Plaintiffs who say they are victims of internet frauds or schemes are often stymied at the beginning of their lawsuits because they don’t really know the defendant’s name or address. They may only have an email address or the address of a crypto wallet.

Some lawyers have begun to try to turn the tables by using the same tools that have made the defendants hard to find in order to serve process on them. This is not a brand-new development, but there are more and more cases. I’d like to highlight two cases, which I’ve written about for the 2024 ABA International Law Section’s Year in Review, which is forthcoming.

The first case is Chow v. Defendant 1 (E.D. La. 2024). The plaintiff claimed that the unknown defendant ran a “global internet cryptocurrency fraud and conversion scheme” using “the internet and cryptocurrency blockchain electronic technology.” She sought leave to serve process by “Non-Fungible Token (‘NFT’) electronic transfer” under FRCP 4(f)(3), which allows service “by other means not prohibited by international agreement, as the court orders.” More specifically, she proposed transferring an NFT on a blockchain to the defendant’s crypto wallet addresses, which would include a URL pointing to a website with a notice and PDFs of the summons and complaint. The plaintiff argued that all her communications with the anonymous defendant had been online and that the fraudulent scheme “was facilitated online using cryptocurrency blockchain technology.” The court granted the motion, but on dubious grounds. It noted that the Service Convention does not expressly preclude service by NFT and that China (where the plaintiff believed the defendant to be) had not “specifically objected to service via NFT electronic transfer.” But the Convention is exclusive. That is, when it applies, a plaintiff must use one of the methods it authorizes or permits; it is not enough to say that the Convention does not expressly forbid it. Nothing in the Convention authorizes or permits service of process by NFT. Let me expand on that a little by asking whether we could, as with email, argue that airdropping an NFT is within the postal channel. The “email is mail” metaphor is pretty natural and hardly requires explanation. Your write and “address” an email and send it to your “post office,” your email service provider. Your provider sends to the email to the recipient’s “post office,” its ESP, which then delivers it to the addressee’s “mailbox.”

Is there a similar analogy between postal mail and an NFT airdrop? I don’t think so. In part, that’s because in an NFT airdrop, there is no intermediary between sender and receiver. Also, when you set up an email address, you are telling the world that you expect to receive email at that address. An airdrop take advantage of technical characteristics of blockchains to allow someone to put an NFT in a recipient’s wallet even if the recipient never had any intention of using the wallet to send or receive messages.

A better way to reach the same result is to note that because the defendant’s address and apparently his or her name were unknown, the Convention does not apply and so does not limit the methods of service the court can authorize.

In the second case, In re Celsius Network LLC (Bankr. S.D.N.Y. 2024), which arose on similar facts (an unknown defendant abroad who had a crypto wallet, and a motion for service via NFT), the court granted the plaintiff’s motion for leave to serve by alternate means, but it recognized that because the defendant’s address was unknown, the Convention did not apply. The court went on to analogize service by NFT to service by e-mail. It is important to understand that the court was not drawing the analogy in order to hold that service by NFT is within the “postal channel” as that term is used in the Convention. Instead, it was focused on whether service by NFT “comports with due process” by providing adequate notice to the defendant. Due process is always required, whether or not the Convention applies. But Celsius does not stand for the proposition that if service by email is permissible under the Convention, then service by NFT is permissible under the Convention, too.

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