Dr. Craig Wright is suing cryptocurrency exchanges Coinbase (NASDAQ: COIN) and Kraken for passing-off fake Bitcoin regarding their use of the name Bitcoin in relation to assets that do not conform to the system described in the white paper. According to a claim form issued today, the claim is worth hundreds of billions of pounds.
On Friday, ONTIER LLP on behalf of Dr. Wright, Wright International Investments Limited (WII) and Wright International Investments UK limited (WIIUK) filed a claim form with the English High Court, formally kicking off the action. The full details of the claim won’t be known until the more substantive particulars of the claim are filed in the near future in accordance with English civil procedure rules.
In the claim form, Dr. Wright accuses the exchanges of ‘passing off’ projects which do not conform to the Bitcoin system described by him in the white paper, damaging his interest in Bitcoin to the tune of hundreds of billions of pounds. He requests an injunction restraining Coinbase and Kraken from continuing to pass off digital assets like Bitcoin as well as damages.
Simon Cohen of ONTIER said in a statement:
“These actions are undoubtedly game changing for the digital asset market. Simply put, the Claimants’ assertion is if your digital asset doesn’t strictly adhere to the Bitcoin protocol and is linked to the Bitcoin blockchain it is not Bitcoin, and should not be marketed or referenced as such. Product choice is a vital driver of innovation – but asset-holders must be aware of exactly what they are buying and stability comes from transparency.
“Bitcoin was always designed to be a peer-to-peer electronic cash payment system, not a store of value. While this is quite likely the highest value claim to have ever come before the English courts, in fact, the arguments in support of our clients’ position are straightforward and verifiable.”
Dr. Wright said:
“This is about protecting the consumer from fraud and deception. Consumers are being misled daily into thinking that BTC is Bitcoin as I outlined in the Bitcoin Whitepaper. BTC is not Bitcoin. I want to correct the deception that consumers are being subjected to, using the appropriate legal channels and require those operating exchanges to stop passing off BTC as Bitcoin, to change the name, to be clear in their communications and to list BSV which is Bitcoin.
“BTC is not in any way related to the system I set out in my Bitcoin Whitepaper which I released in 2008. BTC Core engineers have significantly altered the code to a point where it is not, and cannot be considered Bitcoin. BTC is being passed off as Bitcoin. Consumers need to be protected from this misleading activity that these exchanges/developers are conducting for their own financial benefit.”
Given that this lawsuit has the potential to vitiate these platforms’ biggest cash cow—BTC—the news is significant. Being a public company listed on the NASDAQ, Coinbase has to comply with the exchange’s disclosure rules, which include the requirement to make prompt disclosure to the public of any information which might reasonably impact the value of the stock or its future prospects.
Kraken is believed to be in the process of going public and is similarly obligated to disclose the implications of the suit. The exchange also made much ado about being granted a special purpose depository institution (SPDI) charter in Wyoming, putting them under the direct scrutiny of the Wyoming Banking Commission.
The action appears to be the natural consequence of letters sent to a collection of cryptocurrency exchanges in 2021, warning them over their promotion of products using the name Bitcoin. Though claim forms have only been filed in respect of companies within the corporate groups of Coinbase and Kraken at this stage, those letters indicate that there may be more lawsuits to come.
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