There has been a significant judgment in the Tulip Trading case, involving claimed Bitcoin creator Dr Craig Wright, on which we previously reported.
Tulip, ultimately owned by Dr Craig Wright and his family, alleged that open-source software developers who worked on Bitcoin Core and Bitcoin Cash ABC software owed tortious and fiduciary duties to Tulip which required the developers to re-write or amend the underlying software code to enable Tulip to access its stolen Bitcoin.
In a decision in March 2022, when giving judgment on various jurisdictional issues, the High Court concluded that Tulip’s case that the developers owed tortious and fiduciary duties was not seriously arguable.
However, the Court of Appeal has now overturned this decision, finding that Tulip’s case was seriously arguable.
The Court of Appeal indicated the previous judgment was flawed because it assumed that the Bitcoin blockchain was decentralised and that the developers were a fluctuating unidentified body, whereas Tulip did not accept this.
Birss LJ, when giving judgment for the Court of Appeal, said it was arguable that the developers were subject to fiduciary (and potentially tortious) duties because they had undertaken a role which involves making discretionary decisions and exercising power on behalf of other people, in relation to property owned by other people, with which they had been entrusted. On that basis, they may be under a duty to introduce software code to return stolen Bitcoin to its true owner.
This case opens the door for significant developments in the law applicable to blockchain software developers.
See the Court of Appeal’s judgment here: https://www.bailii.org/ew/cases/EWCA/Civ/2023/83.html
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.