Theatre of the Absurd
Back in the 1950s and 1960s a theater critic named Martin Esslin came up with the term ‘The Theatre of the Absurd’ which was a moniker for plays that dealt with the philosophy of Albert Camus and how the life of human beings is a series of circumstances that put them in ‘hopeless’ situations that force them into meaningless actions. While this sounds depressing and painful, many of the plays associated with the Theatre of the Absurd were comedies, pointing out the ‘grin and bear it’ view of the human condition.
But Esslin and ToA playwrights like Ionesco and Beckett could not have come up with a more absurdist plot like the one that played out in the High Court of Singapore this month between Janesh Rajkumar and “Chefpierre”, a person of unknown name or location. The lawsuit defines NFTs as ‘property’ under Singapore law, which justified the court’s recent injunction against the sale of a piece of NFT art, part of the collection known as “Bored Ape Yacht Club” that are well-known collector’s items in the NFT space. Prices for some of the ~10,000 cartoon monkeys in the collection have reached ~$150,000, with investors such as Justin Bieber, Madonna, Mark Cuban, and Shaquille O’Neal creating an unusually robust market for the drawings, each of which are promoted as being ‘the only one of its kind in existence’. The item that is the basis for the lawsuit (Figure 3) is said to have the following ‘special’ characteristics:
But Esslin and ToA playwrights like Ionesco and Beckett could not have come up with a more absurdist plot like the one that played out in the High Court of Singapore this month between Janesh Rajkumar and “Chefpierre”, a person of unknown name or location. The lawsuit defines NFTs as ‘property’ under Singapore law, which justified the court’s recent injunction against the sale of a piece of NFT art, part of the collection known as “Bored Ape Yacht Club” that are well-known collector’s items in the NFT space. Prices for some of the ~10,000 cartoon monkeys in the collection have reached ~$150,000, with investors such as Justin Bieber, Madonna, Mark Cuban, and Shaquille O’Neal creating an unusually robust market for the drawings, each of which are promoted as being ‘the only one of its kind in existence’. The item that is the basis for the lawsuit (Figure 3) is said to have the following ‘special’ characteristics:
- A “jovial mouth” – A trait only 3% of the items in the collection can claim
- “Red Fur” – A trait which only 5% of the items in the collection had.
- A “beanie hat” – A trait which only 6% of the items in the collection sported.
- “Bored Eyes” – a trait which only 17% of the collection could claim.
- A “Purple Background” – which only 13% of the items had.
- It was a “virgin ape”, which in the court document was defined as not having been “fed with any mutant serum”, which, if fed, would have created a mutated version of the original ape, according to the claimant’s affidavit.
Bored Ape Collection - Item #3001 - Source: Singapore Court Documents
The claimant acquired the NFT on August 6, 2021 on the OpenSea (pvt) platform for 15.99 ETH, which we calculate was $46,226.13 (based on closing price) from ‘victorjia_eth”. The claimant used the purchased NFT as collateral for loans to buy other NFTs, being careful to use only highly ranked lenders on the NFTfi (pvt) system, a platform designed to match NFT users with cryptocurrency lenders. Janesh was careful to specify that the NFT would be held in an NFTfi escrow account until the debt was repaid and that if the repayment was not made on time, he would inform the lender and reasonable extensions could be given, also adding that at no time would the lender utilize the ‘foreclosure’ option on the NFT without first granting the claimant reasonable opportunities to make full repayment and retrieve the NFT from escrow.
As Janesh had used the same criteria for other loans using the NFT above, all of which were paid back in time, he thought there would be no problem when he asked a new lender (chiefpierre.eth) to make a loan for 45 ETH ($153,828.45) on January 6, 2022 for 90 days at 33% interest/yr. The lender agreed to the terms, including the non-foreclosure option and on March 18, 2022 the lender agreed to another loan for ~$150,000 for 30 days at 45% interest. When the claimant informed the lender on April 17 that he would need a short extension to pay back the March loan, the lender agreed and reassured him that the NFT would be returned to him once the loan was paid in full. A few days later, when the claimant informed the lender that he had contacted another entity who would grant him a loan to pay back “chefpierre.eth”, the chief decided to offer a refinance roll-up that would provide fresh funds to Janesh and deduct the outstanding loan.
That said, as one might guess, “chiefpierre.eth” changed his mind and informed Janesh that he must pay the loan back in full by April 22 or he would exercise the foreclosure option on NFTfi, Janesh was caught without ample time to find alternative financing, and the chief exercised the foreclosure option and moved the NFT from escrow into his account. While Janesh was ‘devastated’ he assumed that the lender would return the NFT when full payment was made and made a partial payment, but the chief no longer would discuss the matter, returned the partial payment and stopped the platform from accepting any other payments. Subsequently the NFT was listed for sale on Opensea and had a number of offers from potential buyers pushing the claimant to file a suit, including an injunction against the sale of the NFT.
The court agreed to the fact that the claimant was a Singapore citizen and effected the purchase in Singapore, giving it dominion over the suit, which was extremely important as if the court did not agree that it had jurisdiction, there was no other court that could rule, given that the NFT itself is held in the Ethereum blockchain, a network of computers across the world. But there was also the fact that the defendant’s (chiefpierre.eth) actual name and location were unknown. The ruling cited a precedent that stated that the defendant was not required to be specifically named, allowing the proceedings to continue, and also agreed that there was a ‘serious matter to be tried’, a requirement for the injunction. That said, the question remained as to whether the NFT itself was able to ‘give rise to proprietary rights’ as the NFT is really just information which would have questionable rights, but the court saw the NFT as ‘data encoded in a certain manner and securely stored on a blockchain ledger’, and ruled that the NFT did carry the right to be considered property and not just data.
The absurdity comes from a number of points here, the first of which is why some folks consider 10,000 cartoons of apes valuable, but we know the obvious answer is that they consider it valuable only because someone else says so, and there is the possibility that said ‘other’ person might be willing to buy it. Flashing the names of celebrities in front of people who are unable to control their emotions is certainly a way for some to make money collecting fees and interest, but we have to fall back on the old adage that ‘beauty is in the eye of the beholder’, so if someone finds cartoons of apes beautiful or in some way valuable, it’s their money and they should not be limited in what they want to do with it, no more than the purchase of a Rolls Boat Tail should be limited.
However, when it comes to defining property under the law the answers about whether a string of numbers that is spread across the globe is property is going to take years to define, and while we commend the Singapore courts for its efforts to define said NFT, we know only one group that is guaranteed to make money on NFTs and that is lawyers who we expect will be arguing for or against whatever NFT questions hit the courts all over the world. Will there be a unified answer that will stand the test of time? We doubt it, so for now it all seems like we remain a member of the cast of the Theatre of the Absurd, searching for meaning in the incomprehensible universe of NFTs and cryptocurrencies.
As Janesh had used the same criteria for other loans using the NFT above, all of which were paid back in time, he thought there would be no problem when he asked a new lender (chiefpierre.eth) to make a loan for 45 ETH ($153,828.45) on January 6, 2022 for 90 days at 33% interest/yr. The lender agreed to the terms, including the non-foreclosure option and on March 18, 2022 the lender agreed to another loan for ~$150,000 for 30 days at 45% interest. When the claimant informed the lender on April 17 that he would need a short extension to pay back the March loan, the lender agreed and reassured him that the NFT would be returned to him once the loan was paid in full. A few days later, when the claimant informed the lender that he had contacted another entity who would grant him a loan to pay back “chefpierre.eth”, the chief decided to offer a refinance roll-up that would provide fresh funds to Janesh and deduct the outstanding loan.
That said, as one might guess, “chiefpierre.eth” changed his mind and informed Janesh that he must pay the loan back in full by April 22 or he would exercise the foreclosure option on NFTfi, Janesh was caught without ample time to find alternative financing, and the chief exercised the foreclosure option and moved the NFT from escrow into his account. While Janesh was ‘devastated’ he assumed that the lender would return the NFT when full payment was made and made a partial payment, but the chief no longer would discuss the matter, returned the partial payment and stopped the platform from accepting any other payments. Subsequently the NFT was listed for sale on Opensea and had a number of offers from potential buyers pushing the claimant to file a suit, including an injunction against the sale of the NFT.
The court agreed to the fact that the claimant was a Singapore citizen and effected the purchase in Singapore, giving it dominion over the suit, which was extremely important as if the court did not agree that it had jurisdiction, there was no other court that could rule, given that the NFT itself is held in the Ethereum blockchain, a network of computers across the world. But there was also the fact that the defendant’s (chiefpierre.eth) actual name and location were unknown. The ruling cited a precedent that stated that the defendant was not required to be specifically named, allowing the proceedings to continue, and also agreed that there was a ‘serious matter to be tried’, a requirement for the injunction. That said, the question remained as to whether the NFT itself was able to ‘give rise to proprietary rights’ as the NFT is really just information which would have questionable rights, but the court saw the NFT as ‘data encoded in a certain manner and securely stored on a blockchain ledger’, and ruled that the NFT did carry the right to be considered property and not just data.
The absurdity comes from a number of points here, the first of which is why some folks consider 10,000 cartoons of apes valuable, but we know the obvious answer is that they consider it valuable only because someone else says so, and there is the possibility that said ‘other’ person might be willing to buy it. Flashing the names of celebrities in front of people who are unable to control their emotions is certainly a way for some to make money collecting fees and interest, but we have to fall back on the old adage that ‘beauty is in the eye of the beholder’, so if someone finds cartoons of apes beautiful or in some way valuable, it’s their money and they should not be limited in what they want to do with it, no more than the purchase of a Rolls Boat Tail should be limited.
However, when it comes to defining property under the law the answers about whether a string of numbers that is spread across the globe is property is going to take years to define, and while we commend the Singapore courts for its efforts to define said NFT, we know only one group that is guaranteed to make money on NFTs and that is lawyers who we expect will be arguing for or against whatever NFT questions hit the courts all over the world. Will there be a unified answer that will stand the test of time? We doubt it, so for now it all seems like we remain a member of the cast of the Theatre of the Absurd, searching for meaning in the incomprehensible universe of NFTs and cryptocurrencies.
Which would you choose?
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