§ 78B-3-112 — Action for mistaken or fraudulent transaction on a reversible blockchain.

(1) As used in this section:

(1)(a) "Blockchain" means a digital ledger of transactions:
(1)(a)(i) that is distributed across multiple nodes;
(1)(a)(ii) that is mathematically verified; and
(1)(a)(iii) where the validity of transactions is maintained by consensus of nodes.
(1)(b) "Blockchain administrator" means a person that is responsible for maintaining and overseeing a blockchain.
(1)(c) "Division" means the Division of Consumer Protection created in Section 13-2-1.
(1)(d) "Fraudulent transaction" means a transaction that a person undertakes with the intent to deceive another person, including a transaction that involves:
(1)(d)(i) false representation;
(1)(d)(ii) omissions of material fact; or
(1)(d)(iii) the use of a false or stolen identity.
(1)(e) "Node" means a computer connected to a blockchain.
(1)(f) "Proof of identity" means government-issued identification that contains the following information:
(1)(f)(i) a person's name;
(1)(f)(ii) an individual's date of birth;
(1)(f)(iii) a person's address, which is:

(1)(f)(iii)(A) for an individual, a residential or business street address;
(1)(f)(iii)(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
(1)(f)(iii)(C) for a person other than an individual, the principal place of business; and
(1)(f)(iv) an identification number, which is:

(1)(f)(iv)(A) for a United States person, a taxpayer identification number; or
(1)(f)(iv)(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.
(1)(g) "Reversible blockchain" means a blockchain that:
(1)(g)(i) requires the blockchain's users to:

(1)(g)(i)(A) provide proof of identity to the blockchain administrator;
(1)(g)(i)(B) acknowledge and agree that all transactions occurring on the blockchain are subject to reversal by a sheriff node; and
(1)(g)(i)(C) agree to be subject to jurisdiction of a court in Utah; and
(1)(g)(ii) requires the blockchain administrator to:

(1)(g)(ii)(A) verify a user's identity by checking the user's proof of identity against government-issued identification databases; and
(1)(g)(ii)(B) maintain records of a user's proof of identity for a minimum of five years.
(1)(h) "Sheriff node" means the same as that term is defined in Section 67-5-39.
(1)(i) "Transaction" means the transfer of digital assets, rights, privileges, or obligations from one person to another that occurs on a blockchain.
(1)(j) (1)(j)(i) "User" means a person that interacts with a blockchain.
(1)(j)(ii) "User" includes a person that is:

(1)(j)(ii)(A) sending or receiving transactions;
(1)(j)(ii)(B) accessing data stored on the blockchain;
(1)(j)(ii)(C) participating in consensus or governance mechanisms;
(1)(j)(ii)(D) running a node on the blockchain;
(1)(j)(ii)(E) interacting with smart contracts or decentralized applications; or
(1)(j)(ii)(F) holding or managing digital assets.
(2) A plaintiff may bring a cause of action against a person to reverse:

(2)(a) a fraudulent transaction if:
(2)(a)(i) the transaction occurred on a reversible blockchain;
(2)(a)(ii) the plaintiff entered into the transaction with reasonable reliance on the person's:

(2)(a)(ii)(A) fraudulent representation;
(2)(a)(ii)(B) omission of material fact; or
(2)(a)(ii)(C) use of a false or stolen identity; and
(2)(a)(iii) the plaintiff was injured as a result of that reasonable reliance; or
(2)(b) a mistaken transaction if:
(2)(b)(i) the transaction occurs on a reversible blockchain;
(2)(b)(ii) the transaction resulted in a transfer of assets:

(2)(b)(ii)(A) to the wrong recipient; or
(2)(b)(ii)(B) in the wrong amount; and
(2)(b)(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.

Legislative History

Enacted by Chapter 365, 2023 General Session