E-Commerce Law: Buyer Sues NFT Platform in China: Court Dismisses Lawsuit – NFT’s Proprietary Virtual Property | news

• The NFT platform terminates the purchase agreement due to inaccurate personal information
• Buyer sues NFT platform – court dismisses lawsuit
• Court considers NFTs as legally protected virtual property

In China, a case involving an NFT purchase landed in the Hangzhou Internet Court in east China’s Zhejiang province — the first court in mainland China to use blockchain technology in court proceedings, reports Denial. In the current case, the plaintiff sued a Hangzhou-based digital art platform for canceling an NFT sale and issuing a refund without his consent. The platform, in turn, said it made its decision because the claimant provided inaccurate personal information during the know-your-customer (KYC) verification process.


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The court’s decision provided interesting new insight into the status of NFTs before the law and the buying and selling of NFTs.

The case

In detail, as Cryptonews reports, the platform announced in February that it would be selling a limited number of “NFT Digital Collection Blind Boxes”. When purchasing the NFT box, buyers must enter a mobile phone number that matches the real name authentication. Invalid orders, due to failure to authenticate real name, false personal information or the like should be eliminated and the purchase refunded.

However, the plaintiff claimed to have purchased such a box after entering his mobile phone number and personal data. However, the company never delivered the NFT box and instead returned the money after 10 days. The plaintiff therefore demanded performance of the contract or payment of compensation.

The platform, on the other hand, claimed that the mobile phone number and ID number provided by the claimant when placing the order were inaccurate, and therefore refunded the money. According to the platform, the contract had not yet been concluded at this time, and even if it had been, it would have been terminated as agreed due to the wrong information provided by the buyer. Furthermore, the digital box has already been sold, so the platform could no longer send it to the plaintiff after the trial.

The Court’s decision

The Hangzhou Internet Court ruled against the plaintiff, saying the platform had the right to terminate the NFT purchase agreement. In its announcement about the sale of the NFT box, the platform indicated that it had the right to terminate any contract in case of incorrect information, Cryptonews reports. According to the court, the fourth digit of the mobile phone number and the sixth digit of the ID card on the identity card did not meet the requirements, which gave the platform the right to terminate the contract.

Since there was no longer a contract, according to Cryptonews, there was no legal basis for the fulfillment of the contract. Since there was no breach of contract either, the plaintiff’s claim for compensation “had no corresponding factual and legal basis”, according to the court.

The court considers NFTs to be legally protected virtual property

The summary from the Hangzhou Internet Court also shows that the court considers NFTs as virtual property protected by law.

According to the court, NFT collections have several characteristics, such as valuable, rare, discretionary and tradable, as well as characteristics associated with virtual assets, Global Times reports.

“As a virtual work of art, NFT Collectibles condenses the creator’s original artistic expression and has the value of related intellectual property rights,” the court said, according to the motion. “NFT is a unique digital asset on blockchain based on trust and consensus mechanisms between blockchain nodes. Therefore, NFT falls into the category of virtual property,” according to Hangzhou Internet Court.

The court also stated, according to recusal, that “NFT […] does not violate either Chinese laws or official regulations of China to avoid economic risks” and should therefore be protected by the laws of the country.

But the court also found that Chinese law “does not currently clearly prescribe the legal characteristics of NFT collections,” Cryptonews reports. However, according to the court, transactions in such cases amount to online sales of digital goods, and these e-commerce activities are regulated by China’s e-commerce law.

Editor finanzen.net

Image Credits: archy13 / Shutterstock.com

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