Craig Wright lawyers warn Coinbase, Kraken and others over misuse of Bitcoin

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Dr. Craig Wright has sent legal notices to a number of digital asset entities and groups over their use of the Bitcoin name, warning of formal legal action if they do not take steps to address the situation.

CoinGeek has learned that the letters went out to Bitcoin.org, Square, BTC Core, Blockstream, Coinbase (NASDAQ: COIN), Etoro, and Payward Ventures (Kraken). The letters were sent by law firm ONTIER on behalf of Dr. Wright and one of his companies, Wright International Investments Ltd (WII). The letter says and we can see from documents in the Kleiman v Wright case—aka the Satoshi Trial in Florida—that WII is the company that Dr. Wright assigned all of the intellectual property rights in the Bitcoin software and database to in 2009.

Among the letters that went out, there appears to be two distinct versions. Neither are formal letters-before-action (which more immediately precipitate formal legal action), but they both make clear that unless the situations complained of are not remedied, formal legal action will be forthcoming.

The first version went out to Kraken, Coinbase, eToro, Blockstream, Bitcoin.org, Square and BitcoinCore.org.

This letter puts the recipient on notice that by misrepresenting BTC (Bitcoin Core) as ‘Bitcoin,’ they are misleading investors and other members of the public. It makes clear that as the creator of Bitcoin, Dr. Wright (and WII) intends to take action to enforce their rights in the Bitcoin name.

This letter appears to be the natural sequel to the letters and legal actions taken by Dr. Wright at the beginning of 2021 in which he challenged a number of websites that were hosting the Bitcoin white paper. There, too, Dr. Wright’s concern was the misleading of investors. The first of those cases—against website administrator Cøbra and the hosting of the paper on bitcoin.org—reached its conclusion with a rout-like victory for Dr. Wright. As a result, the bitcoin.org site was forced to post a notice informing visitors of the ruling and the paper was removed from the site.

The second letter has been sent to Kraken, Coinbase, eToro, Blockstream and BitcoinCore.org. Like the first, it establishes that Dr. Wright is the inventor of Bitcoin and author of the Bitcoin white paper. However, this one is concerned with Dr. Wright’s rights over the Bitcoin blockchain database. According to the letter, while Dr. Wright expressly made the Bitcoin code subject to the permissive MIT license, he did not do the same for the accompanying Bitcoin database or its contents. It warns that “since 2017, you have been using and encouraging the use of that database without a licence or otherwise without WII’s permission. We therefore put you on notice that WII intends to enforce its rights against you in respect of the Bitcoin Blockchain database.”

Though the letters are distinct, they ultimately concern the same thing: the protection of Dr. Wright’s intellectual property rights. Dr. Wright’s concerns have been consistent since asserting his rights over Bitcoin: his name is being used to sell and promote unaffiliated products with little or no relation to the system originally described in the white paper. The statement released by Dr. Wright after word of the initial wave of letters went out in January 2021 says as much:

“As the author of the white paper, I feel compelled to exercise my legal rights and to ensure that it cannot be marketed in such a way—not just so that Bitcoin can live up to its potential, but so that people are not misled into supporting a different endeavour, having been led to believe that they were supporting Bitcoin.”

MNP, one of Canada’s largest assurance, risk and audit firms, recently published an independent review on “The Original Bitcoin Protocol: What Is It and Why Does It Matter?” in which they concluded that among the Bitcoin implementations, BSV is moving closer to Satoshi’s original vision while BTC is moving further away from that vision.

The high-profile nature of those who were sent letters will likely generate a lot of noise and complaints from those aligned with the recipients, the assertion and enforcement of intellectual property rights is a natural and vital part of business. Intellectual property rights are there to be enforced—for the creator of a product as significant as Bitcoin to do the same is expected. Which is to say nothing of the moral element here—that people are flooding into the digital asset market and being misled into investing in projects that they believe are associated with Bitcoin. Based on the statement released by Dr. Wright at the time, this is an important part of his motivation.

No formal suit has been filed at this stage, so exactly what shape a formal complaint might take is yet to be seen. One can assume that the actions would take a similar form to those launched against Cøbra, at least as far as the letters concerning the Bitcoin name go. Taking direct action over the database itself is new, but has been strongly signaled by Dr. Wright for years: see his blog post titled Forking and Passing Off….

Looking at the actions taken by Dr. Wright so far, it’s obvious he’s taking aim at what has become a large network of intellectual property infringement with regard to his own creation. A large number of unaffiliated third parties are currently profiting from Bitcoin—either directly by using the database or code in their own forked projects or by using the Bitcoin name to promote themselves and others—or both. With the original author returning to enforce his rights against these projects and entities, the effects are likely going to be far-reaching.

In fact, the scale of infringement is reminiscent of the high-profile LimeWire litigation throughout the early part of this century. LimeWire, a peer to peer music sharing application, was ultimately shut down as a result, as plaintiffs were successfully able to hold LimeWire responsible not only for their own copyright infringement, but that they were also liable for inducing copyright infringement to whom the software had been distributed. Those who are targeted by Dr. Wright’s latest moves—particularly those distributing the Bitcoin database without a license—should pay close attention to the LimeWire judgment, where the Court said:

“The evidence establishes that LimeWire, by distributing and maintaining LimeWire, intentionally encouraged direct infringement by LimeWire users…. The plaintiffs, therefore, are entitled to summary judgment on their claim against LimeWire of inducement of copyright infringement.”