The $7.4bn court case Craig Wright could still win

It’s official — Craig Wright is not Satoshi Nakamoto.

The declaration on Thursday from a London High Court judge hands Wright’s opponent, the Cryptocurrency Open Patent Alliance, the win it wanted.

This ruling severely dents the Australian-born computer scientist’s claims that he is the mysterious inventor of Bitcoin — assertions he has used to pursue Bitcoin developers, crypto businesses, and bloggers in a string of court cases.

But there’s still a case that Wright has a shot at winning.

This case — Tulip Trading Ltd vs Van der Laan — will be heard this year in the London High Court.

This case between Tulip Trading — a Seychelles-registered company Wright owns — and a group of Bitcoin devs will decide not only Wright’s potential access to $7.4 billion in Bitcoin, but the future of the cryptocurrency as we know it.

Claim to identity

The case Wright has just lost hinged on “the identity issue” — whether he could credibly prove he authored the Bitcoin whitepaper, a claim he has made since 2016.

It’s not the only case to which the “identity issue” is central.

There are three others in the London High Court — against exchanges Coinbase and Kraken, and a group of Bitcoin devs — brought by Wright and alleging copyright infringement over changes made to the Bitcoin blockchain.

In the Tulip Trading case, however, Wright’s identity as Satoshi is not a central consideration.

And worryingly for Bitcoin’s proponents, judges have said that Wright has a credible chance of success in Tulip.

Tulip saga

The Tulip saga began in 2020 when Wright said the network of his home office in Surrey, England, had been compromised.

He said a hacker stole private keys associated with two crypto wallets belonging to Tulip Trading.

Those wallets contained 110,000 Bitcoin — worth about $7.4 billion today.

In 2021, Wright, via Tulip, made a move to restore the allegedly stolen assets — filing suit against 16 Bitcoin developers.

In the suit, Tulip argued that:

• Bitcoin devs are a kind of “fiduciary” — bound to act in the best interests of users of the blockchain;
• They were therefore responsible for the lost Bitcoin;
• They must therefore provide a software patch to restore Tulip’s assets.

Tulip argued, in filed court documents, that such a patch would not be technically difficult to implement.

Wright said that his company, nChain, was working on a modification in the Bitcoin Satoshi Vision network that would allow users to freeze assets and “return control on a case-by-case basis,” according to court documents.

BSV is the fork of the blockchain Wright has championed and that he claims is the original.

The devs argued, on the other hand, that they bear no such responsibility, and that a backdoor in the blockchain wouldn’t work anyway.

They called Tulip’s claim “fraudulent” and “an abuse of the court’s process.”

Dangerous

Here’s why this case has crypto proponents worried.

Tulip was initially thrown out of court, as a judge concluded that the company didn’t have a realistic prospect of establishing that the Bitcoin devs owed it a fiduciary duty.

However, an appeals court reinstated the case in early 2023.

“That’s dangerous,” George Morris, a partner at Simmons & Simmons in London, told DL News during the trial.

It implies that the appeals court judges believe Tulip does, in fact, have a reasonable chance of success.

A win for Wright would establish his central contention — that Bitcoin devs owe a fiduciary duty to users of their software.

For Bitcoin developers, that could create a terrifying precedent. Crypto devs have never had to shoulder that kind of liability.

‘If someone built a backdoor in the blockchain, you wouldn’t be able to trust the software, you’d have to trust the person. That doesn’t work in the world of crypto.’

Backers like the Bitcoin Legal Defence Fund say that given the open-source and decentralised nature of their work, they don’t even know who or where their users are.

The fund says that will deter developers from building Bitcoin projects — and open-source software in general.

It’s also dangerous for the decentralised and trustless nature of the blockchain, the qualities that make Bitcoin attractive to its users.

“If someone built a backdoor in the blockchain, you wouldn’t be able to trust the software, you’d have to trust the person. That doesn’t work in the world of crypto,” Morris said.

There’s hope, however, for the Bitcoin devs. Before Tulip can go to trial, Wright must clear a major legal hurdle.

According to a court document, Tulip must prove that it owns the Bitcoin in the two wallets in question — 1Feex and 12ib7 — before the case can proceed.

DL News reached out to Wright’s law firm Shoosmiths for comment, but they did not immediately respond.

Email me joanna@dlnews.com, or Telegram @joannallama.