In a groundbreaking event, a prominent nonfungible token (NFT) influencer was served with a legal settlement demand via an NFT itself. Lawyer Mike Kanovitz, a partner at Loevy & Loevy, took to Twitter to announce the service of the settlement demand letter to the wallet address of the alleged influencer, identified as ‘Ben.eth’. The real identity of Ben.eth, however, remains unknown. The demand accuses Ben.eth of engaging in wire fraud “at a minimum” during a recent $7 million token presale for his token ‘$PSYOP‘.
According to Kanovitz, Ben.eth allegedly used a manipulative launch strategy involving the structure of Liquidity Pools (LP) and the token distribution approach. The influencer faced immediate allegations after mentioning in a tweet that 50% of the tokens were sent out and the rest would be distributed shortly.
Penalties for wire fraud, as stated in the demand letter, would base a treble damages award against Ben.eth, turning the $7 million into a staggering $21 million if found guilty. To avoid legal action, the letter urges Ben.eth to initiate a refund for all $PSYOP presale purchasers. Kanovitz suggests that if Ben.eth obliges, everyone can move forward with their lives. However, he threatens that his law firm will step in to correct the injustice if Ben.eth insists on causing harm to thousands of people.
Bringing the case to court would also turn out to be a painful process for the accused, warns Kanovitz, who stated that the lawsuit would name Ben.eth personally, alongside any known aliases. The court papers would be served to Ben.eth’s home address. If the influencer fails to cooperate with the letter, a subpoena could be issued for their communications, which Kanovitz believes will provide sufficient evidence to seal their fate. The lawyer even promises to reveal the true identities of any co-conspirators also involved in the alleged scheme.
Kanovitz concludes the letter by reminding Ben.eth that they are engaging in real fraud with real-world consequences. Ben.eth later responded to the letter, calling it “unprofessional” and even suggesting that it could land the lawyers in hot water with the bar association.
The unique case highlights the potential future of legal actions in the realm of cryptocurrencies and NFTs. While laws and regulations continue to evolve, incidents like this one serve as valuable examples of the pros and cons arising from the intersection of traditional legal systems and the rapidly growing world of blockchain technology.