Welcome to Degen Lawyer's Newsletter, this week we bring you some fascinating news. Every week we serve up curated analysis, hot takes, and expert commentary on all things emerging tech and law, sprinkled with a healthy dose of wacky and meme-worthy. Enjoy!

In this week’s edition:

WHAT’S HAPPENING AROUND THE WORLD

1. DPDP Rules: Coming Soon(ish)

Remember the DPDP Act, the big data privacy law that was passed last year? They’re finally ironing out the wrinkles on the rulebook, but we’ve got to wait until after the elections for everyone to have a peek. The industry’s been chomping at the bit for specifics on how this whole thing works, and they’re hoping the rules are clear and don’t stray too far from the original law. Businesses want guidelines tailored to their specific industry, something that is not a one-size-fits-all deal. Buckle up, data world, things are about to get interesting! Companies are already getting a head start prepping for the rules to drop. 

2. EU cracks down on Crypto Anon

EU just threw shade on anonymous crypto! Forget secret stashes of Bitcoin - crypto companies gotta know who you are now. Apparently, it's to stop shady dealings, but some folks are yelling about privacy rights. Turns out those crypto transactions leave a trail anyway, so the whole "anonymous" thing might be a myth. This new rule only applies to stuff linked to crypto companies, your personal stash is safe... for now. Not everyone is on board, with people saying EU can’t control the wild world of crypto anyways. Guess we’ll have to see how this crypto crackdown plays out!

3. Game over: No more shady gambling Ads in India

Big Bollywood trouble! The Indian government is throwing the red card at celebs and influencers who promote shady online gambling sites. Apparently it's a big no-no, and these stars could face fines or even social media exile! The government says it's all about protecting people from losing money and getting into trouble. They even tried some new rules to keep things safe, but it seems a lot of folks are still gambling on unregulated sites. Yikes! The government's cracking down though, blocking a bunch of these sites in November. Looks like the battle against online gambling in India is heating up!

THIS WEEKS DEEP READ

Navigating NFT Theft: Legal Insights for Buyers and Owners

The surge in popularity of Non-Fungible Tokens (NFTs) has brought about a parallel rise in theft cases within the NFT space. More than $100m worth of NFT’s were stolen in a variety of scams between January and July of 2022, according to a report by the blockchain analysis firm Elliptic. Unfortunately, it is often the buyer of the stolen NFT’s and the original owner who bear the brunt of such incidents, leaving scammers to evade legal consequences due to the pseudonymous nature of these transactions. This article explores the legal landscape surrounding NFT theft.

Are NFT’s Property?

The essence of property rights lies in the concept of ownership, control, and the ability to transfer or exclude others from using a specific asset. In the context of NFTs, which are unique digital tokens representing ownership or proof of authenticity of a digital or physical asset, establishing and safeguarding these property rights becomes paramount. Recent rulings from a UK court in the case of Lavinia Osbourne and a Singapore court in Bored Ape Yacht Club NFT case have emphasised that NFTs should be afforded the same protection as traditional property. When NFTs are considered property, theft of these digital assets carries legal consequences akin to traditional property theft. This shift in perspective ensures that individuals who knowingly or unknowingly engage in the acquisition of stolen NFTs can be held accountable under established legal principles. The question of title retention in NFT transactions becomes particularly contentious when an unsuspecting innocent buyer buys a stolen NFT.

 Liability of Innocent Buyers:

a. Common Law jurisdictions

Determining the liability of an innocent buyer who unknowingly acquires a stolen NFT involves a delicate balancing act between competing interests, with different countries adopting varied positions. For instance, common law countries namely, United Kingdom, India, Canada etc., generally adhere to the principle that ‘one cannot transfer a title they do not possess’ i.e., if a scammer illicitly obtains an NFT and subsequently attempts to sell it to an unsuspecting buyer, the legal framework in these common law jurisdictions works to protect the rights of the original owner. Since the scammer never had proper title to the NFT, their attempt to transfer ownership to a buyer is deemed legally invalid. Consequently, the original owner typically holds a superior title over the innocent buyer, a stance also prevalent in the United States.

b. Continental Europe

In contrast, some Continental European countries, including Austria and Sweden, permit innocent buyers to retain the title. This departure reflects a legal philosophy that places a higher emphasis on protecting the bona fide purchaser, even if the seller did not have valid ownership/ title. For instance, if an innocent buyer in Austria acquires an NFT without knowledge of its stolen status, the legal system tends to afford the buyer a more robust claim to ownership. The principle here is that the buyer, acting in good faith, should not bear the consequences of the original owner's misfortune.

Meanwhile, others, such as France and Germany, align with common law principles, favouring the original owner's superior title. This stance underscores the importance of a clear and unbroken chain of ownership, reinforcing the notion that the thief cannot transfer a title they did not rightfully possess

c. Market Overt

Notably, jurisdictions like Hong Kong and British Columbia adhere to the doctrine of "Market Overt," where possession equates to title, allowing a good-faith buyer to retain ownership or seek compensation from the original owner.

Liability for Knowingly Receiving Stolen Property:

If a buyer knowingly acquires stolen NFTs, criminal liability may ensue in most jurisdictions. This emphasizes the importance of due diligence on the part of buyers to avoid unintentional involvement in illicit transactions. This stance aligns with established legal principles governing the receipt of stolen property, emphasizing that individuals must not only respect property rights but also actively avoid participating in transactions that involve unlawfully obtained assets.

Additional Considerations:

Beyond the general principles outlined, courts may consider various factors in determining ownership and liability. These include whether the original owner took adequate precautions and if the buyer exercised prudence, conducting thorough due diligence before making a purchase.

Illustrative Example:

Consider a scenario where a Bored Ape with a market floor of 100 ETH is listed at 60 ETH on @opensea. This discrepancy raises a red flag and underscores the importance of buyers conducting due diligence before completing a transaction.

Conclusion:

In conclusion, the ownership of stolen NFTs is a nuanced issue influenced by jurisdictional differences. Buyers must navigate a complex legal landscape, recognizing that the burden of proof lies with them to demonstrate their lack of knowledge regarding the theft. As the world of NFTs continues to evolve, the intersection of property law and digital assets presents unique challenges that demand careful consideration and legal scrutiny.

Digital artist Pak’s creation, "Merge," made a splash in December 2021, selling for a whopping $91.8 million on Nifty Gateway! That's a record for a living artist, but some folks say it's a bit of a cheat. Here's the twist: "Merge" wasn't sold as one piece, but as a bunch of smaller tokens that people could buy, starting at $299. The price even went up every six hours! In the end, over 28,000 collectors grabbed a piece (or should we say token) of the action.

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