most commonly Ethereum. Unlike bitcoin, which is a fungible token, NFTs are not interchangeable as they each represent the specific data associated with the underlying asset or right that is stored in permanently accessible form on the blockchain.

One of the earliest instances of service via NFT was in D’Aloia v. Person Unknown & Others [2022] EWHC (Ch) 1723 (discussed further below), and remains particularly useful in the context of cryptocurrency fraud claims, where claimants often have very little information about the intended defendants, save for the details of the digital wallets containing the disputed crypto-assets. Crucially, service via NFT is completed by way of transmission of the NFT to the defendant’s digital wallet, as opposed to requiring any interaction by the defendant with the airdropped NFT itself.

The most recent of these cases is Tai Mo Shan Ltd v. Persons Unknown [2024] EWHC (Comm) 1514, where the court granted permission to serve outside of the jurisdiction via NFT, thus expanding the body of case law for this particular means of alternative service. Below, we examine the court’s decision and remind ourselves of some of the previous decisions of the English courts in this area.