Law firm Holland & Knight has become the first to serve a restraining order as an NFT. The asset recovery team of the firm issued the NFT on behalf of its client, LCX, to an anonymous hacker that exploited the platform back in January.
In a press release, LCX also gave an update on the investigation into the hack that saw it lose around $8 million, noting that the case is now being handled in several jurisdictions, including Liechtenstein, Ireland, Spain, and the United States.
Additionally, it has been able to track down and freeze around 60% of the stolen funds. These include 500 ETH and $1.3 million worth of stolen USDC. LCX says it used “algorithmic forensic analysis” to track down the transactions which were obfuscated using Tornado cash, a digital currency mixing tool.
Circle Consortium, an organization founded by Circle—the issuer of USDC—and Coinbase (NASDAQ: COIN), helped freeze the USDC based on a New York Supreme Court court order. At the same time, a Liechtenstein court order served by law enforcement in Ireland to Coinbase Europe was used to freeze the ETH.
The wallets that the exchanges investigations traced the funds to will also be reported, marked, and flagged by digital assets security firms, including Elliptic, as well as Etherscan and other public blockchain explorers. The law firm says it airdropped its “service token” or “service NFT” to the main wallet the investigation identified.
Holland & Knight has become the first law firm to serve a defendant by #NFT, which was created and airdropped by our #AssetRecovery Team. Learn more from our client @LCX. https://t.co/wWs2cOVVY1 #crypto #blockchain #legalinnovation pic.twitter.com/mo7VaAKEgo
— Holland & Knight (@Holland_Knight) June 8, 2022
The method “was approved by the New York Supreme Court and is an example of how innovation can provide legitimacy and transparency to a market that some believe is ungovernable,” LCX added.
The legal system continues to catch up with digital assets hackers
The Liechtenstein-based digital currency exchange was exploited after an anonymous hacker compromised the platform’s hot wallets. Other digital assets were also stolen asides from the USDC and ETH.
The case marks the first time a law firm has issued a restraining order on-chain. However, it is not the first time the legal system has introduced innovation to track down criminal actors in the digital assets space.
The U.S. Department of Justice recently launched its first criminal lawsuit involving using digital assets to evade sanctions. The department has also created a new unit to oversee digital assets investigations, appointing a heavyweight investigator to head the unit.
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