Chinese Court Rules on NFTs
A Chinese court in Hangzhou ruled that the responsibility for guaranteeing the ownership of assets sold on NFT marketplaces resides with the marketplace itself. The ruling was the result of a suit by Shenzhen Qice Diechu Cultural & Creative Co. (pvt) against Yuanyuzhou Company’s (pvt) subsidiary “Bigverse” over artwork created by Chinese artist Bu2ma, as Qice owns the artwork and not the seller on the Bigverse site. The suit alleged that the site did not take necessary steps to ‘disallow and remove’ fake NFT’s that were placed on the site and caused the ‘uniqueness’ of the items to be lost. While the monitory damages sought were $1.6m, the court ruling only awarded $612 to the plaintiffs, however the ruling cemented the idea that anything that affected the consumer’s trust that NFTs were unique would undermine the industry’s business model and would therefore violate copyright law. The defendants argued (unsuccessfully) that since it is a 3rd party platform and the works are uploaded directly by the platform user, it should not be held responsible and performs a ‘post review’ at which point it can delete transaction notifications. Since NFTs operate through blockchains, they cannot be completely deleted from all nodes and enter a ‘black hole’ when there is suspicion of an illegal transfer.
With Alibab’s (BABA) NFT marketplace (Topnode) having more than 700,000 active users and over 4.5m NFT sold last year in China, there has been considerable controversy both by the Chinese government, who has warned consumers to be wary of fakes, fees and other dishonest practices, while NFT marketplaces that sell everything from digital art to virtual land have been popping up everywhere. In the above case, the platform charges what it calls a ‘fuel cost’ for purchasers to use the platform (non-refundable) and also receives a 5% fee on the sale of items (10% to list), along with another $33 “gas fee” and a 2.5% ‘writer’s royalty’, and there is no limit on the value of NFT’s sold, with some artwork sold at over $15m US.
With Alibab’s (BABA) NFT marketplace (Topnode) having more than 700,000 active users and over 4.5m NFT sold last year in China, there has been considerable controversy both by the Chinese government, who has warned consumers to be wary of fakes, fees and other dishonest practices, while NFT marketplaces that sell everything from digital art to virtual land have been popping up everywhere. In the above case, the platform charges what it calls a ‘fuel cost’ for purchasers to use the platform (non-refundable) and also receives a 5% fee on the sale of items (10% to list), along with another $33 “gas fee” and a 2.5% ‘writer’s royalty’, and there is no limit on the value of NFT’s sold, with some artwork sold at over $15m US.
Non-official image of disputed artwork in lawsuit - Source: Uncle Fuji - Weibo.com
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