Self-proclaimed bitcoin inventor's $2.5 billion lawsuit can go to trial

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Self-proclaimed bitcoin inventor's $2.5 billion lawsuit can go to trial - London court

Currencies Feb 03, 2023 04:47PM ET

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Self-proclaimed bitcoin inventor's $2.5 billion lawsuit can go to trial - London court

LONDON (Reuters) - Self-proclaimed bitcoin creator Craig Wright's lawsuit against bitcoin network developers to try to recover billions of dollars can continue to trial, a London court said on Friday.

The ruling paves the way for a trial on whether developers owe duties to the owners of digital assets – which a lawyer representing some developers said could pose a fundamental challenge to decentralised finance if Wright won.

Australian computer scientist Wright is suing 15 developers in an effort to retrieve around 111,000 bitcoin – currently worth about $2.5 billion – after he lost the encrypted keys to access them when his home computer network was allegedly hacked.

Wright’s Seychelles-based company Tulip Trading is taking legal action against the developers of three networks, arguing they are obliged to write software patches to help Tulip recover the bitcoin.

Tulip’s case was thrown out last year, but the Court of Appeal ruled on Friday that developers arguably do owe duties to owners, which should be determined at a full trial.

Judge Colin Birss said Tulip had a realistic argument that cryptocurrency is “entrusted” to network developers, who could therefore have a duty to, for example, “introduce code so that an owner’s bitcoin can be transferred to safety”.

Wright says he wrote the bitcoin white paper which first outlined the technology behind the digital assets under the pseudonym Satoshi Nakamoto in 2008, however the claim is hotly disputed.

He said in a statement that he was delighted with the ruling.

His lawyer, Felicity Potter, said the decision was “a step towards a properly regulated and well-governed digital asset ecosystem which should be welcomed by potential and current coin-holders alike”.

James Ramsden, a lawyer who represented 13 of the 14 developers involved in the appeal, told Reuters that code writers are “incredibly nervous” about the case, which could leave them liable for massive sums of money if Wright wins.

He added that the outcome of any trial will affect “all aspects of (decentralised finance), whether it involves value tokens or NFTs (non-fungible tokens) or the wider blockchain system”.

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