Fighting Fire with Fire: The First Service NFT in Hong Kong
- Mia Cheng
- Jul 24, 2023
- 4 min read
Updated: Feb 23
As cryptocurrency grows increasingly popular, so does the number of victims affected by crypto scams. With offenders protected by the anonymity of blockchain technology, courts are exploring new methods of serving legal notices, including the use of crypto products against those who misuse such tools. In Wang Chichen v FeCommerce fDeals Co., Limited and 20 Others, Ravenscroft and Schmierer secured the first grant authorising service via NFT in Hong Kong. This development represents a significant step forward in technology driven litigation.
What is alternative service?
Service is the formal notification of legal proceedings required under Cap. 4A The Rules of the High Court, Order 10, s. 1(1). Under Order 65, s. 2, personal service means leaving a copy of the legal document directly with the intended recipient.
When personal service is not feasible, courts may permit alternative service. This includes posting documents to a last known address or sending them by email. Alternative service is particularly common in crypto related disputes where defendants often remain anonymous.
What Is an NFT and How Can It Be Used for Service
An NFT is a non-fungible token used to represent unique digital or physical assets. Ownership details are stored on a blockchain, a platform that hosts cryptocurrencies, which functions as a decentralised and immutable ledger. Because blockchain records cannot be altered without affecting subsequent blocks, ownership of NFTs is easily verifiable.
NFTs contain metadata that is unique to each token. This makes NFTs nonfungible, as they cannot be exchanged on a one-to-one basis with other tokens.
Courts in other jurisdictions have used blockchain based service methods. For example, in LCX AG v John Does, service was affected to blockchain wallet addresses. In the United Kingdom, courts have approved the airdropping of NFTs that contain links to court documents, allowing service via NFT.
Our case: a summary
Wang Chichen v FeCommerce fDeals Co., Limited and 20 Others is the first case in Hong Kong to establish the precedent of alternative service by NFT.
Ravenscroft and Schmierer obtained injunctions to freeze the client’s assets, as well as self-identification orders requiring unknown defendants to reveal their identities. By embedding a hyperlink to the legal materials inside an NFT and airdropping it into the defendants’ wallets, the Court ensured direct on chain notice. This method increases the likelihood that anonymous defendants receive and review the proceedings, thereby enhancing the prospects of procedural compliance and advancing the proper administration of justice in our client’s case.
This approach allowed the client to move closer to justice but also introduced a new procedural tool that reflects the need for legal practitioners to adapt to emerging technologies, especially when practitioners are placed at the forefront of litigation.
Ramifications of Service NFTs
Courts are beginning to embrace blockchain based service methods.
It is unlikely that defendants reveal themselves if anonymity benefits them.
The risk of defaulting provides an incentive for defendants to respond when served on chain.
If defendants remain unidentified, it becomes unlikely to enforce a judgment, particularly when assets are dispersed or held anonymously.
As a result, it is highly unlikely that claimants will be able to recover assets without additional investigative mechanisms.
Speak With Our Digital Asset Litigation Specialists Today
If you or your clients are facing challenges involving cryptocurrency disputes, digital asset recovery, fraud investigations or innovative service procedures, Ravenscroft and Schmierer is ready to assist. Our team has pioneered the first service NFT in Hong Kong and continues to lead the way in blockchain related litigation.
Contact our firm today to discuss how we can help protect your assets, enforce your rights and navigate the evolving legal landscape of digital technologies.
FAQ: The First Service NFT in Hong Kong
What is a service NFT
A service NFT is a digital token delivered to a defendant’s blockchain wallet. It contains legal materials such as court documents and records the act of service on chain.
Why would a court use NFTs for service
Courts may use NFTs when defendants cannot be located or identified. Serving through blockchain wallets ensures notice reaches the digital addresses associated with relevant transactions.
Is service via NFT legally valid in Hong Kong
Yes. In Wang Chichen v FeCommerce fDeals Co., Limited and 20 Others, the Hong Kong court authorised service through NFT for the first time.
Does receiving an NFT ensure the defendant has read the documents
Not necessarily. Although it increases the likelihood of notice, anonymity still limits certainty. Courts view NFT service as a practical alternative, not a perfect solution.
Can NFT service be used outside crypto fraud cases
Potentially yes. Any case involving digital assets or anonymous defendants could benefit from on chain service methods.
Do other jurisdictions recognise service by NFT
Yes. The United Kingdom and other common law jurisdictions have authorised similar methods, including airdropped NFTs containing legal documents.
Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
For specific advice about your situation, please contact:
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