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UK court hears developers’ attempt to throw out Craig Wright’s stolen Bitcoin case

Parties in Dr. Craig Wright’s attempt to recover his stolen coins have concluded arguments on a particularly contentious jurisdiction application spanning three days.

The case is officially brought by Tulip Trading Limited (TTL), a company primarily owned by Dr. Wright, and concerns the loss of more than 111,000 bitcoins as a result of a hack on Dr. Wright’s home network in 2020. TTL is arguing that the developers of the blockchains associated with the lost digital assets owe fiduciary and tortious duties on the basis of the high level of power and control their exercise over their respective networks. TTL argues that these duties require the developers to return the stolen coins which rightly belong to TTL back to the company.

The argument was over an attempt by two sets of defendants—the BTC developers and the ABC developers—to have the case thrown out for lack of jurisdiction. Because the defendants in this case are outside of the jurisdiction of the English courts, the burden is on Dr. Wright to show that 1) there is a serious issue to be tried against the defendant on the merits (in other words, there needs to be more than a ‘fanciful’ prospect of success); 2) that there is a good arguable case that the claim falls within a set of defined ‘gateways’ to jurisdiction (for example, that the property concerned sits in the jurisdiction); and 3) that England is the most appropriate forum in which to hear the claim.

Though applications such as that made by the defendants are commonplace, the subject matter of Dr. Wright’s lawsuit meant that the parties had to argue nuanced points of law in relation to a highly novel fact area—namely, digital assets and digital asset ownership. This led to some difficulty for parties arguing before Justice Falk, who warned parties several times against attempting to turn the jurisdictional challenge into a trial by arguing over disputed facts, recognizing the contentious and high-profile nature of the subject matter.

For example, two of the relevant aforementioned ‘gateways’ enabling jurisdiction concern the location of the property being said to be damaged as a result of the breach of duty, and additionally the location where the damage took place. Though this answer might be obvious where such assets are held in a hardware wallet, the case where digitally held keys were stolen (as was the case for Dr. Wright) or lost is more difficult. Such analysis will necessarily involve discussion of what Justice Falk called ‘heavily disputed’ facts, such as those surrounding the 2020 hack.

Regarding the question of if England is the most convenient forum for the case to be heard, James Ramsden QC for the BTC developers argued that the only connection between the facts of the case and England is that an agent of TTL lost access to wallets owned by TTL while he happened to be in the country.

John Wardell QC, arguing for TTL, said that on the contrary, the company, Dr. Wright and the assets in question are based in England, and none of the defendants have been able to point to a competing jurisdiction where it might be more appropriate to hear the claim. 

Similarly, counsel for the developers made much of problems which TTL might have in implementing the remedies being sought and the potential for a ‘hard fork’ if they are enforced. Justice Falk was unmoved by this, commenting that these issues are most appropriately determined at trial.

The developers’ application is now out for decision by Justice Falk, who remarked more than once on the volume of evidence submitted by the parties. As such, a decision may not be imminent.

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

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