- Singapore Hight Court issued to freeze the sale and ownership transfer of a BAYC NFT.
- The law recognizes both fungible and non-fungible tokens as a form of property.
- The case has a positive outcome for the NFT industry according to an expert.
Singapore High Court has granted a proprietary injunction to freeze the sale and ownership transfer of a Bored Ape Yacht Club (BAYC) NFT on behalf of a Singaporean investor against an unknown defendant.
A court in Singapore has issued a freezing injunction preventing the sale of a Bored Ape NFT, in one of the first cases of its kind that could have broad ramifications for digital assets https://t.co/P2iUNDjxLg— Bloomberg Crypto (@crypto) May 20, 2022
The injunction issued last Friday, May 13, is also said to be the first ever in Asia – and the first worldwide – of its kind to protect an NFT.
According to the documents provided, the claimant, who is a Singaporean citizen, is an active dealer in crypto and digital assets. Meanwhile, the defendant identified as “chefpierre.eth” is stated as unknown in both identity and physical location but claims as a frequent lender on the platform.
In addition to the report, in mid-April, the claimant requested refinancing on the loan. But with untold reasons, chefpierre gave a short time to repay the loan; the claimant was unable to do so, which resulted in the lender foreclosing on the property.
In response to a lawsuit filed after the NFT was foreclosed as collateral for a loan, the court said it shouldn’t be sold until the ownership dispute is resolved as the law recognizes both fungible and non-fungible tokens as a form of property.
“It is the first decision in a commercial dispute where NFTs are recognized as valuable property worth protecting,” said Shaun Leong, lead counsel for the case and equity partner of Withersworldwide law firm.
The particular BAYC NFT, No. 2162, was bought by the claimant with the intention of keeping it for himself. But due to its rarity and high value, he would use the NFT as collateral to borrow cryptocurrencies from NFTfi, a platform that allows people to use NFTs as collateral for crypto loans.
On the other hand, a partner at a Singapore advisory firm, Chris Holland, commented that the ongoing case somehow had given a positive outcome for the NFT industry because courts are acknowledging a person’s potential ownership rights.
“It’s also a reminder to NFT buyers to be vigilant about the rights and control they give to third parties over an NFT. For example, it appears that the borrower does not know ‘the real-life identity of the lender. That creates significant complexity for the borrower’s legal proceedings.” he added.