In a world first for both the crypto space and the legal profession, a defendant in a hacking case has been served with a temporary restraining order by means of a non-fungible token (NFT).
International law firm Holland & Knight served the defendant on-chain using a “service NFT“. The hacker, who cannot be named, stole US$7.94 million in digital assets from a hot wallet belonging to LCX, a Liechtenstein-based fintech company.
Method Approved by NY Supreme Court
The service method was approved by the New York Supreme Court and “is an example of how innovation can provide legitimacy and transparency to a market that some believe is ungovernable”, according to LCX.
The hack, which took place in January this year, saw assets including Ether, USDC, Sandbox and more stolen from LCX, whose blockchain tracing specialists were subsequently able to identify the addresses of the hacker’s wallets.
LCX has been working with law enforcement authorities in Liechtenstein, Ireland, Spain and the US to trace the funds, which were initially appropriated via Tornado Cash, a crypto mixer protocol for concealing the digital trail of blockchain transactions. LCX traced the funds and wallets through what it describes as “algorithmic forensic analysis”.
Could Legal Precedent Save NFTs?
Perhaps this legal first could be the saviour of NFTs. Earlier this month, crypto analytics firm IntoTheBlock reported that Ethereum transaction volume was down 80 percent on the same period last year due in large part to plummeting interest in NFTs. Google search data showed a concurrent 75 percent reduction in searches for the term NFT, contributing significantly to the drop in transaction volume.
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