Lawyers Airdropped an NFT to a Hacker To Serve Them With Legal Documents
Reportedly marking the first time this method has been used.
In January, Lichtenstein-based crypto exchange LCX AG reported on Twitter that it was the victim of a hack worth almost $8 million USD of cryptocurrencies that were stolen from one of LCX’s hot wallets.
LCX is a regulated fintech company that focuses on digital asset trading, compliant token offerings and tokenization. The exchange has reportedly received eight blockchain-related approvals by the Liechtenstein regulator — more than any other company in the country.
According to a recent update, LCX says that approximately 60% of the stolen funds have been frozen.
On June 7, the New York Supreme Court allowed for American multinational law firm Holland & Knight and Bluestone, P.C. to successfully serve the alleged hacker legal notice through an NFT.
Holland & Knight has become the first law firm to serve a defendant by #NFT, which was created and airdropped by our #AssetRecovery Team. Learn more from our client @LCX. https://t.co/wWs2cOVVY1 #crypto #blockchain #legalinnovation pic.twitter.com/mo7VaAKEgo
— Holland & Knight (@Holland_Knight) June 8, 2022
In LCX’s case, while it reportedly traced some of its stolen digital assets to different digital wallets, freezing some of the funds, it didn’t have a name or identity as to who to pursue legal action against.
Under New York law, parties to a lawsuit must be put on “notice” or made aware of the soon-to-be litigation against them. For purposes of serving legal notice under New York Law, the exchange was missing the name and place in order to move forward.
Since the blockchain acts as an immutable ledger for transactions, LCX AG’s lawyers and a New York court got creative and allowed for an NFT or a “Service Token” to be sent to the digital wallet address where LCX’s alleged stolen funds were found. It contained a hyperlink to the court’s order to show cause.
The process of service can be viewed here on the blockchain, as well as the Service NFT, which contains the TRO. The link had a mechanism that allowed the issuer (LCX and its attorneys) to see if it had been clicked on.
It’s worth noting that New York law still defaults to the physical service of defendants, and only allows for exceptions, such as this when service is “impracticable.”
The county court emphasized that while it allowed for a court order to be issued through an NFT, this was a “rare occurrence” — at least for now.