Craig Wright, who claimed to be Satoshi Nakamoto’s Bitcoin creator, was hit with a new setback when a London court ruled that developers are not responsible for helping the Australian computer scientist access two bitcoin wallets worth $3.9 billion.
Wright, whose Tulip Trading Limited (TTL), brought the lawsuit, stated that he had lost his private keys in the wake of a hack and asked for help from Bitcoin developers to help him regain control. Friday’s rejection by Judge Sarah Falk at the London High Court was not a surprise.
All 16 defendants are developers of Bitcoin-related programs, while 12 are Bitcoin Core developers. This chain is widely considered to be the definitive Bitcoin. Wright’s company also claimed developers of Bitcoin Cash, Bitcoin ABC, and Bitcoin SV. Wright claims that the fork Wright refers to is ‘Satoshi’s Vision’.
Wright claims the two Bitcoin wallet addresses he has are his. He does this through a series Seychellois-Antiguan shell companies, trusts, and other beneficial owners.
Wright claims that he kept the private keys in an encrypted file with backups on two cloud storage server backups. However, both the file as well as its backups were deleted or lost in a hack before February 8, 2020.
Since the hack, the assets have not changed. Wright requests that Bitcoin developers release a software upgrade that would allow Wright to access his wallets again. Wright even offered to pay them for it.
Judge Falk stated that, apart from their shared interest digital assets, there is very limited common ground between Claimant, Defendants. He also added that there is a significant amount of animosity which is more extensive than the specific dispute before the court. ‘
The judge wrote that Wright’s assertion that Bitcoin developers are able to do the things he requests is untrue.
According to the defendants, Bitcoin development is done by ‘a large and shifting group of contributors, without an organisation or structuring’. Miners and full-node operators will ignore any changes to the network software as they are against core community values. It would only lead to more network forks but it wouldn’t allow Wright to access the bitcoins that hold the value he wants.
The true extent of Bitcoin developers’ power depends on the central question in the case: whether the role and work Bitcoin developers creates a fiduciary obligation to TTL, assuming Wright was actually the victim of fraud (which the developers also dispute).
Judge Falk stated that it was difficult to see how TTL’s fiduciary duty case could be seriously argued.
“I don’t think bitcoin owners could realistically be described to have given their property to a fluctuating and unidentified group of software developers, at least not in the way claimed by TTL. ‘
Even if TTL could prove the facts it relies upon in a trial, judge explained that there was no realistic prospect for TTL to establish a breach of fiduciary obligation.
The judge stated that although the relationship between developers, owners, and bitcoin miners ‘generally has fiduciary qualities’, they are not bound to any one owner to the detriment or benefit of others.
“It is obvious that the Networks’ fundamental feature, at least as they exist, is that digital assets can be transferred using private keys. TTL tries to circumvent that. ‘
TTL’s claim about Bitcoin developers being liable for a ‘duty to care’ was not accepted by the judge. The network was allowed to function in a manner that could result in the loss of private keys. She wrote that such a claim was not’realistically plausible’. They would need to have a contractual relationship with Wright and his companies. She noted that the potential class in this instance is ‘by definition, unknown and potentially unlimited’.
It would be absurd to expose bitcoin developers to legal liability for anyone whose private keys have been lost or stolen. Falk stated that TTL would pay them to access the wallets and further “underlines the weakness in its case.”
Following a Florida trial, Wright found himself liable to conversion, a form theft, and was ordered to pay $100,000,000 to Ira Kleiman (brother of Wrights’ ex-business partner, David Kleiman), who once mined bitcoins.
