Although NFT restraining orders and legal proceedings are the airdrop no one wants, they can be useful in combating crypto scams and blockchain-related crime.
NFT finally evolve beyond”dear JPEG“, and are now seeing their first uses in representing lawsuits and legal summonses in response to cryptocurrency scams and hacks. Blockchain-Based Non-Fungible Tokens (NFTs) have existed for years, but despite their ability to represent “literally anythingThey still haven’t been able to shake their public image as overpriced, overpriced collectible JPEG tokens. However, that’s starting to change thanks (oddly enough) to crime.
Blockchain wouldn’t be what it is without the myriad of scams, pumps and dumps, bogus projects, protocol hacks and smart contract bug exploits that have resulted in net losses of hundreds of millions. , as criminals are usually the first to use powerful new technologies for nefarious purposes. Although crime has not been the majority of crypto, it has always been a major problem haunting the industry. Fortunately, due to the transparent nature of public blockchains and the existence of blockchain analytics companies, it is now extremely difficult to liquidate Stolen NFTs and crypto. Still, that doesn’t stop scammers and hackers from trying, and governments know they have to catch up. At least two courts have now stepped up to show the way.
According Giambrone’s Law, on June 24, the High Court of England and Wales of the United Kingdom issued an order to initiate legal proceedings via the NFT airdrop to an anonymous person or persons operating a maliciously cloned brokerage site, as well as requiring five cryptocurrency exchanges operating in the UK to comply with returning the victim’s hijacked cryptocurrency. The move came weeks after the New York Supreme Court’s decision to broadcast an NFT restraining order in the wallet responsible for an $8 million hack against the LCX exchange, which was reported by Lexology July 6. These are examples of how NFT advantages and innovation may involve more than just speculative image files, and the Lexology article supports the claim that it could become a standard method of serving blockchain-related crime prosecution.
Criminal records for criminal portfolios
A much more useful property of NFTs is their ability to be easily verified in a wallet, like the restraining order served in the LCX case that alerts exchanges to past activity in that wallet. Airdropping non-transferable NFTs into wallets used in hacks and scams would allow exchanges, web3 apps, and even some smart contracts to check criminal backgrounds at the protocol level, and thus reject deposits and interactions without human intervention. While crypto transfers cannot be stopped, NFTs can be automatically airdropped into wallets that receive the stolen crypto, marking each new wallet it passes through. An NFT could represent a list of crypto scams and the crimes his wallet was involved in, and if ever the identity of the wallet’s owner is discovered, the NFT records could be used as evidence. Because the blockchain never forgets, these NFTs could be useful in making life difficult for scammers and hackers.
It’s not without its drawbacks, however. Realistically, an NFT legal proceeding won’t require someone to appear in court to face judgment for their chain crimes if they’re still anonymous, and it will likely result in them simply creating a new wallet and never to use the scarred wallet again, leaving the funds sitting in blockchain limbo forever. Additionally, a blockchain-savvy criminal who adheres to operational security practices could still use a mixing service to slowly launder their stolen crypto and liquidate it over time through exchanges that do not enforce KYC/AML regulations, but the process for cash out their crypto would still be very long, difficult and risky.
Overall, this is a big step forward for NFTs, as it shows a government’s willingness to exert a legal presence on the chain using some very powerful properties that NFTs possess, and hopefully this will demonstrate one way this technology can be used to combat crime on the blockchain. There is a lot to do using NFTs to represent anything, and these applications barely scratch the surface of a powerful technology that can do much more than represent collectible JPEGs.
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