A Brazilian court has given the green light for the use of non-fungible tokens (NFTs) to inform unknown defendants involved in a matter surrounding missing Bitcoins (BTC) linked to a suspected pyramid scheme, BWA Brazil.
This ruling follows a legal action initiated by the trustee appointed for the bankrupt estate of BWA Brazil which aims to pause the statute of limitations on claims connected to crypto assets supposedly acquired with funds from creditors.
The estate requested permission from the court to utilize digital service of process by creating NFTs that contain the pertinent legal documents and sending them to the wallet addresses associated with the original transactions.
The court declared:
> “Creditors who have suffered substantial financial losses should not face additional harm due to legislative lags in adapting to technological advancements. Hence, I permit the trustee to undertake all necessary measures to execute the notification of this interruptive protest [which halts lawsuit deadlines] through electronic means utilizing NFTs.”
Additionally, the Public Prosecutor’s Office provided a supportive opinion endorsing the trustee’s request.
This action is aimed at the holders of digital assets whose identities are currently unknown, yet their wallet addresses can be traced via the Bitcoin blockchain.
The estate estimates that around 11,200 BTC were acquired using funds belonging to creditors, which, at present market values, equates to over $900 million.
As detailed in the filing, these transactions occurred prior to the bankruptcy and are now part of potential recovery efforts.
### A Major Scheme
Launched in 2017 by Paulo Roberto Ramos Bilibio, BWA Brazil marketed itself as an investment firm offering exposure to Bitcoin. It promised clients a fixed 5% monthly return on their deposits, a feat that is unachievable for a variable return asset like Bitcoin.
However, the company halted withdrawals in early 2020, resulting in customer losses estimated at R$300 million—or about $52.2 million. Authorities have indicated that this is among the largest reported losses in Brazil related to an alleged crypto pyramid scheme.
In July 2020, a Brazilian court approved BWA’s petition for judicial recovery, claiming it would compensate its clients. Less than a year later, another court ruling transformed the process from judicial recovery into bankruptcy, citing the firm’s lack of efforts to reimburse its customers.
Bilibio and his associate, Jessica da Silva Farias, are accused of using the funds retained by BWA to purchase Bitcoin. Both individuals are still at large and have not been apprehended.
### Blockchain Traceability Enables New Legal Approaches
The trustee emphasized that even with the anonymity of wallet addresses, Bitcoin’s technical framework allows for the tracking of individual coins. Once BTC enters a wallet, it can be transferred multiple times, but every transaction is immutably logged on the blockchain.
The filing acknowledged that while some assets were transacted through centralized exchanges, others may have moved through peer-to-peer avenues that circumvent third-party intermediaries.
Authorities might be able to trace the ultimate beneficiaries in cases involving exchanges located in Brazil, where firms are obligated to report user transactions to the Federal Revenue Service.
However, peer-to-peer transactions employing asymmetric encryption present notable challenges for attribution, making direct communication via blockchain an essential procedural advancement.
The integration of NFTs for legal notification signifies an evolution of procedural norms to address the unique aspects of blockchain-enabled financial activities, as courts navigate the jurisdictional and evidentiary complexities of decentralized asset transactions.