Tulip Trading and the Tale of the Missing Bitcoin Billions

There are times when you read a High Court judgment that you think you just couldn’t make this stuff up. Mrs Justice Falk’s decision on Tulip Trading is definitely one of those.

The claim relates to a very substantial amount of Bitcoin that Tulip Trading Ltd (“Tulip”) claims it has lost following a hack on the computers of the man behind Tulip Trading, Dr Craig Wright.

Tulip has claimed $4.5bn from sixteen developers of various Bitcoin networks alleging that they owed fiduciary and common law duties of care to come to its aid by writing and applying a “patch” to the blockchain network in order to reverse the alleged hack that had led to the claimed loss of its Bitcoin.

This hearing, in March 2022, was an attempt by most of the defendants, none of whom operate in the UK, to challenge the jurisdiction of the English court.

In short, they were successful largely because the court found that open source Bitcoin software developers whose code is widely adopted and used to trade or store cryptocurrencies owe neither fiduciary duties nor a common law duty of care to those who use that code to store or trade their crypto assets.

English law is starting to deal regularly with the jurisdictional issues of Bitcoin and cryptocurrencies and this case may be appealed.

Tulip, is a compary that is registered in the Seychelles while its CEO, Dr Craig Wright, is an Australian who has lived in England since 2015.

Clearly there is a great deal of animosity in this case too which probably isn’t surprising if you think you have lost £3 billion worth of Bitcoin because you have been hacked. As the judge said:

“A significant level of animosity exists which is much broader than, and the origins of which predate, the particular dispute before this court”.

Indeed, one of the many disputes between the parties, which the court acknowledged it didn’t need to resolve, is that the defendants do not accept Dr Wright’s claim that he is Satoshi Nakamoto. (Nakamoto is the apparent pseudonym of Bitcoin’s creator.) Nor do they accept that a hack took place at all.

Bird & Bird acted for 12 of the 16 defendants and reported the decision here. And there is some analysis on the Society for Computers and Law website.

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