Crypto influencer Shuifeng Dao (Yuebuke) sues "Goddess of Wealth" over unpaid NFT project fees totaling 730,000, court awards only 800 yuan due to lack of cost proof.

A well-known KOL, Shui Feng Dao, and the legal battle over the "Meng Chong Paradise NFT project

The digital landscape is witnessing a significant revival in the cryptocurrency market, paralleled by a surge in Non-Fungible Token (NFT) activities. This resurgence has spotlighted the intricate challenges of managing NFT projects, which require more than just captivating products. Effective community management, compelling art design, and strategic partnerships are pivotal. As the complexity of these projects escalates, many Web2 brands are increasingly leaning towards outsourcing their NFT ventures to Web3 enterprises. This narrative dives into the complexities of NFT project management through the lens of a legal dispute involving a renowned Key Opinion Leader (KOL) in the cryptocurrency sphere.

In the heart of Taipei, Taiwan, a legal battle unfolded that captured the attention of the NFT and broader Web3 community. Shui Feng Dao, a prominent figure in the cryptocurrency world with a substantial following on her YouTube channel "Yue Bu Ke," ventured into the NFT space with the "Meng Chong Paradise NFT project." This project, initiated at the peak of the NFT market boom in 2022, promised its holders a share of the profits from the whimsical "Meng Chong Paradise," a venture that boasted the unique appeal of "sitting in a Rolls-Royce watching alpacas."

However, what commenced as an ideal partnership soon spiraled into a legal debacle over construction costs. Shui Feng Dao's company, Yue Bu Ke Enterprises, filed a lawsuit against the "Wealth Goddess" Wang Youxin's company, demanding compensation of 730,000 New Taiwan Dollars. The crux of the dispute revolved around a contract termination and unpaid expenses, leading to a court case that was widely discussed across social media platforms.

Image Source: 臺北地方法院

The court's verdict shed light on the nuanced understanding of contractual obligations and expense claims in the NFT domain. It highlighted that expenses incurred before the contract's signing, such as meetings, art design (excluding a nominal fee for a trial drawing), community management, and engineering development, were preparatory efforts for the Meng Chong project, not damages due to contract breach. Consequently, Yue Bu Ke's claim was largely dismissed, with the court recognizing only the trial drawing fee as a legitimate expense.

How to mitigate risks in NFT collaborations and the importance of legal advice in contract drafting

This legal tangle underscores the inherent challenges in managing and executing NFT projects. The case exemplifies the critical need for transparent and well-documented contracts between parties. The difficulty Yue Bu Ke faced in proving the direct linkage of post-contract expenses to the NFT project emphasizes the importance of meticulous record-keeping and contract specificity.

Legal experts, like attorney Chen Zhe Wei, who commented on the case, stress the frequent occurrence of such disputes when expectations aren't met or documented precisely. The absence of a "liquidated damages clause" in the contract left Yue Bu Ke's company vulnerable, illustrating the protective power such clauses can offer in NFT project agreements.

The key takeaways from the lawsuit for NFT creators and Web3 enterprises

The unfolding and outcome of this legal dispute serve as a cautionary tale for NFT creators and enterprises venturing into the Web3 space. It brings to light several best practices:

• Clear Contractual Agreements: Ensuring all project specifics, expectations, and obligations are clearly defined and agreed upon in the contract can prevent misunderstandings and disputes.
• Proof of Expenses and Damages: Maintaining detailed records of all expenses and their direct relevance to the project is crucial for substantiating claims in potential disputes.
• Legal Preparedness: Consulting with legal professionals to review contracts and assess potential risks can save considerable time, resources, and legal headaches in the future.