Plaintiff wins case against hackers after serving court papers via NFT
A federal judge in Florida has ruled in favor of a plaintiff who sued Anonymous hackers and gave formal notice of the lawsuit via NFT, according to recent court documents.
The order, a default judgment by Judge Beth Bloom of the United States District Court for the Southern District of Florida, declares that the unidentified hackers are on the hook for USDT (Tether) worth $971,291 that they stole from plaintiff Rangan Bandyopadhyay’s Coinbase wallet in December 2021.
The perpetrators have been ordered to pay an 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 is still unclear who these digital thieves were, let alone where they live. That’s why Judge Bloom allowed them to be served via NFT in last week’s case, using the same chain addresses they used to steal from Bandyopadhyay.
The hackers tricked the plaintiff into connecting his Coinbase wallet to a fake liquidity mining project, then siphoned money from that wallet into their own. After several transfers, the funds ended up in a Binance Exchange Pool.
Judge Bloom’s ruling that NFTs constituted a legitimate form of legal notice for these defendants marks the first time a US federal court has allowed defendants to be served by NFT.
Before last week’s ruling, a New York County Court allowed the practice early last year. Last summer, a UK court ruled that NFTs are an acceptable method of notifying anonymous chain defendants in that country.
The trend marks a turning point for legal systems that are desperately trying to cope with a range 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 difficult to separate the legitimate from the dubious.
It is even more difficult to recover digital funds and assets once they are stolen.
But according to Fernando Bobadilla – the lawyer who successfully represented Bandyopadhyay in last week’s case – blockchain can be just as problematic for hackers as it so often is for their victims.
“These scammers are usually outfits outside the US, and everything 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 lawyer is convinced that he and his client are well on their way to recovering at least part of the stolen funds – although he will not elaborate on how that might be possible.
“Knowing where the crypto sits makes the whole fundraising strategy viable,” is all he would say.
US-based crypto companies such as Circle, which issues the stablecoin USDC, and Coinbase, the centralized crypto exchange, have previously frozen funds or accounts commissioned by the US government. However, USDT, the cryptocurrency stolen from Bandyopadhyay’s wallet, is issued by Tether, a Hong Kong-based company; Binance, where these funds were reportedly deposited last year, has also previously frozen stolen funds transferred to their accounts, but the company also has known avoided to clarify the country of origin.