Here’s what happened.
What Are NFTs?
NFTs can be anything on the internet like drawings or video clips. and you can buy and sell them on a decentralised digital ledger called the blockchain.
Although NFTs existed since 2014, the market met a boom last year following news of the sale of a collage of 5,000 digital images by American artist Beeple, for US$69.3 million.
Since then, many celebrities and companies have jumped on the bandwagon to create, buy and sell NFTs.
Negligence and Breaching Duty of Care After Premature Termination of NFT Sale
Mr Matthew Lim Yew Chuang of NFKings Productions acted as a middleman between Jim Thompson and Heart Media and Binance NFT.
Jim Thompson is a brand owned by The Thai Silk Company in Thailand and known for its iconic elephant prints. Heart Media owns and operates various digital and print media platforms, while Binance NFT was where the NFTs were sold.
They agreed that Jim Thompson would allow its intellectual property rights to be used, to create NFTs that will be marketed and sold by Mr Lim on the Binance NFT platform.
However, Mr Lim failed to inform Heart Media that the sale would only last for an hour, from 7pm to 8pm on 12 August last year.
Mr Lim countered by saying that “the hour rule is standard” so that the event won’t look bad if there was little interest. But there is no such rule by Binance NFT.
Heart Media said that the one-hour sale period meant it wasn’t able to reap the expected profits, yet it still had to fork out for the costs of marketing materials it prepared to generate interest.
Heart Media was also not informed that the unsold NFTs would be burned after the sale. Fewer than 6% of 60,6000 Jim Thompson NFTs had been sold, yet Binance NFT had displayed the NFTs as “Sold Out”. This misrepresented the true status of the NFTs to potential buyers.
This caused Heart Media and Jim Thompson to suffer losses and damages.
How Did This Collaboration Come About?
Mr Lim had approached Heart Media’s chief executive, Mr Olivier Burlot, in July 2021. He claimed that he was making huge profits by helping companies create and sell NFTs.
As Mr Burlot had wide-ranging connections amongst wealthy people and luxury brands, Mr Lim asked Mr Burlot to approach Jim Thompson, to collaborate on NFTs.
Mr Lim also suggested the sale have a “mystery box” format, that they introduce NFTs of different rarities, and also give buyers chances to win prizes after the sale.
Furthermore, he said Binance NFT will need 20% of sale proceeds to be set aside for “market-making” activities, like buying and selling of NFTs after the sale.
NFTs bought using the 20% funds will belong to Heart Media, Jim Thompson and Mr Lim.
Given his pretty comprehensive plan, Heart Media and Jim Thompson had relied on Mr Lim to facilitate the sale with Binance NFT.
First NFT Lawsuit in Singapore
The lawsuit was filed at a time when Singapore was seeing increasing interest in NFTs.
Lawyers from Wong Tan & Molly Lim LLC, namely Philip Ling, Eunice Wong and Chua Cheng Yew is representing Heart Media.
Meanwhile, Mr Lim is represented by lawyers Ng Si Ming, Ang Ann Liang and Tai Ai Lin from Allen & Gledhill LLP.
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