Singapore's High Court has prohibited the trading of a Bored Ape NFT despite its involvement in a loan dispute, decisively fusing the decentralized domain of NFTs with that of the centralized legal system. OpenSea has since blocked the asset's capacity to be traded on the platform, as it did with the case's legally binding ruling.
BAYC #2162, the ape in question, is owned by Singaporean crypto assets dealer Rajesh Rajkumar and was used as collateral in an NFT loan transaction with pseudonymous NFT collector 'chefpierre.' The transaction, handled on March 19th by NFT lending platform NFTfi, apparently offered the opportunity for refinancing deal' to take place a month after it was launched.
However, Rajkumar claims that Chefpierre did not comply with such an extension and instead foreclosed on the loan, releasing the NFT from the platform's escrow to Chefpierre's wallet.
Following such circumstances, Rajkumar claims unjust enrichment occurred, leading to the decision to halt the asset's capacity to be traded.
Although the case's outcome is unknown, and while lawyers have alluded to the legal complexities that can arise within loan agreements involving pseudonymous parties (something NFT-finance is prone to), an OpenSea spokesperson has spoken on the platform's policies regarding legally-questionable assets:
A Singaporean man has obtained a court injunction to prevent the sale of a non-fungible token (NFT) that belonged to him and was used as collateral for a loan. The NFT in question is from the Bored Ape Yacht Club (BAYC) series, a collection of 10,000 simian avatars with a floor price of 108 Ethereum (ETH), or $368,000, thanks in part to a large celebrity following.
According to the claimant's legal representation Withers, the Singapore High Court's decision to freeze trading of the NFT was based on a judgment to view it as a digital asset—the first instance of such a finding anywhere in the world for a business dispute.
Rajkumar is now seeking that the defendant accepts loan repayment and return BAYC No. 2162 to his cryptocurrency wallet.
"This groundbreaking judgment is noteworthy because it recognizes that Singapore courts can take jurisdiction over assets located in the decentralized blockchain," explains Shaun Leong of Withers KhattarWong.
Surprisingly, the Singapore court permitted the freezing order to be issued over social media platforms such as Twitter and Discord.