Technically, you’ll almost always have the right to sue someone for stealing an NFT. Whether it’s practical to sue for NFT theft is a different question.
How does NFT theft work?
There are two usual ways to steal non-fungible tokens.
Fraudulent Blockchain Transactions
The first common method of theft is fraudulent blockchain transactions.
Thieves may attempt to steal your login credentials, pose as an exchange or other third party, or initiate a fraudulent transfer.
You might think that the blockchain is completely traceable, so a stolen NFT can always be returned to its rightful owner. The problem is that since blockchain technology is decentralized, there’s usually no one who can decide whether a transfer was legitimate and force a reversal.
The next logical step is to identify the thief and go to court. Courts verify ownership of stolen art, digital assets, intellectual property, and other assets all of the time.
The problem is when Russian hackers create an account that looks like it’s in Brazil. It can be next to impossible to figure out who actually stole your NFT.
If you do figure out who stole your NFT, you can’t just walk into the local courthouse and sue someone who lives in another country. The laws to get jurisdiction and serve someone in another country are super complicated, and that’s when the other country has a well-functioning legal system that cooperates with U.S. Courts.
So even when you have a case for theft, conversion, fraud, or something, else, the costs or practicalities may make it impossible to sue.
Screenshotting and Downloading NFTs
There’s good news and bad news when it comes to screenshotting and downloading NFTs.
The bad news is that suing will be just about as hard as it would be with a fraudulent transfer.
The good news is that even if you can’t sue for money, it can be easier to have your stolen digital artwork taken down.
Most video and image services as well as search engines take copyright infringement pretty seriously. They can potentially be sued if they don’t.
If you see your artwork online, you can usually send a Digital Millennium Copyright Act notice to the image or video host as well as search engines that it appears in. That usually results in the content being taken down unless the person who posted it can show that they had the owner’s permission or that copyright laws don’t apply.
Most scammers will move on to easier targets once they get a DMCA notice.
If you think it’s unfair that art theft can still result in lost sales or having your work on someone else’s computer without paying for it, remember that’s the same way Netflix and other studio creators feel when people pirate their work.
What are your damages?
Let’s say that the person who stole your NFT is your next-door neighbor, so there’s no issue with finding the thief or jurisdiction. How much can you sue for?
If you want to sue, you have to prove what your NFT was worth or what you lost. You can’t just declare that it’s worth $1 million.
Courts will want to see evidence such as what your other work has sold for or what similar artwork by other creators has sold for. If you don’t sell the entire NFT but sell the rights to use it to multiple people, you might get what you normally receive for a single sale.
If you get the NFT back through the lawsuit, you probably won’t receive its full value. You’ll likely get compensated for what you lost by not having it during the time it was stolen.
In some places, you may also be entitled to receive compensation for your legal expenses or other costs.
Can you have someone prosecuted for stealing your NFT?
NFT owners can theoretically press charges for stolen NFTs. It’s theoretically the same as a stolen Mona Lisa.
In practice, the police or DA probably won’t do anything.
They’ll have the same problems tracking the thief down that you would to sue, and they probably won’t want to spend the resources. They’ll also have to prove the value of what the thief stole, which could be difficult if you never had a chance to sell your NFT.
Finally, most simply won’t understand NFTs or will look down on digital creators. They’ll probably give you the infamous “it’s a civil matter” before heading to Walmart to arrest people who missed scanning a stick of gum.