ONTIER (on behalf of Tulip Trading Ltd) succeeds in overturning on appeal Mrs Justice Falk’s judgment of 25 March 2022 - which had denied jurisdiction over the claim brought by Tulip Trading Ltd that developers have duties to Bitcoin owners.
Tulip Trading seeks to recover £3+ billion worth of Bitcoin through a court order compelling developers to restore Tulip Trading’s access to these Bitcoin.
Claim has significant implications for other users and the way Bitcoin operates
London, 3 February 2023:
Three judges sitting in the Court of Appeal (Lord Justice Lewison, Lord Justice Popplewell and Lord Justice Birss), today granted ONTIER LLP client, Tulip Trading Ltd (Tulip) permission to pursue its claim for breach of fiduciary duties and/or a duty of care against the developers of various blockchain-linked digital assets, including Bitcoin.
Tulip is a Seychelles registered company whose primary beneficial owner is Dr Craig Wright. Tulip owns Bitcoin and other digital assets on four blockchain networks: (1) the Bitcoin Satoshi Vision network (“BSV”); (2) the Bitcoin Core network (“BTC”); (3) the Bitcoin Cash network (“BCH”); and (4) the Bitcoin Cash ABC network (“BCH ABC”) but is unable to access its coins following the theft of its private keys from computers at Dr Wright’s home in 2020. Tulip says the defendant developers control those networks but have thus far failed to assist it in regaining access to its Bitcoin, despite having a duty to do so.
Of the original 16 defendants, the 1st defendant (the Bitcoin Association on behalf of BSV), settled with Tulip; the 13th failed to respond (on behalf of BTC); and the remaining 14 (on behalf of BTC, BCH and BCH ABC) challenged the jurisdiction of the court to hear the claim. Their challenge led to Mrs Justice Falk’s judgment in March 2022 that Tulip had no real prospect of establishing at trial that the claimed fiduciary duties and duty of care exist, which has been overturned by the Court of Appeal today.
The Court of Appeal held that “[t]he time to decide on the duty in this case is once the facts are established” but that there is a “realistic argument” that the defendant developers are fiduciaries, and “to rule out Tulip’s case as unarguable would require one to assume facts in the defendant developers’ favour which are disputed and which cannot be resolved this way. If the decentralised governance of bitcoin really is a myth, then in my judgment there is much to be said for the submission that bitcoin developers, while acting as developers, owe fiduciary duties to the true owners of that property.”
As a result of today’s judgment, Tulip is now able to continue proceedings to seek to recover control over its very valuable assets. The English High Court will be given the opportunity to consider the extent of the duties owed by the defendant bitcoin developers to Bitcoin and other digital asset owners against the background of the Court of Appeal’s comments in relation to the existence of fiduciary duties.
Felicity Potter, Partner at ONTIER LLP comments:
“This is a much-welcomed judgment from the Court of Appeal. We asserted that it is inappropriate to summarily dismiss Tulip’s claims at an early jurisdiction hearing where the disputed underlying facts have not been assessed by the court, and the Court of Appeal agreed. The scope of developers’ duties must now be explored in detail at trial. The responsibilities owed by developers of digital assets to end users is of significant importance to all coin holders as the concept of digital assets becomes more mainstream. The consequences are particularly acutely felt by Tulip’s beneficiaries, given the amounts at stake. The outcome at trial will set the precedent for others to follow should they lose or be deprived of access to their digital assets. This is a step towards a properly regulated and well-governed digital asset ecosystem which should be welcomed by potential and current coin-holders alike. We look forward to successfully presenting Tulip’s case at trial in due course.”
Dr. Craig Wright says:
“We are delighted that the judges have granted permission for Tulip to pursue its claim for breach of fiduciary duties and/or duty of care against the developers of blockchain linked digital assets including Bitcoin. The court has clearly understood that the interests and actions of individuals using a cloak of decentralisation can control a global financial system. This will ensure that Bitcoin owners and that holders of Bitcoin can properly safeguard and recover control over their digital assets”.
The remaining defendants in this unprecedented action are the developers of BTC, BCH, and BCH ABC residing in various jurisdictions across the world including: Netherlands, Switzerland, St Kitts and Nevis, France, Japan, numerous different states in the USA, New Zealand and Australia.
In the Court of Appeal: Lord Justice Lewison, Lord Justice Popplewell and Lord Justice Birss; Lady Justice Andrews DBE (permission to appeal).
Legal Advisors: Tulip Trading Ltd was represented by Derek Stinson, Oliver Cain, Felicity Potter, Nicholas Dawson and Nicola Scarparo of ONTIER LLP.
Issued on behalf of ONTIER LLP by: Bell Yard Communications / email@example.com
Melanie Riley / firstname.lastname@example.org / +44 7775 591244
NOTES TO EDITORS
Tulip’s beneficial owner is Dr Craig Wright. Dr Wright is the inventor of Bitcoin who set out his vision for the digital currency in his famous White Paper under the pseudonym Satoshi Nakamoto. In February 2020, Dr Wright’s personal computer was hacked by persons unknown and encrypted private keys to two addresses (which hold substantial quantities of Bitcoin belonging to Tulip) were stolen. These assets were, and continue to be, owned by Tulip. ONTIER, on Tulip’s behalf, was originally granted permission to serve all the developers out of the jurisdiction by the Business and Property Courts of the High Court in London, following a 173 page application submission detailing the claim. Following the jurisdiction hearing, the Bitcoin Association, developers of BSV, entered into a settlement agreement with Tulip and so forms no part of the forthcoming trial. The litigation seeks to examine, for the first time, the nature and extent of legal duties conferred upon and owed by developers of blockchain-linked digital assets resulting from the control they exercise over their respective blockchains. As detailed in the Particulars of Claim, Tulip requested that the individual developers enable Tulip to regain access to and control of its Bitcoin on the grounds that they, the developers, owe Bitcoin owners both fiduciary duties and a duty of care under English law.
OTHER LITIGATION INVOLVING DR. CRAIG WRIGHT
There is a series of successful or pending legal claims issued by lawyers across jurisdictions on behalf of Dr Wright and his associated entities, to uphold his right to protect his lawfully-held digital assets, his reputation as the creator of Bitcoin and his associated intellectual property:
In 2022, ONTIER, on behalf of Dr Wright, defeated an attempt by Magnus Granath to obtain summary judgment on Dr Wright’s defamation claim against Mr Granath in England.
In September 2023, the Court of Appeal in Oslo will hear Dr Wright’s appeal of the November 2022 judgment that determined Mr Granath’s campaign of disparagement of Dr Wright through social media was not defamatory under Norwegian law.
In 2022, influential digital currency podcaster, Peter McCormack, was found by the English High Court to have defamed Dr Wright in 14 tweets and 1 YouTube video, in which Mr McCormack decried Dr Wright’s assertion that he invented Bitcoin. This judicial ruling came after Mr McCormack withdrew his reliance on a defence of truth to his publications.
In 2021 ONTIER, on behalf of Dr Wright, successfully brought a copyright claim against the anonymous digital currency enthusiast operating under the pseudonym “Cøbra”. Enforcement of this judgment is ongoing, with the court recently concurring with ONTIER that no individual can take part in proceedings for detailed assessment of costs whilst declining to inform the court of their identity.
In December 2021 Dr Wright successfully defended a claim brought in Florida, USA, by Ira Kleiman, brother of Wright’s late friend Dave Kleiman, who predicated the claim on the fact that Dr Wright is Satoshi Nakamoto, but that Wright created Bitcoin with the help of Dave Kleiman. The jury rejected that allegation.
In April 2022, ONTIER, on behalf of Dr Wright and companies owned by Dr Wright, issued passing off claims in the High Court against exchanges Kraken and Coinbase.
Dr Wright is also advised by ONTIER on his defence to the Crypto Open Patent Alliance’s (COPA) challenge to Dr Wright’s authorship of the White Paper, which will be heard in the High Court in early 2024.
ONTIER has an established and growing practice for recovering stolen and hacked Bitcoin. Its partners, Oliver Cain, Derek Stinson, Felicity Potter, Nicholas Dawson (Senior Associate) and Nicola Scarparo (Trainee Solicitor) are advising Tulip and instructed John Wardell KC, Bobby Friedman and Sri Carmichael of Wilberforce Chambers as Counsel on this matter.
The firm is well known for its high-profile Bitcoin and digital assets related litigation and has a highly-regarded dispute resolution team. Its work is almost exclusively international and multi-jurisdictional in nature, focused on complex, high value international litigation, insolvency matters and arbitration in a wide range of financial and industry sectors.
ONTIER is recognised in the UK Legal 500 for commercial litigation, international arbitration and civil fraud. The firm has offices in 18 cities in 13 countries.