Dominic Low, The Straits Times
20th May 2022 – (Singapore) In a first, a Singaporean man has won a court injunction to stop any potential sale and ownership transfer of a non-fungible token (NFT) that was previously owned by him.
The injunction, issued by the Singapore High Court last Friday, is also said to be the first in Asia – as well as globally for a purely commercial dispute – to protect an NFT.
NFTs are tokens that exist on decentralised digital ledgers called blockchains. They can be used to represent underlying assets, which can be digital or physical, such as artwork, videos and music.
According to documents provided by the counsel to The Straits Times, the High Court’s injunction protects a unique Bored Ape Yacht Club (BAYC) NFT, which a Singaporean man is seeking to repossess from an online persona named “chefpierre”.
BAYC is a limited collection of NFTs, each featuring an ape with distinctive attributes such as facial expressions, clothing and accessories.
They are seen as a highly coveted status symbol, with some reportedly being owned by celebrities such as American talkshow host Jimmy Fallon and Canadian singer Justin Bieber.
Pop star Madonna was reported to have bought one of the NFTs last month for 180 Ether, a cryptocurrency worth US$560,000 (S$777,000) at the time.
The man’s identity was redacted from the provided documents, but a search on the Singapore Courts website by ST shows his name to be Janesh Rajkumar. The identity of “chefpierre” is stated as unknown in both the court documents and the website.
Mr Janesh is seeking to repossess the NFT known as BAYC No. 2162, which he had used as a collateral for a loan from “chefpierre”. He is claiming, among other things, that he is the rightful owner of the NFT and that “chefpierre” had taken it wrongfully from him.
In his statement of claim, Mr Janesh said he had previously bought the NFT with the intention of keeping the token for himself.
He also said it is a particularly rare piece even among BAYC NFTs due to its attributes, including its potential to create a new NFT of another exclusive series.
Due to BAYC No. 2162’s rarity and high monetary value, Mr Janesh would often use it as collateral to borrow cryptocurrencies on a community platform known as NFTfi.
But he took particular care to specify in loan agreements with lenders that he was not willing to relinquish ownership of the NFT, and would make full repayment of the loan to redeem it back.
In the event that Mr Janesh was unable to repay the loan in time, he would inform the lender, who should provide reasonable extensions of time for repayment.
He also specified in the loan agreements that the lender should never use the “foreclose” option, which was available if repayment was not made in time, to take ownership of BAYC No. 2162.
Court documents state that Mr Janesh had successfully borrowed and paid back many cryptocurrency loans using the NFT as collateral.
He first borrowed a loan from “chefpierre” on Jan 6 this year, which he subsequently paid back.
While Mr Janesh generally dealt only with reputable lenders ranked highly by NFTfi’s system, he decided to transact with “chefpierre” as the online persona was willing to provide favourable terms for a loan, seemed like a reputable lender and had a substantial sum in tokens and NFTs.
He later entered into another loan agreement with “chefpierre” on March 19, but subsequently asked for an extension of time to repay the borrowed sum.
The two parties then began discussing the terms of a third loan, which eventually led to “chefpierre” offering to refinance the March 19 loan, and Mr Janesh agreeing.
But “chefpierre” subsequently refused to lend the additional sum to Mr Janesh, and threatened to use the “foreclose” option to seize BAYC No. 2162 if the March 19 loan was not fully repaid by 5am on April 21.
This gave the Singaporean just under seven hours to repay the loan, which he failed to do so, leading to “chefpierre” taking ownership of BAYC No. 2162.
Mr Janesh later repaid part of the loan, but “chefpierre” returned the sum and blocked the Singaporean from making any further repayments.
Court documents state that “chefpierre” has since listed BAYC No. 2162 for sale on OpenSea, an online NFT marketplace.
Law firm Withers KhattarWong, which represents Mr Janesh, said in a press release issued on May 18 that the High Court’s injunction recognises NFTs as an asset.
The injunction also comes after a recent landmark ruling by a United Kingdom court, which recognised NFTs as “legal property”.
The court had granted an injunction to freeze two NFTs that were stolen from a woman’s digital wallet in January this year and were later found in other digital wallets.