Despite all their popularity and financial success, NFTs are not fully accepted around the world. From countries that have a very strict policy around NFT use to members of the public who decry them as a scam, NFTs still have some ways to go before they reach complete mainstream acceptance.
One small victory in this regard, however, has come as a court in the United Kingdom has recognized NFTs as legal property. This came via a lawsuit filed by Lavinia Osbourne, the founder of Women in Blockchain Talks, against the Boss Beauties collection.
The Legal State of NFTs
The lawsuit in question was filed earlier this year and in it, Osbourne alleges that two of her digital works were stolen from her wallet and then listed as NFTs on the Boss Beauties collection. Following deliberation, the judge in the case ruled that the NFTs that were stolen constituted legal property and thus, enjoyed legal protections.
Subsequently, the judge ruled that an injunction be put on the Ozone Networks, which hosted the NFT marketplace where the assets were sold, and a Bankers Trust disclosure. The latter means that the marketplace that sold the NFTs has to submit information to the courts about the current holders of the NFTs.
In the meantime, OpenSea, the site where the NFTs were sold, has frozen the sale of them.
This ruling is significant not just because the artist will have some respite for her stolen work but also because it sets a precedent for the industry. The formal recognition of NFTs as legal property by a court means that future cases involving them can be better handled and industry players can access more legal protections.
As Racheal Muldoon, a counsel on the case, says, “It is of the utmost significance as, for the first time in the world (as far as we are aware), a court of law has recognised that an NFT is property capable of being frozen by way of an injunction. This ruling, therefore, removes any uncertainty that NFTs (as tokens consisting of code) are property in and of themselves, distinct from the thing they represent (e.g., a digital artwork), under the law of England and Wales.”
NFTs’ Growing Presence in the Legal World
A hot-button issue in the NFT world is the rights of NFT creators and buyers, especially when it comes to stolen works. But a string of legal developments has shown that the judiciary system is catching up with the progress of NFTs and creating frameworks to protect stakeholders.
In China, for example, a court ruled that an NFT marketplace had a responsibility to prevent stolen assets from being sold on its platform. In the ruling, the platform had to compensate the original owner of the stolen artwork and make sure that the stolen assets couldn’t be further circulated.
With this new ruling in the UK, even more protection can be ensured for artists whose work might be stolen and sold without their consent.