NFTs may not be fungible, but they are transferable, and they are sometimes stolen with no traditional recourse. The PLRB crew discuss Bored Apes, acronyms, whether pixels are physical, and whether the internet is just a fad. Coverage topics include direct physical loss, special limits of liability, Property Not Covered, and more.
Notable Timestamps
[ 00:38 ] - An erstwhile member of the Bored Ape Yacht Club clicked a malicious link and his NFTs were transferred to an unknown source. The police were unable to assist.
[ 01:06 ] - An NFT or "Non-Fungible Token" is a digital certificate of ownership residing on a blockchain. In the art world, someone may be the true owner of a piece of art while the actual piece of art is stored elsewhere, and even if someone makes a copy. NFTs apply that same logic to digital art and other media.
[ 06:03 ] - Several courts have held that the loss of NFTs is not considered a "direct physical loss." The microchip is physical, but the information on it is not.
[ 09:00 ] - Special Limits of Liability likely do not apply. However, an argument could be made that NFTs fall under the policy language for "securities, accounts, deeds, evidences of debt, letters of credit, notes other than bank notes, manuscripts, personal records, passports, tickets and stamps."
[ 11:17 ] - Newer "Property Not Covered" provisions often discuss digital currency, but NFTs are not considered currency. The defining characteristic of currency is that it is fungible: any dollar is exchangeable with any other dollar. On the other hand, NFTs are by definition non-fungible.
[ 13:12 ] - Just like traditional art, experts may be needed to evaluate the worth of NFTs.
[ 16:01 ] - Tim provides a recap of the scenario and the points above.
Your PLRB Resources
Coverage Questions on "Is the missing digital art covered property?" - https://search.plrb.org/?dn=80503&src=gsa and https://search.plrb.org/?dn=79717&src=gsa
Homeowners annotation on digital currency - https://search.plrb.org/?dn=80104&src=gsa
Webinar on "The Great Bitcoin Robbery Caper" - https://www.plrb.org/distlearn/webinars/vplayer.cfm?vid=w0130
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The views and opinions expressed in this resource are those of the individual speaker and not necessarily those of the Property & Liability Resource Bureau (PLRB), its membership, or any organization with which the presenter is employed or affiliated. The information, ideas, and opinions are presented as information only and not as legal advice or offers of representation. Individual policy language and state laws vary, and listeners should rely on guidance from their companies and counsel as appropriate.
Music: "Piece of Future" by Keyframe_Audio. Pixabay. Pixabay License.
Font: Metropolis by Chris Simpson. SIL OFL 1.1.
Icons: FontAwesome (SIL OFL 1.1) and Noun Project (royalty-free licenses purchased via subscription).
Sound Effects: Pixabay (Pixabay License) and Freesound.org (CC0).
https://pixabay.com/sound-effects/data-reveal-sound-6460/
https://thenounproject.com/icon/hacker-1942859/
https://thenounproject.com/icon/ape-1240957/
https://thenounproject.com/icon/binary-code-4635048/
