The court ordered the hackers to restore roughly $1 million in stolen USDT, however it is unclear how the money would be recovered.
According to recent court documents, a federal judge in Florida has ruled in favor of a plaintiff who sued anonymous hackers and sent formal notice of the legal action via NFT.
The unidentified hackers are responsible for the $971,291 worth of USDT (Tether) that they stole from plaintiff Rangan Bandyopadhyay’s Coinbase wallet in December 2021, according to the judgment, which is a default judgment from Judge Beth Bloom of the United States District Court Southern District of Florida.
The offenders have been ordered to reimburse Bandyopadhyay for the comparable sum, with interest to be added until the balance is paid in full.
Due to the blockchain, it is still a mystery who these digital burglars were and where they were located. In the case from last week, Judge Bloom allowed them to be served via NFT using the same on-chain addresses they had previously used to steal from Bandyopadhyay.
The plaintiff was duped into connecting his Coinbase wallet to a fictitious liquidity mining scheme by the hackers, who then transferred funds from that wallet to their own. The money eventually found up in a Binance Exchange Pool after multiple transfers.
The decision by Judge Bloom that NFTs were an acceptable method of legal notification for these defendants marks the first occasion that a federal court in America has permitted service of process through NFT.
A New York county court had earlier in the year approved the practice before last week’s decision. A U.K. judge determined that NFTs are a legitimate way to inform anonymous, on-chain defendants in that nation last summer.
The development represents a turning point for legal frameworks that are scrambling to keep up with a flood of novel criminal activities made possible by blockchain technology. Crypto-savvy hackers frequently construct sophisticated networks of fictitious businesses to convince unwary victims to link their wallets, which are then quickly drained. It can be challenging to tell the trustworthy players from the shady ones in an ecosystem where even well-known, honest actors frequently operate under the radar.
Once digital dollars and assets are stolen, recovering them is considerably more difficult.
But, Bandyopadhyay’s attorney Fernando Bobadilla, who successfully defended him in the case last week, claims that the blockchain can be problematic for hackers just as much as it is for their victims.
According to Bobadilla, “These fraudsters are typically organizations based outside of the United States, and everything they tell the victim is a fabrication regarding their own identities. But they are unable to conceal the fact that the monies were transferred through a blockchain. They can’t hide since the ledger is there.
Although he declined to specify, the lawyer is convinced that he and his client are close to recovering at least a portion of the cash that were taken.
He would only say, “Knowing where the crypto is makes the entire collection strategy viable.
Previously, US-based cryptocurrency firms like Coinbase, the centralized crypto exchange, and Circle, which creates the stablecoin USDC, have frozen funds or accounts at the request of the American government. The cryptocurrency that was taken from Bandyopadhyay’s wallet, USDT, is however issued by Tether, a Hong Kong-based company. Binance, the site where those funds were allegedly deposited last year, has previously frozen stolen funds transferred to its accounts, though the company is also well-known for not disclosing its place of origin.
In other NFT News. . .
DraftKings is slapped with a federal class action lawsuit because of the falling NFT prices.
Last week, a federal class action lawsuit against DraftKings was filed in response to the falling prices of the non-fungible tokens (NFTs) available on the company’s DraftKings Marketplace.
A blockchain data storage unit known as an NFT. NFTs can be used with a variety of digitized objects, including audio and video data and images. Illinois citizen Justin Dufoe filed the lawsuit earlier this month in US District Court in Boston. He alleges that the NFTs he purchased from the DraftKings Marketplace cost him about $14,000. Boston is the defendant’s corporate headquarters.
According to the complaint, DraftKings’ conduct exposed customers to risk because users of the marketplace were “completely dependent” on the company’s administrative efforts.
The lawsuit claims that DraftKings neglected to register its NFTs as securities with the Securities and Exchange Commission during the class period (SEC). If true, greater regulatory scrutiny could be imposed on the sportsbook operator due to the SEC’s potential classification of NFTs as securities.
DraftKings launches NFTs in mid-2021
Midway through 2021, as interest in and prices for the asset class were skyrocketing, DraftKings began operations for its NFT division.
The gaming business collaborated with Tom Brady, seven-time Super Bowl champion, and one of the greatest quarterbacks of all time, who also cofounded Autograph, an NFT collecting site. An NFT created by the artist known only as Beeple was auctioned off in 2021 for more than $69.3 million. Shalom Meckenzie, a member of the DraftKings board, spent $11.8 million purchasing the NFT known as “CryptoPunk #7523” at a Sotheby’s auction that year.
As NFT prices fell last year, that euphoria rapidly faded. In the example of Dufoe, those NFTs he bought for $72,261 on DraftKings Marketplace are now thought to be worth about $58,000.
Fanatics announced in January that it was selling Galaxy Digital its 60% investment in the digital collectibles platform Candy Digital for an unknown sum, underscoring recent instability in the NFT sector.
What could happen in the NFT lawsuit with DraftKings
It’s challenging to predict how the class action lawsuit will turn out. On the one hand, a jury might determine that there is a burden on the gaming company to properly implement the NFT platform and do so without putting customers at risk of financial losses given that DraftKings Marketplace is the only location in which customers can purchase and sell the firm’s NFTs.
The legal complaint states that “investors of DraftKings’ NFTs nominally associated with different players were entirely dependent on DraftKings’ managerial efforts, just as investors of traditional securities such as common stock, preferred stock, bonds, and warrants that have various features and profit opportunities are still equally dependent on the managerial efforts of the company.
On the other hand, class action lawsuits brought about by depreciating securities prices frequently fail because courts find that investing entails risk and that investment product issuers are not necessarily responsible for the market conditions that cause price declines.
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