The Singapore High Court has authorized iSanctuary, a financial investigation firm, to attach non-fungible tokens (NFTs) bearing legal warning labels to cryptocurrency wallets associated with a multi-million dollar hack.
iSanctuary was hired by a businessperson who had fallen victim to a fraudulent activity involving crypto assets valued at over $3 million. The perpetrators of this fraud had exploited Singapore-based cryptocurrency exchanges to launder the stolen funds.
Following a meticulous investigation that encompassed both on-chain and off-chain procedures, iSanctuary successfully pinpointed a series of cold wallets holding the ill-gotten gains.
The firm then presented this evidence to the Singapore High Court, accompanied by a proposed solution aimed at preventing future fraudulent attacks. This solution involved attaching NFTs to these cold wallets, marking them as associated with criminal activities. The court authorized this action through a Worldwide Freezing Order.
While this method does not technically impede fraudulent transactions, it serves as an alert to counterparties that the wallets have been flagged due to suspected criminal involvement — thereby shielding them from potential frauds.
For the creation and attachment of these NFTs, known as “SoulBound,” iSanctuary collaborated with NFT provider Mintology. The involvement of Mintology was publicly confirmed via X (formerly Twitter) by its Founder, Zach Burks, who expressed his enthusiasm for “moving the NFT ecosystem into a realm of utility.”
The minted NFTs are non-transferrable and permanently affixed to the cold wallets. This permanent attachment enhances the ability to trace laundered funds and related hacking addresses.
This case exemplifies how emerging technologies can smoothly merge with well-established legal procedures to address issues in the Web3 financial landscape. It also highlights the practical utility of NFTs in real-world applications. This approach could also potentially become a part of cryptocurrency regulation, providing a new set of tools to operate securely within legal frameworks.