Singapore court blocks BAYC sale, ruling NFTs are assets

By Raffaele Redi

The landmark ruling recognises that courts can take jurisdiction over blockchain assets

A Bored Ape Yacht Club NFT surrounded by hundred dollar bills                                 
The Bored Ape Yach Club NFT collection is one of the most expensive NFT series in circulation – Photo: Shutterstock
                                

A Singapore-based law firm, Withers KhattarWong, has obtained a worldwide proprietary injunction on behalf of a Singaporean non-fungible token (NFT) investor to freeze the sale and ownership transfer of a Bored Ape Yacht Club (BAYC) NFT on the Ethereum blockchain against a metaverse personality.

The Singapore High Court’s injunction to protect the NFT would be the first in Singapore and Asia, and the first globally in a commercial dispute, to recognise NFTs as an asset. In addition, it also establishes that Singapore courts can take jurisdiction over assets on blockchains.

Shaun Leong, a partner and international arbitration and litigation specialist at Withers KhattarWong, said: “We are the first law firm in Singapore – and one of the first few in the world – that is successful in obtaining a worldwide proprietary injunction to freeze a Bored Ape Yacht Club NFT sale on the blockchain against a Metaverse personality.”

In another recent decision, a UK court also considered NFTs as property. However, that injunction was to protect NFTs that were criminally hacked by unknown persons.

The Singapore hearing

The Singapore High Court case involves a rare NFT in the BAYC series. On 29 April 2022, the floor price for BAYC hit an all-time high of ETH152, around $434,000 on OpenSea.

As the law firm explained in a statement, the claimant – who owns several BAYC apes – used one of the NFTs (BAYC #2162) as collateral to borrow Ethereum on the community collateralised loans platform NFTfi.

The NFT collector agreed with a Web 3.0 user – who is believed to hold a high position in the team at play-to-earn, NFT-based metaverse game, Gino’s Big Town Chef – allowing the investor to unlock liquidity in ethers (ETHs) from his BAYC NFT.

However, when the collector could not repay the loan, the Web 3.0 user shifted the NFT to his wallet and listed it for sale on OpenSea in breach of the agreement, which – as the law firm explained – permitted extending the loan agreement.

The collector has petitioned the court that he is allowed to repay the loan so his BAYC NFT can be returned to him among other items.

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