In the recently decided case of D’Aloia v. (1) Persons Unknown (2) Binance Holdings Limited and others the High Court permitted service of court proceedings via a non-fungible token (NFT). The decision has been noted as a further example of the English and Welsh courts’ willingness to break new ground in order to protect the victims of crypto asset fraud and to embrace new technology.
The claimant, Mr D’Aloia, says that he was the victim of a fraud involving a clone online brokerage. The allegedly fraudulent website was set up to induce people to transfer funds from their crypto wallets to the platform, ostensibly so that the funds could be used for trading in the future. The cryptocurrency that Mr D’Aloia transferred was subsequently deposited into private wallets operated by various cryptocurrency exchanges.
In order to try and recover his cryptocurrency, Mr D’Aloia filed a claim and sought an interim proprietary injunction in respect of five cryptocurrency exchanges.
Service of a claim form in England and Wales is governed by CPR 6.3, which permits service by: (a) personal service; (b) first class post; (c) leaving it at a place specified by the court rules; and (d) fax or means of other electronic communication.
Under CPR 6.15 a party may apply for an order for alternative service if there is a ‘good reason’ for such an order to be made. Alternative service has previously involved service via WhatsApp or Facebook Messenger.
In addition to allowing service by email, Justice Trower granted an order permitting service of court proceedings via the transfer of a token on a blockchain in the form of an NFT. This is considered to be the first order of its kind in England and Wales.
The judgment demonstrates that the courts of England and Wales are prepared to adapt and interpret the rules on service in order to keep pace with technological advances.
This flexibility will be welcomed by those advancing claims involving blockchain technologies and generally provides comfort that the courts are able to respond to the unique challenges that such disputes present.