Singapore’s High Court rules in favor of a Singaporean man seeking to stop the potential sale and transfer of a rare NFT he previously owned.
For the first time in Asia—and in a global setting for a purely commercial dispute—the Singapore High Court issued an injunction favoring a Singaporean man fighting to stop the potential sale and ownership transfer of an NFT he previously owned. The ruling was issued on May 13.
As per court documents, the High Court’s injunction safeguards a unique Bored Ape Yacht Club (BAYC) NFT, which the Singaporean man is looking to repossess the NFT from an online persona going by the handle “chefpierre.” BAYC is deemed one of the most popular NFT collections ever, featuring apes with distinctive characteristics like facial expressions, clothing, and accessories.
Merits of the Case
As per provided documents, the Singaporean man, who was later identified as Janesh Rajkumar, used his NFT, BAYC #2162, as collateral for a loan he acquired from “chefpierre.” Now, he is seeking to repossess the same, with one of his claims stating he is the rightful owner of the piece and that it was wrongfully taken from him.
Rajkumar issued a statement of claim in which he explicitly said he purchased BAYC #2162, intent on keeping it for himself. According to him, BAYC #2162 is an exceptionally rare piece among BAYC NFTs given its attributes, such as its potential to create a new NFT of another exclusive series.
Because of the NFT’s rarity and high monetary value, Rajkumar usually uses it as collateral when loaning cryptocurrencies, especially from the community platform NFTfi. Nevertheless, he always made sure to specify in loan agreements that he would never relinquish ownership of the NFT and would pay his loan back in full to redeem the NFT.
The loan agreements likewise stipulate that if he cannot repay the loan in time, he would disclose the reason to the lender so the lender can provide reasonable repayment extensions. Another stipulation of the loan agreements is that the lender cannot use the “foreclose” option, something available if repayment was not made in time, to take ownership of BAYC #2162.
Not the First Transaction
According to court documents, Rajkumar had, on various occasions, taken cryptocurrency loans against the NFT. The transaction in question is also not the first time he took out a loan from “chefpierre,” having already loaned from him on January 6. The loan has subsequently been paid back.
However, whereas his previous dealings were with highly-ranked reputable lenders on NFTfi, he decided to transact with “chefpierre” since the latter offered favorable terms for the loan. After the first transaction, the man entered into another loan agreement with “chefpierre” on March 19, eventually asking for a repayment extension.
The two parties agreed to refinance, but as per Rajkumar’s claims, “chefpierre” refused to lend the additional sum to the Singaporean and even threatened the foreclosure option to seize BAYC #2162 if the latter failed to repay the loan in full by 5 am of April 21. It gave Rajkumar barely seven hours to repay the loan, which he could not do, leading to “chefpierre” seizing the NFT.
Even after he could repay part of the loan, “chefpierre” only returned the amount and blocked the former from making further repayments. “Chefpierre” has since listed BAYC #2162 for sale on OpenSea, as per court documents.
The High Court’s Decision
The High Court’s decision, which was in favor of Rajkumar, is partly due to the explicit terms in his loan agreements. The terms are crystal clear.
Withers KhattarWong, the law firm representing Rajkumar, said in a press release issued on May 18 that the High Court’s injunction recognizes NFTs as an asset. It comes after a United Kingdom court recognized NFTs as “legal property,” and Singapore followed suit, thereby recognizing NFTs as digital assets in this landmark ruling.
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