Brazilian prosecutors probe company over Amazon forest NFT sale

Friday, 29 July 2022 18:00 GMT

ARCHIVE PHOTO: An aerial view shows the Acari river in Apui, in the southern region of the state of Amazonas, Brazil, July 28, 2017. REUTERS/Bruno Kelly

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NFT company Nemus encourages eco-conscious customers to help preserve rainforest, but indigenous community says it has rights to the land

  • Confusion over ownership of rainforest land linked to NFTs
  • Indigenous people not properly consulted, prosecutor says
  • Case flags challenges of using digital assets for conservation

By Andre Cabette Fabio and Avi Asher -Schapiro

RIO DE JANEIRO, July 29 (Thomson Reuters Foundation) - A Brazilian firm selling non-fungible tokens (NFTs) it says are linked to physical land in the country's Amazon rainforest has been asked by Brazilian prosecutors to prove its ownership of the land, which is in territory claimed by indigenous people.

The prosecutor's office has given Nemus 15 days to show the land belongs to it and has accused the company of pushing indigenous people in the region to endorse documents they could not understand.

"People from the company delivered a sign to the villages, written in English, and asked the indigenous people, who can barely read, to sign documents without clarifying the content or providing a copy," the prosecutor's office said in a public statement issued on July 25, without specifying further.

Federal Prosecutor Fernando Merloto Soave told the Thomson Reuters Foundation his office had decided to publicize the situation in the media to raise awareness.

"The company advertises that indigenous people are benefiting, but at the same time a part of them came to us to denounce that they don’t know what is happening,” he said.

Soave said his office was trying to work out if the land is privately owned, but added this would be made invalid if the territory is recognized by the federal government as indigenous.

He also said it was clear that indigenous communities had not been consulted in this case, as required by the International Labour Organization.

Nemus - whose slogan is "Treasure the forest" – sells NFTs it says are a digital representation of real pieces of land in the Brazilian Amazon.

Buyers, called "guardians", do not gain ownership of the land themselves but the company guarantees their money will be used to preserve the forest and support the people living there.

The buyers receive a collectable digital card that can be traded for game rewards.

A non-fungible token (NFTs) of an illustration of a Brazilian king vulture by Los Angeles based graphic artist Ben Kwok, and that has been released to Reuters on March 26, is being offered by Brazilian company Nemus as a way they say can fund conservation in the Amazon rainforest, in Brasilia, Brazil March 26, 2022. NEMUS/Handout via REUTERS

NFTs are a digital asset that exists on blockchain, a record of transactions kept on networked computers. All kinds of digital objects - including images, videos, music and text - can be bought and sold as NFTs.

In a statement to the Thomson Reuters Foundation, Nemus said it had "requested and received formal approval from FUNAI (Brazil's indigenous affairs agency) to navigate along the Seruini River", which is the traditional access route to the region where the land underlying the NFTs is located.

A promotional video issued on July 20 by Nemus shows Silvio Antonio de Souza, a man from the indigenous Apurinã community, going to the local notary's office and allegedly changing the name of the land claimed by the company to "Non-Fungible Territory", in a play on the NFT acronym.

Antonio de Souza could not be reached for comment but his son told the Thomson Reuters Foundation that his father was not given a copy of the document.

Normally, changing the name of the area would require consensus among the whole community, said Daniel Lima of the Indigenous Missionary Council (CIMI), a Brazilian non-profit group.

LAND DISPUTES

Nemus says it owns 41,000 hectares (101,313 acres) of forest in the Amazon. On its official website, the company provides a digital map of an area in the municipality of Pauini, in the state of Amazonas - one of its plots that have already been divided into hundreds of squares, each one equivalent to an NFT.

But Melquisedeque Lopes Soaris Apurinã, a local indigenous leader, told the Thomson Reuters Foundation that the NFT company's claim to the land was illegitimate.  

"(Nemus) said they would buy the land and give it to us. But we already lived there - our veterans, grandfathers, great grandfathers all died there," he said.

"They say they want to buy the land to preserve the forest. But we are preservers, we have been here for a long time and it was never deforested."

Apurinã leaders say the land sits in an area that has been going through a government process since 2012 that could lead to its official recognition as territory of the Apurinã people.

ARCHIVE PHOTO: Members of different Amazonian tribes occupy the headquarters of Brazil's indigenous affairs bureau FUNAI as they protest a court decision to evict them from a nearby plot of land they have been occupying for several weeks, in Manaus, September 19, 2013. REUTERS/Bruno Kelly

CIMI worked with community members to alert Brazilian prosecutors to the NFT situation, according to Lima.

According to official maps from the state of Amazonas consulted by CIMI and another green group, IPAM Amazonia, the territory is classified as a public forest - although such maps do not always log private ownership. 

In a phone interview with the Thomson Reuters Foundation from the U.S. state of Florida, Nemus founder Flavio de Meira Penna denied claims by CIMI that the land is public property.

"I do not know where this came from - it (the land) is private; it belonged to a family from Sao Paulo for more than 40 years," Penna said, adding that the family had owned a nut plantation in the area.

This information concurs with the statement from Nemus, which noted that the territory "is not in any Indigenous Land or Reservation" and is "duly registered in the Public Notary of Pauini".

Land ownership is a constant source of disputes in the Brazilian Amazon. The Brazilian Constitution guarantees indigenous communities the right to traditional territories.

But parts of the forest have been historically transferred to non-indigenous private owners.

The Amazon is also plagued by a centuries-long practice of illegal privatization through land seizures - some of which have been retroactively recognized by the government as legal.

GREEN BLOCKCHAIN

Nemus is part of a growing constellation of cryptocurrency companies that say they want to leverage blockchain technology to help preserve nature and fight climate change.

Other efforts include turning carbon offsets into digital tokens, initiatives to log forest preservation programs on blockchain digital ledgers, and projects to create crypto-based financial derivatives to fund green projects.

In a March interview with Reuters, Penna said he hoped to raise up to $5 million to buy another two million hectares of land already under negotiation in Pauini.

Buyers of the Nemus NFTs - which cover plots ranging from a quarter of a hectare to 81 hectares, and cost as little as $250 - said they expected their money to go towards preserving the rainforest.

Bhavesh Bati, a solar energy entrepreneur who recently bought an NFT from Nemus, said it had "always been my dream to buy rainforest lands and keep it aside fully protected".

"In Nemus, I saw that I can buy a parcel and with my little money I can help with conservation efforts there on the ground," he added.

John Reed Stark, a former head of the Office of Internet Enforcement at the U.S. Securities and Exchange Commission, told the Thomson Reuters Foundation that people who buy NFTs rarely understand what they are purchasing, which could lead to them being misled.

"I am not surprised by the fact that someone would use the hook (that) you are helping the rainforest to sell an NFT," he said.

Related stories:

IN FOCUS-Amazon forest and climate change

In Ecuador's Amazon, indigenous forest defense gains legal ground

Colombia's indigenous form 'mini-government' to save Amazon

(Reporting by Andre Cabette Fabio and Avi Asher-Schapiro; Editing by Barry Malone and Megan Rowling. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)

Our Standards: The Thomson Reuters Trust Principles.

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