In a ground-breaking decision, Singapore High Court (SHC) affirmed its jurisdiction over an NFT case, ruling that non-fungible tokens can be considered property. The litigation involves a claimant who took a DeFi loan in Ether, equivalent to $150,000, in March this year. As collateral, he used a Bored Ape Yacht Club #2162 token worth $500,000 at the time.
However, a dispute ensued over the refinancing of the loan. Since the plaintiff was unable to pay the debt in full at the required time, the defendant, known by the pseudonym "chefpierre", decided to exercise his foreclosure rights and moved the NFT from escrow to his wallet.
In May, the judge Lee Seiu Kin issued an injunction to prevent any attempt to sell or transfer the NFT. On October 21, he recognized the BAYC token as a property granting "the proprietary injunction sought by the claimant."
In a ruling the judge wrote that even though "the picture of the Bored Ape NFT exists as an image file which can be copied many times over", it is tied to the unique and irreplaceable string of code representing the NFT on the blockchain. "If that is transferred to third parties, the claimant might never be able to recover it, and so any proprietary remedy ordered by the court in relation to the Bored Ape NFT would be writ in water," he concluded.
SHC's ruling is the first time a public court in a purely commercial dispute recognized the proprietary character of an NFT. If this reasoning is followed by judges from other jurisdictions, the status of blockchain-based tokens might change – for the good and the bad, considering they might lose some advantages of "borderlessness."