The Singapore High Court has granted Intelligent Sanctuary (iSanctuary), a financial investigation firm, the authority to attach non-fungible tokens (NFTs) to cold wallets associated with a hacking incident. This decision involves tokenizing a court-issued worldwide freeze order as soulbound NFTs, which are then permanently linked to the implicated wallets. While these NFTs do not prevent transactions, they serve as a crucial warning to counterparties and exchanges about the involvement of these wallets in a hack.
iSanctuary claims to have developed a method to track funds leaving the compromised wallets through the use of these NFTs. The firm was engaged by a businessperson who had suffered a $3 million loss in crypto assets. The evidence presented, both on-chain and off-chain, led to the issuance of a worldwide injunction—a first for the Singapore High Court. The financial and crypto investigators from iSanctuary identified cold wallets containing the proceeds of the crime, and the court accepted their innovative method of using NFTs for service.
Jonathan Benton, the founder of iSanctuary, emphasised the significance of this decision, stating, “This is a game changer; it can happen in hours if needed. We can serve on wallets and start to police the blockchain, identify those holding illicit assets, serve civil or criminal orders, even red flags.”
The NFTs, known as SoulBound tokens, act as red flags for counterparties and exchanges, signalling that the wallets have been compromised. This legal milestone opens the door for a broader application of blockchain technology in the realms of legal and financial investigations. Despite the warning mechanism, transactions can still be conducted using these wallets.
The use of NFTs in legal processes is not confined to Singapore. Similar technologies have been successfully deployed in Italy and the United States to serve court summonses, indicating a global potential for NFTs in legal settings.
Mintable, a Singapore-based NFT studio, was identified as the creator of the SoulBound tokens. Zach Burks, the founder of Mintable, confirmed this partnership, underscoring the collaboration between innovative tech firms in the financial and blockchain space.
The case investigated by iSanctuary has international implications, spanning multiple jurisdictions, including Singapore, Spain, Ireland, Britain, and other European countries. The ongoing investigation showcases the global nature of financial crimes and the need for cross-border collaboration in addressing them.
iSanctuary’s success in locating 95% of the stolen assets within six hours was attributed to its proprietary REKTify process. This approach involves a combination of on-chain and off-chain investigations, utilising open-source intelligence (OSINT) to identify potential suspects and their locations. The comprehensive nature of the REKTify process ensures that clients receive continuous guidance on where efforts should be concentrated for optimal success in recovering stolen assets.