A federal judge in Florida has ruled in favor of a plaintiff who sued anonymous hackers and issued formal notice of the legal action via NFT, according to recent court filings.
The ruling, a default judgment from Judge Beth Bloom of the United States District Court Southern District of Florida, declares that the unidentified hackers are on the hook for the $971,291 worth of USDT (Tether) that they stole from plaintiff Rangan Bandyopadhyay’s Coinbase wallet in December 2021.
The perpetrators have been ordered to pay the equivalent amount back to Bandyopadhyay, with the amount set to accrue interest on that debt until it is paid in full.
Because of the blockchain, it remains unclear who these digital thieves were, let alone where they reside. That’s why Judge Bloom permitted them to be served via NFT in last week’s case, using the same on-chain addresses they used to steal from Bandyopadhyay.
The hackers tricked the plaintiff into linking his Coinbase wallet to a fake liquidity mining project, and then drained money from that wallet to their own. After several transfers, the funds ended up in a Binance Exchange Pool.
Judge Bloom’s determination that NFTs constituted a legitimate form of legal notification for these defendants marks the first time an American federal court has allowed defendants to be served by NFT.
Prior to last week’s ruling, a New York county court permitted the practice early last year. Last summer, a U.K. court ruled that NFTs are an acceptable method of notifying anonymous, on-chain defendants in that country.
The trend marks a turning point for legal systems that are desperately trying to catch up with a slew of new types of crime facilitated by blockchain technology. Crypto-savvy hackers routinely create elaborate networks of fake companies to persuade unsuspecting victims to link their wallets, which are drained shortly thereafter. In an ecosystem where even high-profile, legitimate actors routinely operate anonymously, it can be hard to discern the legitimate from the dubious.
It is even harder to get digital funds and assets back once they’re stolen.
But, according to Fernando Bobadilla—the attorney who successfully represented Bandyopadhyay in last week’s case—the blockchain can be just as problematic for hackers as it so often is for their victims.
“These fraudsters are usually outfits outside of the United States, and everything that they tell the victim is a lie about their own identity,” Bobadilla told Decrypt. “But what they can’t hide is the transfer of the funds via the blockchain. The ledger is there and they can’t hide.”
The attorney is confident that he and his client are well on the way to recovering at least a portion of the stolen funds—though he wouldn’t elaborate on how that might be possible.
“Us knowing where the crypto is sitting makes the entire collection strategy viable,” is all he would say.
American-based crypto companies like Circle, which issues stablecoin USDC, and Coinbase, the centralized crypto exchange, have previously frozen funds or accounts at the behest of the American government. USDT, the cryptocurrency stolen from Bandyopadhyay’s wallet, however, is issued by Tether, a Hong Kong-based company; Binance, where those funds were purportedly deposited last year, has also previously frozen stolen funds transferred to its accounts, though the company has also famously avoided clarifying its home country.
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Read More: decrypt.co