Blockchain developers successfully challenged jurisdiction on Craig Wright’s coin recovery lawsuit

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The U.K. High Court has granted a jurisdictional challenge made by a group of blockchain developers being sued by Tulip Trading Limited on behalf of Dr. Craig Wright over legal duties he says the developers owe to their users, effectively ending the lawsuit prematurely.

Dr. Wright had launched the groundbreaking action in February of 2021, seeking to demonstrate that blockchain developers can owe fiduciary and tortious duties towards those who use their blockchains. The defendants are developers in control of the BSV, BTC, BCH and BCH-ABC blockchains.

The court heard the challenge earlier this month, where lawyers for the developers argued that the case fell outside the jurisdiction of the English courts. In particular, they argued that the Court should not accept jurisdiction because Dr. Wright had not demonstrated more than a ‘fanciful’ prospect of success in arguing for the existence of the duties, that there was no good arguable case that the claim falls within a set of defined ‘gateways’ to finding jurisdiction (for example, that the property concerned sits in the jurisdiction) and that England is not the most appropriate forum in which to hear the claim.

In a judgment handed down this morning, Mrs. Justice Falk found that lawyers for Dr. Wright had successfully established the necessary gateways and that England is the most appropriate forum for the case to be heard. However, they had failed to demonstrate that there were serious issues to be tried on the question of the existence of fiduciary and tortious duties.

Falk was critical of the volume of evidence submitted for the challenge and noted with regard to the defendant developers that their evidence was “certainly not sufficiently strong to enable me to conclude that TTL’s factual case was no more than fanciful.” Nonetheless, she found that Dr. Wright had failed to demonstrate that there was a serious issue to be tried on the question of the fiduciary and tortious duties.

Oliver Cain, Partner at ONTIER LLP for Dr. Wright, said, “The duties and responsibilities of developers are issues of the highest legal importance in a rapidly developing field that need to be fully aired and determined by an appellate court. As such, Dr. Wright on behalf of Tulip Trading will seek leave to appeal today’s judgment.”

In a statement, Dr. Wright said, “I am naturally disappointed by this outcome but it is far from the end of it. We will appeal. Tulip Trading will be seeking to have the owner of the database exercise its rights over its agents, the developers. The responsibilities of developers as fiduciaries to those who have lost access to Bitcoin is too important and the fight will go on to prove that.”

The case had the potential to greatly increase the protections offered to users of digital assets. However, an appeal seems inevitable, so the Court may yet afford the question of which responsibilities blockchain developers owe to those relying on them the benefit of a full trial.