Legal gavel and coins

UK Court of Appeal to hear Tulip Trading’s case on legal duties owed by blockchain developers

The English Court of Appeal will hear Tulip Trading’s case on the legal duties owed by blockchain developers, granting permission to appeal the High Court’s decision to strike the case out for lack of jurisdiction.

The Court of Appeal in granting permission said that the issue as to whether developers owe duties of care and/or fiduciary duties to the owners of digital assets is “one of considerable importance and is rightly characterized as a matter of some complexity and difficulty.” Tulip Trading will be allowed to argue before the Court of Appeal that High Court Judge Falk had erred in deciding there was no serious issue to be tried on the question.

Dr. Wright has argued that duties are owed by developers to those who use and rely on their blockchains. Dr. Wright suffered a hack on his home network in 2020 which led to the loss of access to more than 111,000 Bitcoin, and he brought the action to argue that these duties exist and oblige the developers of the relevant blockchains to return the Bitcoin to him and the many others in a similar position.

Thirteen of the 16 developer defendants, which include the developers of the BTC, BCH, BCH ABC blockchains, sought to strike out the suit for lack of jurisdiction. In particular, they argued that Dr. Wright had not demonstrated more than a ‘fanciful’ prospect of success, that there was no good arguable case that the claim falls within a set of defined ‘gateways’ to jurisdiction and that England is not the most appropriate forum in which to hear the claim.

Mrs. Justice Falk found in favor of the developers, finding that Wright had failed to show that there was a serious issue to be tried on the question of the existence of the duties.

Now that Tulip Trading has permission to appeal, a hearing will be set for the parties to argue that Justice Falk’s decision to allow the challenge was in error. If so, the case will be allowed to proceed to trial. The Court has estimated a two-day hearing, the window for which will be notified to the parties in due course.

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