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Utah Code Title 78B. Judicial Code § 78B-3-112. Action for mistaken or fraudulent transaction on a reversible blockchain

Current as of January 01, 2025 | Updated by Findlaw Staff

(1) As used in this section:

(a) “Blockchain” means a digital ledger of transactions:

(i) that is distributed across multiple nodes;

(ii) that is mathematically verified; and

(iii) where the validity of transactions is maintained by consensus of nodes.

(b) “Blockchain administrator” means a person that is responsible for maintaining and overseeing a blockchain.

(c) “Division” means the Division of Consumer Protection created in Section 13-2-1.

(d) “Fraudulent transaction” means a transaction that a person undertakes with the intent to deceive another person, including a transaction that involves:

(i) false representation;

(ii) omissions of material fact; or

(iii) the use of a false or stolen identity.

(e) “Node” means a computer connected to a blockchain.

(f) “Proof of identity” means government-issued identification that contains the following information:

(i) a person's name;

(ii) an individual's date of birth;

(iii) a person's address, which is:

(A) for an individual, a residential or business street address;

(B) for an individual who does not have a residential or business street address, a Post Office box number or the residential or business street address of next of kin or of another contact individual; or

(C) for a person other than an individual, the principal place of business; and

(iv) an identification number, which is:

(A) for a United States person, a taxpayer identification number; or

(B) for a non-United States person, a taxpayer identification number, passport number and country of issuance, alien identification card number, or the number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.

(g) “Reversible blockchain” means a blockchain that:

(i) requires the blockchain's users to:

(A) provide proof of identity to the blockchain administrator;

(B) acknowledge and agree that all transactions occurring on the blockchain are subject to reversal by a sheriff node; and

(C) agree to be subject to jurisdiction of a court in Utah; and

(ii) requires the blockchain administrator to:

(A) verify a user's identity by checking the user's proof of identity against government-issued identification databases; and

(B) maintain records of a user's proof of identity for a minimum of five years.

(h) “Sheriff node” means the same as that term is defined in Section 67-5-39.

(i) “Transaction” means the transfer of digital assets, rights, privileges, or obligations from one person to another that occurs on a blockchain.

(j)(i) “User” means a person that interacts with a blockchain.

(ii) “User” includes a person that is:

(A) sending or receiving transactions;

(B) accessing data stored on the blockchain;

(C) participating in consensus or governance mechanisms;

(D) running a node on the blockchain;

(E) interacting with smart contracts or decentralized applications; or

(F) holding or managing digital assets.

(2) A plaintiff may bring a cause of action against a person to reverse:

(a) a fraudulent transaction if:

(i) the transaction occurred on a reversible blockchain;

(ii) the plaintiff entered into the transaction with reasonable reliance on the person's:

(A) fraudulent representation;

(B) omission of material fact; or

(C) use of a false or stolen identity; and

(iii) the plaintiff was injured as a result of that reasonable reliance; or

(b) a mistaken transaction if:

(i) the transaction occurs on a reversible blockchain;

(ii) the transaction resulted in a transfer of assets:

(A) to the wrong recipient; or

(B) in the wrong amount; and

(iii) the recipient's refusal to return the assets resulted in the unjust enrichment of the recipient.

(3) Upon a finding of a mistaken or fraudulent transaction, the court shall issue an order to the Office of the Attorney General to reverse the transaction in accordance with Section 67-5-39.

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Cite this article: FindLaw.com - Utah Code Title 78B. Judicial Code § 78B-3-112. Action for mistaken or fraudulent transaction on a reversible blockchain - last updated January 01, 2025 | https://codes.findlaw.com/ut/title-78b-judicial-code/ut-code-sect-78b-3-112/

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