A prominent figure in the cryptocurrency space, whose holdings of bitcoin were "lost" after his private keys were stolen, has hired a major law firm to obtain a ruling so that he can retrieve the bitcoin, worth billions of pounds. The action will, for the first time, examine legal duties of developers in these cases.
Controversial Australian tech figure Dr Craig Wright has signed up litigation specialist ONTIER LLP to start potentially ground-breaking proceedings against several bitcoin developers, after his private keys to addresses holding substantial amounts of bitcoin were stolen. The value of the claim at current market rates is more than £3.5 billion ($4.94 billion).
Bitcoin, the cryptocurrency, has soared in value this year, pushing above $57,000 per coin before easing off. It fetched $28,768 as recently as 31 December (source: Coindesk). Commentators and investors say bitcoin is becoming increasingly mainstream, drawing interest from wealth managers such as Vontobel and Julius Baer, for example.
The law firm is acting on behalf of Tulip Trading Limited (TTL), a Seychelles company whose primary beneficial owner is Dr Wright.
Dr Wright has claimed to be the main part of the team that created bitcoin, and the identity behind the pseudonym Satoshi Nakamoto. These claims are contested by much of the media and the cryptocurrency community.
The defendants in this action are developers for BTC, BCH, BCH ABC and BSV. The action will, for the first time, examine the nature and extent of legal duties conferred upon and owed by developers resulting from the control they exercise over their respective blockchains, the law firm said in a statement.
Depending on the outcome of any case, it could affect the extent to which bitcoin owners who lose their keys or suffer some obstruction to bitcoins are able to force platform providers to give them access.
The stolen assets “were, and continue to be, owned by TTL,” the law firm said.
“The theft is the subject of an ongoing investigation by the Cyber Crime division of the South East England Regional Organised Crime Unit,” it continued.
In a note set out before the legal action, TTL said it wants developers to enable TTL to “regain access to and control of its bitcoin on the grounds that they owe bitcoin owners both tortious and fiduciary duties under English law as a result of the high level of power and control they hold over their respective blockchains.”
“Our client always intended bitcoin to operate within existing laws, notwithstanding the original ethos of independence he envisaged for the digital currency,” Paul Ferguson, partner at ONTIER LLP, said. “We assert there are identifiable legal obligations attributable to those who develop and control bitcoin.”
“As a victim of theft of some serious magnitude, Tulip Trading is seeking recovery of its access to and control of its digital assets from those in a position to remedy its loss. The fact that someone has stolen Tulip Trading’s digitally-held private bitcoin keys does not prevent developers from deploying code to enable the rightful owner to regain control of its bitcoin,” he continued. “A ruling in Tulip Trading’s favour will have considerable implications for others who have lost access to their bitcoin or had coins stolen.”