A recent report released by the United Kingdom Law Commission could weaken a central argument brought by Craig Wright in his controversial lawsuit against 12 Bitcoin core developers, argues the Bitcoin Legal Defense Fund (BLDF).
In a 300-page report on digital assets published in late June, the UK Law Commission — an independent body that reviews and recommends reforms to UK and Whales’ laws — cited a classification of fiduciary duty that bolsters the developers’ defense that they are not directly responsible for 111,000 Bitcoin (BTC) lost to hackers.
Wright, owner of Tulip Trading, claimed in a 2021 lawsuit that developers involved in the open-source development of Bitcoin Core owed him a fiduciary duty in connection with his loss. In order to recover the allegedly stolen funds, Wright is seeking a backdoor into the Bitcoin Core blockchain. Wright is also known for claiming he is Bitcoin’s pseudonymous creator Satoshi Nakamoto.
The bitcoin protocol was set in stone to create a system that is stable. Bitcoin is not a Cryptocurrency. By definition, Cryptocurrencies are anonymous and untraceable. Bitcoin is pseudonymous and traceable, it is digital cash.
Don’t believe everything you see at first sight. pic.twitter.com/vPt4a0fEEx
— Dr Craig S Wright (@Dr_CSWright) May 30, 2023
The U.K. report sheds light on the definition of fiduciary duty, claiming that categories of fiduciary recognized by the law include “agents, trustees, partners, company directors, and solicitors.” The report said fiduciary duty rarely exists outside these categories. According to the BLDF, the developers’ legal representative, the defendants do not fit in any criteria mentioned by the Commission.
“They are not agents, trustees, partners, company directors, or solicitors, and they never ‘undertook or were entrusted with authority to manage the property or make discretionary decisions on behalf of another person’,” BLDF stated in a recent blog post, adding that “Bitcoin was created to facilitate transactions between individuals without the need to entrust any authority to a third party.”
According to a definition by the University of Texas, fiduciary duty is the “legal responsibility to act solely in the best interest of another party.” Common examples of fiduciary duties include undivided loyalty, due diligence, full disclosure of conflicts of interest, and confidentiality.
The Tulip Trading suit could set a case law for open-source developers’ liability for assets, with a trial in the case expected to occur in 2024. During the Bitcoin 2023 conference in May, Jessica Jonas, BLDF’s chief legal officer, noted that potential legal ramifications of the lawsuit could deeply affect the community of open-source developers, as 97% of the world’s software programs are open-sourced.
The UK Law Commission report also pushed for the creation of a new and distinct category of personal property to accommodate the unique features of digital assets.