It's official: NFTs are digital assets, Singapore High Court says in landmark ruling

A win for NFT owners?

May 19, 2022

It's official: NFTs are digital assets, Singapore High Court says in landmark ruling

If you're an non-fungible token (NFT) owner, rejoice.

In a landmark ruling – touted as the first in Asia – Singapore's High Court recognized NFTs as digital assets in a May 13, 2022 injunction.

The injunction – basically a court order – saw a Singaporean man successfully stop the potential sale and ownership transfer of a rare Bored Ape Yacht Club (BAYC) NFT.

Using Bored Ape Yacht Club (BAYC) No. 2162 as collateral.

According to reports by The Straits Times, the Singaporean citizen, Janesh Rajkumar, had been using BAYC No. 2162, an NFT he had purchased, as collateral for cryptocurrency loans from the users of NFTfi, a community platform.

In court documents, cited by The Straits Times, Janesh claimed to have taken a loan from "chefpierre" three times.

The first on January 6, which he successfully paid back. The second on March 19, for which he had to request an extension of time to repay the borrowed cryptocurrencies.

The third time saw both parties discussing terms for a third loan. Here's when "chefpierre" offered to refinance Janesh's March 19 loan.

Here's how the Singapore High Court favored the NFT owner.

What really saved Janesh was the fact that he made sure to clearly specify in every loan agreement with lenders that he will never be relinquishing his ownership of BAYC No. 2162.

In the event he's unable to repay the loan in time, he made a promise in each agreement to inform the lender to provide an extension so that he can make full repayment to get the rare NFT back.

In the agreement, Janesh also specified that the lender is not allowed to use the "foreclose" option, in this case, taking full possession of the NFT in the event the borrower failed to pay back his loan.

How a rare NFT was wrongfully taken in the eyes of the law.

Back to the March 19 loan refinance. Problems began when "chefpierre" declined lending the additional money to Janesh.

In fact, the NFTfi user also threatened to take possession of BAYC No. 2162 if Janesh failed to pay back the loan by 5 a.m. on April 21, 2022. Yikes!

This meant that Janesh only had seven hours to repay the loan – which he obviously failed to do. "chefpierre" then took possession of the rare NFT.

Janesh claimed to have repaid part of the loan but "chefpierre" returned the sum and even prevented the original owner of BAYC No. 2162 from completing his payment. To make matters worse, "chefpierre" even listed BAYC No. 2162 for sale on online NFT marketplace, OpenSea. Damn.

With the United Kingdom recently recognizing NFTs as "legal property", the Singapore High Court followed suit and now recognizes NFTs as digital assets in its landmark ruling.

Hope this prompts "chefpierre" to return BAYC No. 2162 to Janesh.