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Document Type

Note

Abstract

The non-fungible token (“NFT”) is a type of digital asset that is usually associated with an image and has a unique identifier. An NFT cannot be copied or reproduced, and records of NFT transactions are stored on the blockchain. NFTs are a recent innovation and have swept the world by storm. NFT sales tripled from 2019 to 2020 and DappRadar—the premier platform for hosting decentralized NFT portfolio management applications—estimates that NFT sales hit twenty-five billion dollars in 2021. Many NFTs appear to be artistic works and, either individually or in a collection, can be given away for free, sold for a few dollars, or sold for millions.

Not long after the NFT craze began, various individuals and organizations attempted to create NFTs either to gain internet popularity or to raise money. The success of NFTs also drew the attention of some unscrupulous individuals and scammers, such as the adult actress Lana Rhoades who made headlines after raising $1.5 million in Ethereum for a series of planned NFTs and subsequently disappearing from the project, in what has been termed a “rug pull” scam. While federal authorities have begun cracking down on these kinds of scams, there has also been a rise in NFT “heists.” In one case, thieves used social engineering to attain users’ login credentials on OpenSea—a popular NFT trading platform—and stole NFTs collectively worth over $1.7 million.

Given NFTs have visual representations, these high-profile thefts have left many wondering how, if at all, American art theft law applies to the theft of NFTs. In addition, due to the international nature of the internet, some have wondered whether international law governing stolen and illegally exported artwork could apply to NFT theft. These legal questions are the subject of this note.

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