Craig Wright’s UK case against 16 Bitcoin developers is set to go to full trial

The UK Court of Appeal ruled that a claim by Craig Wright’s Tulip Trading against 16 Bitcoin developers should go to trial in London. The claim was initially rejected in March 2022.

The suit alleges that the developers owe “fiduciary duties” and “duties in indemnity” for rewriting or changing protocol code to give Wright access to 111,000 bitcoin (BTC) from two wallets whose private keys were allegedly stolen and then deleted in a hack. One of the wallets Wright claims to own, the 1Feex wallet, has nearly 80,000 BTC associated with the hack of Mt. Gox – the Tokyo-based bitcoin exchange that went bankrupt after a series of hacks between 2011 and 2014. As such, his ownership of these coins is disputed.

The case was first heard in the England and Wales High Court last year by Mrs Justice Falk, who concluded that Tulip had not “established a serious issue to be tried”. Wright then appealed Falk’s sentence and a 2-day hearing was held in late 2022 in the Court of Appeal.

In its ruling, the Court of Appeal said the claim presents a “serious issue to be tried” and cited four reasons for the appeal to proceed, including that the relevant area of ​​law is evolving, uncertain and complex and thus warrants a trial.

In fiduciary-beneficiary relationships, fiduciaries are required by law to act in the best interests of the beneficiaries (e.g. lawyer-client relationship). Harmful duties require a relationship where the service provider is reasonably expected to protect a person from some form of harm, otherwise the individual may be entitled to financial compensation (e.g. doctor-patient relationship).

Wright is essentially asking the court to treat developer-user relationships the same way it treats attorney-client and doctor-patient relationships.

Bitcoin Core developers work on the key software underlying Bitcoin and focus their efforts on a number of improvements (privacy, security, user experience, etc.) to the base layer of Bitcoin. They are often volunteers who may sometimes accept grant funding or donations to support their work.

Last year, Wright’s other company, nChain, developed a blacklist administrator for the Bitcoin SV (BSV) network. The tool allows users to freeze and confiscate BSV coins as long as they provide legal documents proving rightful ownership. Many see this as a violation of the Bitcoin ethos of decentralization and censorship resistance.

In 2021, the London High Court allowed Craig Wright’s lawyers to serve papers on the 16 developers, even though they are not resident in the UK. The developers include Cory Fields, Peter Todd, Roger Ver, Pieter Wuille and others who have worked on the Bitcoin network.

A legal representative for 14 of the developers said the Court of Appeal felt inclined to send the case to trial because the developers were all outside the court’s jurisdiction, City AM reported. A full trial is expected next year.

Craig Wright is a computer scientist who claims to be Bitcoin’s pseudonymous creator, Satoshi Nakamoto. In October, Judge Helen Engebrigtsen ruled in a trial in Norway, involving a claim by Wright that someone named Hodlonaut had defamed him, that Hodlonaut “had sufficient factual grounds to claim that Wright had lied and cheated in trying to prove that he is Satoshi Nakamoto.”

UPDATE (February 3, 14:10 UTC): Changes attribution to court decision, adds partial justification for upholding the appeal in the second paragraph.

UPDATE (February 3, 18:48 UTC): Adds information about court documents; adds explanation about the role of Bitcoin developers; adds information about BSV and its blacklist management technology.

EXPLANATION (February 3, 21:03 UTC): In the last paragraph, it clarifies what the judge in the Norwegian case said.