Business: When code-is-law clash with real law

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Here’s a delightful NFT case out of Singapore:

In a first, a Singaporean man has won a court injunction to stop any potential sale and ownership transfer of a non-fungible token (NFT) that was previously owned by him. …

According to documents provided by the counsel to The Straits Times, the High Court’s injunction protects a unique Bored Ape Yacht Club (BAYC) NFT, which a Singaporean man is seeking to repossess from an online persona named “chefpierre”. …

Due to BAYC No. 2162’s rarity and high monetary value, Mr Janesh would often use it as collateral to borrow cryptocurrencies on a community platform known as NFTfi. 

But he took particular care to specify in loan agreements with lenders that he was not willing to relinquish ownership of the NFT, and would make full repayment of the loan to redeem it back.

In the event that Mr Janesh was unable to repay the loan in time, he would inform the lender, who should provide reasonable extensions of time for repayment. …

He first borrowed a loan from “chefpierre” on Jan 6 this year, which he subsequently paid back. …

He later entered into another loan agreement with “chefpierre” on March 19, but subsequently asked for an extension of time to repay the borrowed sum.

The two parties then began discussing the terms of a third loan, which eventually led to “chefpierre” offering to refinance the March 19 loan, and Mr Janesh agreeing.

But “chefpierre” subsequently refused to lend the additional sum to Mr Janesh, and threatened to use the “foreclose” option to seize BAYC No. 2162 if the March 19 loan was not fully repaid by 5am on April 21.

This gave the Singaporean just under seven hours to repay the loan, which he failed to do so, leading to “chefpierre” taking ownership of BAYC No. 2162.

What is Bored Ape Yacht Club, and how it has taken over the NFT world

So first of all, code is law, not your keys not your apes, blah blah blah: As far as the blockchain knows, chefpierre owns this ape, because he validly used NFTfi’s foreclosure function to transfer it to himself. But the Singapore court was sympathetic to the owner — and less sympathetic to the pseudonymous lender — and ordered the lender to give him his ape back. Will this legal ruling be binding on the blockchain? Honestly I don’t care that much.

Even ignoring the blockchain stuff, though, this is kind of a weird case: The borrower admittedly (1) borrowed money (2) secured by his ape and (3) did not pay it back on time, so the lender seized the ape. Seems fine! But the borrower’s claim is effectively that he was supposed to have more time to repay the loan, that the combination of their past dealings and their ongoing negotiations for a new loan made it unfair to hold him to the deadline at the last minute.

Anyway, I guess the code-is-law concept does not apply to the real law.