The first-ever Chinese court decision to penalize the NFT marketplace that gave its user the ability to mint the NFT of stolen artwork was rendered.
As stated in the South China Morning Post, the case was initiated after a lawsuit filed by Shenzhen-based Qice against BigVerse, a subsidiary of which is the NFTCN marketplace. According to the lawsuit, a marketplace user stole one of the cartoons by Chinese artist Ma Qianli, the author’s work was copyrighted.
In the final judgment, the court held that the NFTCN marketplace was guilty of failing to verify the forgery and theft of intellectual property published on the NFT marketplace. The marketplace was charged with facilitating the violation of the “right to disseminate works through information networks.”
The reason for the lawsuit was the image of a cartoon tiger getting a shot of a vaccine. An unknown user of the same NFTCN marketplace purchased an illegally created NFT for only 900 Chinese yuan, which in terms of dollars is approximately 137 USD. Despite the cost of the sale, the court ruled that NFTCN’s parent company must pay a fine of 900 Chinese Yuan, or $611, to Qice, and send the stolen work to the “eater address,” to withdraw it from circulation. “Eater address” works similarly to the cryptocurrency burn mechanism. Such addresses are deprived of private keys.
The attitude of the State
Despite the Chinese government’s harsh stance on cryptocurrencies in the country, they refrain from fully blocking non-fungible tokens. Though, the three Chinese governments, in a joint warning, announced the “hidden risks” of investing in NFTs.
The China Banking Association, China Internet Finance Association, and China Securities Association all launched initiatives aimed at encouraging innovation in the crypto and blockchain space with a focus on NFTs, as well as “resolutely curb the tendency of NFT financialization and securitization” to reduce the risks associated with illegal activities.
Chinese citizens have also been warned by the government to avoid centralized transactions, investing in NFTs directly or indirectly as well as using Bitcoin and other cryptocurrencies like Ethereum or Tether “as the pricing and settlement tools for NFT issuance transactions.”