UK Recognizes NFTs as Property in Major Ruling for Crypto Theft

It has been said that art is theft, but now, so is takings someone’s NFTs — at least in the United Kingdom. In what is definitely terrific news for someone who loves to combine complicated concepts, NFTs (non-fungible tokens) have won key territory in a legal decision made by the UK’s High Court. The suit, which has established NFTs as “property” that can be legally defended as such, was filed in March by Lavinia Osbourne, the founder of Women in Blockchain Talks. Osbourne contended that two digital artworks from the Boss Beauties NFT collection, which she purchased through the NFT marketplace OpenSea, were stolen from her online wallet.

The immaterial nature of NFTs and the rise in their value as a tradable crypto-commodity have made them yet another arena where the legal system is trailing a new kind of economy — and those seeking to exploit the surrounding feeding frenzy. The UK judgment, slated to be published later this week, recognizes the digital assets as property that can be afforded legal protections. In this case, those protections include a court injunction to freeze the assets on accounts on Ozone Networks (which hosts OpenSea) and a Bankers Trust disclosure “compelling [OpenSea] to send information about the two account holders” who are holding the stolen NFTs.

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Reports of NFT theft have been around seemingly as long as the technology itself. After all, taking anything of value without permission is theft, and where the idle rich go, con artists will follow. But the landmark nature of this case is in the establishment of legal precedent for NFTs as property, which enables litigants to bring the full power of courts to, for example, seize stolen assets or compel repayment.

“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,” said Racheal Muldoon, a counsel on the case, according to the Art Newspaper. “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.”

Furthermore, the ruling includes permission to serve the orders regardless of jurisdiction, which is a major issue in cases of digital art theft, given that the physical location of the theft or the asset cannot always be pinpointed.

Really, the concept of NFTs as property is no more abstract than patent law, or as an extension of Intellectual Property law in general. At the bottom of a well of convoluted information, NFTs are essentially ideas that have taken virtual form — a quality they have in common with basically all other conceptual art — and now those ideas have a legal safety net, at least in the UK. Presumably, having achieved a legal foothold in one place, NFT policy will continue to grow. Soon a whole new category of lawyers will emerge, prepared to surround the impenetrable concept of NFTs with impenetrable legalese. What a time to be alive on a dying planet!


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