In a groundbreaking legal development, the Singapore High Court issued the first injunction in Asia related to a non-fungible token (NFT) ownership dispute in May 2022. This landmark decision marks a pivotal moment in the evolving legal recognition of digital assets, reinforcing the status of NFTs as enforceable property under civil law. The ruling not only sets a regional precedent but also contributes to the global conversation on how traditional legal frameworks can adapt to decentralized digital economies.
The BAYC NFT at the Center of the Dispute
The case revolves around a highly coveted Bored Ape Yacht Club (BAYC) NFT—specifically BAYC #2162, known for its rare “dolphin cap” design. As one of the most iconic NFT collections, BAYC has gained global fame, with individual tokens fetching hundreds of thousands of dollars on marketplaces like OpenSea. These digital collectibles are more than just images; they represent membership in an exclusive online community, offering holders access to virtual events, merchandise, and social capital.
Celebrities such as Madonna, Justin Bieber, Eminem, and NBA star Stephen Curry have acquired BAYC NFTs, further elevating their cultural and financial value. At the time of this dispute, certain BAYC tokens had sold for over 150 ETH (approximately $434,000), underscoring their significance as high-value digital assets.
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Background of the NFT Loan Agreement
The plaintiff, Janesh Rajkumar, is a Singapore-based cryptocurrency investor who owns multiple BAYC NFTs. Facing liquidity needs, he turned to NFTfi—a decentralized finance (DeFi) platform that allows users to borrow cryptocurrency by pledging NFTs as collateral.
Rajkumar used BAYC #2162 as collateral to secure a loan worth approximately $143,346 in Ethereum from an anonymous lender operating under the pseudonym ChefPierre. The two parties entered into a loan agreement in March 2022, which stipulated that:
- The NFT would remain in ChefPierre’s possession until full repayment.
- Rajkumar retained ownership and the right to redeem the NFT upon repayment.
- ChefPierre was prohibited from exercising the "foreclose" option—meaning he could not permanently seize or transfer ownership of the NFT even if repayment was delayed, unless explicitly agreed.
When Rajkumar anticipated difficulty repaying on time, he requested a loan extension. ChefPierre refused and threatened to take ownership of the NFT. After Rajkumar defaulted, ChefPierre terminated the redemption rights, transferred the NFT to his personal Ethereum wallet, and listed it for sale on OpenSea.
Rajkumar claimed partial repayment had been made but was rejected. He then filed for legal relief, seeking to enforce the original agreement and recover his NFT.
Court Ruling: Recognition of NFTs as Legal Property
In mid-May 2022, the Singapore High Court ruled in favor of interim relief, issuing a freezing injunction that temporarily blocked the sale or transfer of BAYC #2162—an NFT valued at around $500,000.
Justice Lee Seu Qin affirmed that NFTs qualify as digital ownership assets with tangible economic value and are therefore subject to legal protection. This aligns with earlier rulings by the UK High Court, which recognized NFTs as property capable of being frozen under civil injunctions.
The court emphasized that despite their intangible nature, NFTs represent unique digital rights stored on blockchain ledgers and can be treated similarly to physical assets in disputes over ownership and collateral. By applying long-standing principles of equity and property law to decentralized environments, the judgment affirms that digital assets are not beyond the reach of judicial authority.
This was the first instance in Asia—and among the earliest globally—where a court intervened in a commercial NFT dispute rather than a theft case. The ruling establishes that NFTs used as loan collateral are protected by proprietary injunctions, ensuring they cannot be disposed of during ongoing legal proceedings.
Innovative Service of Legal Documents via Social Media
One of the most notable aspects of this case was the method of serving court documents. Since ChefPierre’s real-world identity and jurisdiction were unknown, traditional service methods were impractical.
Drawing inspiration from UK precedents involving anonymous defendants, the Singapore court authorized service of the injunction through Twitter and Discord—platforms where ChefPierre was known to be active. The court reasoned that because ChefPierre operated publicly under a consistent online persona, these platforms constituted reasonable channels for notification.
This approach reflects a pragmatic adaptation of civil procedure to Web3 realities. While some jurisdictions have experimented with serving notices via blockchain transactions (e.g., minting an NFT containing legal documents), Singapore’s use of social media offers a simpler, more accessible solution—potentially setting a new standard for cross-border digital litigation.
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Challenges in Enforcement Across Jurisdictions
Despite the legal victory, enforcement remains complex. The injunction is framed as a worldwide proprietary order, yet enforcing it across decentralized networks poses logistical hurdles. Blockchain transactions are borderless and pseudonymous; no single entity controls OpenSea or Ethereum.
While the listing of BAYC #2162 remained active post-ruling, data showed it failed to sell after seven attempted transactions—possibly due to internal transfers between controlled wallets or market hesitation. Legal experts suggest that any third-party buyer acquiring the NFT during litigation could face civil liability for receiving disputed property.
Rajkumar’s legal team warned that unauthorized sales might constitute contempt of court, reinforcing deterrence even without direct technical enforcement mechanisms.
Broader Legal Implications and Unresolved Questions
This case highlights several unresolved issues in digital asset law:
- Can an NFT truly function as collateral under existing property laws?
- What constitutes valid foreclosure in DeFi lending agreements?
- How should courts balance smart contract autonomy with equitable remedies?
In many jurisdictions—including parts of Asia—NFTs have not yet been formally classified as movable property. In civil law systems, this creates ambiguity about whether rights like lien or pledge apply. Under typical contract law, creditors may claim ownership only if terms are clearly defined and legally binding.
Here, the court treated the dispute as one over equitable interest, freezing the asset pending resolution of ownership claims. Future rulings will need to clarify whether automated smart contracts override judicial discretion—or whether courts retain ultimate authority over asset disposition.
Code Is Not Law: Judicial Authority vs. Decentralization
The ruling challenges a core ideology in Web3 circles: "Code is law." Proponents argue that blockchain protocols should govern themselves without external interference. However, this case demonstrates that when real-world harm occurs—such as loss of valuable digital property—users expect legal recourse.
As Justice Lee’s decision shows, code does not replace law; it operates within it. Courts are increasingly stepping in to protect users from exploitation, fraud, and contractual breaches in decentralized ecosystems.
While some fear that judicial intervention undermines decentralization, others see it as essential for mainstream adoption. Legal clarity encourages institutional investment and consumer confidence in digital markets.
Frequently Asked Questions (FAQ)
Q: What is a freezing injunction in the context of NFTs?
A: A freezing injunction prevents the sale, transfer, or disposal of an asset—in this case, an NFT—during legal proceedings to preserve its value and availability for potential recovery.
Q: Can courts really stop someone from selling an NFT on a blockchain?
A: Not directly through code. But courts can issue orders that deter buyers and hold violators accountable for contempt or civil liability, creating strong practical barriers to sale.
Q: Why is this case significant for Asia?
A: It’s the first time an Asian court has recognized an NFT as legally protectable property in a commercial dispute, setting a precedent for future digital asset litigation across the region.
Q: How did the court serve documents to an anonymous defendant?
A: The court allowed service via Twitter and Discord—platforms where the defendant was publicly active—marking a shift toward flexible legal procedures in digital spaces.
Q: Does this mean NFTs are officially considered property everywhere?
A: Not universally. Recognition varies by jurisdiction. However, trends in Singapore, the UK, and the US suggest growing acceptance of NFTs as enforceable digital assets.
Q: What happens if the borrower repays after default?
A: If repayment occurs before final judgment and within contractual grace periods, courts may require return of the NFT, depending on whether foreclosure rights were properly exercised.
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Conclusion
The Singapore High Court’s ruling represents a watershed moment in digital asset jurisprudence. By affirming that NFTs are legitimate property subject to legal protection, it bridges traditional law with emerging technologies. While enforcement challenges persist, the symbolic weight of this decision cannot be overstated—it signals that justice systems are adapting to protect rights in virtual economies.
As NFT markets expand and DeFi lending grows, more disputes will arise. This case paves the way for clearer regulations, better user protections, and greater legitimacy for blockchain-based ownership worldwide.
Core Keywords:
NFT dispute, Singapore High Court, BAYC NFT, freezing injunction, digital asset ownership, DeFi lending, NFT collateral