There are 2 different issues here. Do courts physically have the ability to change the blockchain so that an NFT goes to a different wallet? No. Do courts have the ability to arrest someone when they ignore a court order to transfer an NFT? Yes. I don't think the courts really care about some pure intentioned "code is law" argument, because they tend to think law is law.

But the NFT was actually stolen, she was phished for her seed phrase, and the criminal moved ownership of the nft to their wallet, and then sold that to the person who was interviewed on the podcast.

It’s no different to a thief stealing your bike then selling it to someone else on a street corner. Just because that person is the current owner and thinks they legitimately purchased it doesn’t make it rightfully theirs. In fact it’s even worse because it’s trivial to identify who the rightful owner is in this case, and if you buy an NFT you can look back at exactly who has owned it previously.

Now imagine if this was the deeds to your house on the blockchain.

This is why I struggle understanding the mainstream usecases for crypto. Will it forever be bound to the "only put in what you can afford to lose?" mindset?

Or are people banking on another layered solution which has arbitration, disputes, clawbacks, etc - all built within the blockchain. (I remember EOS discussing something like this)

Note: I understand that risk is present in any financial endeavor, but knowing that the courts can help you does de-risk the amount people will feel comfortable investing.

> if the courts can "force" return of the NFT than the NFT isn't actually synonymous with the ownership, and so then is kinda pointless.

That's just the thing, isn't it? Courts have zero interest in upholding whatever boneheaded ideals that NFTs are meant to represent. Receiving stolen goods is a crime, and that's something courts are entirely geared towards resolving.

Is there really any question about whether or not courts can force the transfer of an NFT or impose penalties?

Say you hold most of your wealth in some cryptocurrency and are going to file for bankruptcy. Do you think the courts will tell your creditors that the Bitcoin is beyond reach? I suspect they wouldn’t treat it differently from any other asset.

That the blockchain is interpreted as a record of ownership is irrelevant. It merely records what has happened and says nothing about the nature of those transfers.

Nothing in crypto belongs to you. It belongs to the private key or whomever holds that.