Kieran Forsyth, Associate in the Contested Wills, Trusts and Estates team looks at the recent High Court decision of D’Aloia v. Person Unknown & Ors  EWHC 1723 (Ch) in which the court permitted service of court proceedings by NFT.
In December 2021, the founder of Microgame (an online gambling technology business), Mr Fabrizio D’Aloia, who was domiciled in England, began transferring funds into a trading account via the website tda-finan.com with the intention of trading the massive drop in the crypto currency markets that began in November of 2021. By May of 2022, Fabrizio had deposited approximately US $2million worth of crypto currencies into the platform. Unfortunately, the website is alleged to have been a scam, passed off as being linked to the US-regulated trading platform TD Ameritrade. When the claimant’s trades were closed in February 2022, he submitted a withdrawal request. Fabrizio’s tda-finan account was subsequently blocked from making withdrawals and communications with an email address associated with tda-finan told Fabrizio to make a number of further deposits. In May 2022, Fabrizio realised that he had been the victim of fraudulent activity and instructed an intelligence investigator who found that the assets had been transferred to several private addresses operated or controlled by five crypto exchanges located in different parts of the world.
Fabrizio issued proceedings in an effort to trace, protect and ultimately recover his lost investment.
He quickly ran into trouble because it was unclear who was behind the tda-finan.com website. Not knowing who he was claiming against would make it very difficult to serve his claim. Unless service of the claim can be effected by ordinary methods, such as post, , more than one method of service may be necessary to increase the chances of the defendant seeing the documents. Fabrizio had a contact email for tda-finan but he would need to find another way of serving his claim to the Defendant.
This second form of service came by way of an NFT (non-fungible token). Talk about real world utility!
Fabrizio knew that rule 6.15 of the Civil Procedure Rules provides that:
“where it appears to the court that there is a good reason to authorise service by a method or at a place not otherwise permitted by this Part, the court may make an order permitting service by an alternative method or at an alternative place.”
As nobody had ever attempted to serve a claim via NFT before, there was no guarantee that the court would accept it as a valid means of service.
The Master hearing the Application clarified that service by NFT would act as a form of “airdrop into the tda-finan wallets in respect of which the claimant first made his transfer to those behind the tda-finan website”. This was determined as being a novel form of service by the Master who accepted the advantages of service by such means for the following reasons:
- the claimant, by embracing the Blockchain technology, would drop the documents into ‘the system’ thereby embedding the documents on the Blockchain;
- by doing so the likelihood of those behind the fraudulent tda-finan website seeing the documents would increase; and this would be the most likely way of effecting proper service.
Fabrizio’s claim is still ongoing, but we will report when there is a judgement in the case.