Digital Assets and the Long-Arm of the Law

By: Jason Nagi

A recent ruling from a federal district judge in the Southern District of New York, involving a trademark dispute between a digital asset offering and web-titan Alibaba, has caused heads throughout the FinTech world to turn.  In Alibaba Group Holding Ltd. v. Alibaba Foundation, the court exercised jurisdiction over a foreign entity, for selling something to an individual in New York. This jurisprudential principal, known as long arm jurisdiction, has existed for many years, and in every state.  But to many non-litigators and individuals in the world of FinTech, the Alibaba Court’s use of long arm jurisdiction is a poignant reminder that small actions in the U.S., or any of its states, can be used by lawyers, the SEC, and prosecutors, to haul an individual or company into court and forcibly prevent that company from acting in the virtual world, and thousands of miles away. The growing use of digital currency and digital assets that are securities, only heightens the importance of this ruling to the wider FinTech community. A poignant reminder of the truth in Kenny Rogers’ words: “You can’t out run the long arm of the law.” 

 A copy of the decision can be found here: Alibaba Group Holding Ltd. v. Alibaba Foundation.