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  • 22 Nov 24

Court Allows Celsius to Use NFTs for Legal Notifications

A U.S. court in the Southern District of New York has permitted Celsius to notify defendants via NFTs.

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A U.S. court in the Southern District of New York has permitted Celsius to notify defendants via NFTs. This approach was proposed due to the anonymity of wallet owners linked to disputed transactions.

What Happened

Following its bankruptcy in 2022, Celsius filed a lawsuit seeking to classify certain transactions as fraudulent to recover assets for creditors. However, due to the anonymity of blockchain addresses, the company was unable to identify the owners of wallets that received the disputed funds.

To address the issue, Celsius proposed a new strategy: sending NFTs to the addresses of these wallets. These tokens will include a link to a website containing the complaint and other legal documents. Delivery verification has been assigned to FTI Consulting, which will record the date and time the NFTs are received and confirm whether the links were accessed by real individuals.

How It Works

FTI Consulting determined that the wallets involved in the transactions are still active and likely controlled by the same individuals. The court acknowledged that traditional notification methods are not feasible in this case, while blockchain provides a unique ability to track the delivery of documents.

Under New York law, if standard notification methods are unachievable, alternative methods are permissible as long as they ensure proper notification of the parties involved. The court concluded that NFTs could meet this requirement.

Legal Precedent

Judge Martin Glenn described the use of NFTs for document delivery as "the best solution" given the anonymity of blockchain addresses. He highlighted the innovative nature of Celsius's approach, drawing a parallel to how email once revolutionized legal notifications, with blockchain now offering similar advancements.

This case illustrates how new technologies can adapt to legal requirements and address challenges previously considered insurmountable.

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