Bitcoin is a decentralized network built by contributions from thousands of individuals around the world.
For years, prominent contributors to the Bitcoin community have been the subject of abusive lawsuits designed to stifle the development of Bitcoin to the detriment of the public.
These lawsuits are frivolous, but effective. Many developers have decided it’s not worth the time, stress, money, and legal risk to continue working on Bitcoin.
The entire Bitcoin community suffers when developers feel so threatened that they stop contributing to the network. After they’ve given so much of their time and energy advancing Bitcoin and the crypto ecosystem more broadly, we owe them our support.
Tulip Trading is a Seychelles-based holding company created by Craig S. Wright.
Tulip Trading alleges that it lost 111,000 BTC during a hack of Wright’s home computer network. Wright, who continues to rely on the discredited narrative that he is Bitcoin’s pseudonymous creator Satoshi Nakamoto, has a history of using litigation to silence his critics in the Bitcoin community.
In 2021, Wright’s Tulip Trading brought a suit against 12 Bitcoin developers, 2 eCash (formerly Bitcoin BCH/BitcoinABC) developers, a BCH marketer, and a proxy entity for Wright alleging that they have a fiduciary duty to introduce a backdoor into the Bitcoin software to allow him to take control of billions of dollars worth of Bitcoin which he claims to own. The lawsuit threatens developers with “equitable compensation or damages” in sums in excess of $4bn to Mr. Wright.
Through this lawsuit, Tulip Trading is seeking to undermine some of the core conceits of Bitcoin, namely that Bitcoin is a fully distributed open source software. The implications for Bitcoin developers specifically, and for open source developers generally, are enormous and potentially existential.
This lawsuit challenges one of the key principles of the Bitcoin network: that a user’s private key is required to effect a transaction and it cannot be overwritten by a group of developers in order to benefit, and prefer, a particular individual.
Beyond Bitcoin, this lawsuit could have grave implications for open source developers everywhere. If the UK courts rule in the claimant’s favor it would potentially mean that open source developers become fiduciaries to users of software that they had contributed to, even in projects without any formal assumption of duty or compensation for the costs and associated risks.
This means that open source developers could be legally compelled to rescue users of their software, without knowledge of who those users are, how many there are, or where they are located— even though open source licenses expressly disclaim liability.
If Tulip Trading wins its case against the Bitcoin developers, or if the Bitcoin developers fail to mount a strong defense, it could set a dangerous precedent that would make it prohibitively risky for developers to build open source software such as Bitcoin.
| 2/5/2020 | Craig Wright allegedly loses access to two wallets (12ib7 and 1FeeX) containing a combined 111,000 BTC following an alleged hack of his home computer network. |
| 06/12/2020 | Attorneys representing Tulip Trading issue a letter claiming ownership of the 111,000 BTC lost in the alleged hack, as well as ownership of the name “Bitcoin” and the “Bitcoin database.” The letter contends that the developers have duties to block “illegitimate” transactions on the Bitcoin blockchain and announces Tulip Trading’s intent to recover control of the hacked wallets. |
| 2/24/2021 | Tulip Trading issues a “Letter Before Action” announcing their intention to take legal action against the developers to recover the 111,000 BTC. |
| 2/25/2021 | Former Bitcoin developer, Greg Maxwell, replies to the letter before action. |
| 4/29/2021 | Tulip Trading files its lawsuit against certain Bitcoin developers and others. |
| 1/12/2022 | Bitcoin Legal Defense Fund announces its intentions to coordinate developer defense in the Tulip Trading case. |
| 3/25/2022 | Mrs. Justice Falk of the England and Wales High Court reject’s Tulip Trading’s case on the grounds that Tulip had not “established a serious issue to be tried.” |
| 5/1/2022 | The Court orders Tulip Trading to provide security for costs in order to continue the lawsuit. |
| 2/3/2023 | Three judges in the UK Court of Appeal overturn the High Court decision and clear the way for the case to proceed to a full trial. |
| 2/14/2023 | Tulip files its Amended Particulars of Claim as ordered by the Court. |
| 4/5/2023 | Defendant 14 files their substantive Defence in the Tulip Trading lawsuit. |
| 4/26/2023 | The developer defendants file their substantive Defence in the Tulip Trading lawsuit. |
| 5/3/2023 | Defendants 15 & 16 file their substantive Defence in the Tulip Trading lawsuit. |
| 7/11/2023 | The developer defendants file their Preliminary Issue Application (Elliss 1) on whether Tulip Trading owns, and did it own at the time of the alleged hack, the Bitcoin in the 1Feex and 12ib7 addresses. The Preliminary Issue Application also contains a request that the Claimant pays security for the developer defendants’ costs up to and including the preliminary issue trial on an indemnity basis. |
| 7/31/2023 | The Claimant files its Reply to the Developer Defendants’ Defence, its Reply to Defendant 14’s Defence, and its Reply to Defendants 15-16’s Defence. |
| 9/15/2023 | The Developer Defendants file their Second Witness Statement (Elliss 2) in reply to the Claimant’s evidence filed on August 29, 2023 (Lee 4) in response to the Developer Defendants’ applications dated July 11, 2023. |
| 9/27/2023 | The Developer Defendants file their Third Witness Statement (Elliss 3) in support of the their application dated July 11, 2023, that the Court (i) determines certain issues as preliminary issues; and (ii) in the light of that, strike out this claim as a fraudulent claim and an abuse of process. |
| 10/1/2023 | The Developer Defendants file their Fourth Witness Statement (Elliss 4) notifying the Court of significant developments in relation to Dr. Wright, and those that are backing and funding him both in these proceedings, and in Crypto Open Patent Alliance v. Craig Wright (Claim No. IL-2021-000019) matter. |
| 10/3/2023 | Claimant’s skeleton in support of its application to strike out certain paragraphs of the evidence relied on by the Developer Defendants in their application seeking directions for a preliminary issue trial, and the Developer Defendants’ skeleton opposing Claimant’s strike out application as a misconceived and grossly disproportionate waste of the court and parties’ time and resources. |
| 10/4/2023 | Judgment on Claimant’s Strike Out Application wherein the court sided with and rendered judgment in favor of the Developer Defendants noting, “[w]hilst one must guard against conducting any sort of mini-trial, . . . the stronger [the Developer Defendants] case on ownership and fraud is, the greater the reason to order a preliminary issue.” |
| 10/18/2023 | The Claimant files its Fifth Witness Statement (Wright 5) and Sixth Witness Statement (Wright 6) in response to the Developer Defendants’ application dated July 11, 2023. |
| 10/31/2023 | The Developer Defendants file their Fifth Witness Statement (Elliss 5) in support of the their application to have Claimant’s claim struck out should Claimant further fail to timely pay the Developer Defendants’ costs which are due pursuant to the October 18, 2023 Security For Costs Order. |
| 11/1/2023 | The Developer Defendants file their Sixth Witness Statement (Elliss 6) in response Wright 5 and Wright 6 which were filed by Claimant in response to the parts Elliss 1, Elliss 3 or Elliss 4 that set out the evidence in support of the Developer Defendants’ application for a preliminary issue trial on issues of ownership and fraud and forgery, in particular evidence supporting the prima facie case of fraud and forgery against the Claimant (through Dr. Wright) in its conduct of these proceedings and the findings of fraud, forgery and dishonesty against Dr. Wright in other proceedings around the world. |
| 11/13/2023 | The Developer Defendants file their Skeleton Argument for the CMC which occurred on November 14 & 15, 2023. |
| 11/29/2023 | Order with directions from the CMC which occurred on November 14 & 15, 2023. Included in the Order are directions favoring the Developer Defendants on the Preliminary Issue Trial, Pleading Amendments, Requests for Further Information, Costs, and Security. |
| 4/2024 | A preliminary issue trial on whether Tulip Trading owns, and did it own at the time of the alleged hack, the Bitcoin in the 1Feex and 12ib7 addresses. |
Craig Wright and his company Wright International Investments have brought a claim in the UK against a group of individual Bitcoin developers and corporations alleging that he is Satoshi Nakamoto (the pseudonymous creator of Bitcoin) and thus owns the copyright for the Bitcoin Whitepaper and the database rights for the Bitcoin blockchain.
Craig Wright claims that his copyright and database rights are being breached by Bitcoin developers and users. He is seeking injunctive relief to prevent certain developers, exchanges, intermediaries, and other users from continuing to work on Bitcoin without first obtaining a license from him. He also seeks “hundreds of billions of pounds” by way of damages for past infringement.
Should the developers fail to defend this claim vigorously, or should Mr. Wright otherwise be successful, it would, in the eyes of the law, allow Craig Wright ultimate control over the Bitcoin network as we know it. He would be permitted to decide who uses the Bitcoin network, the terms of use for the Bitcoin network, and could also control the client software for interacting with the blockchain.
Wright seeks to obtain ultimate control by using litigation to decide who can use the Bitcoin network and under what terms. These efforts could bring significant uncertainty to Bitcoin, drive its usage underground, and make it difficult for businesses and institutions to accept or trade in Bitcoin.
Regardless of whether Craig Wright succeeds on his primary contentions, negative findings in relation to the application or enforceability of the MIT license (the open source license used by the Bitcoin Core client) could be extremely damaging for open source projects beyond Bitcoin Core.
The simple fact that Wright’s personal claims are being brought against developers of an open source project like Bitcoin Core is likely to have an immediate and serious dampening effect on the willingness of talented software developers to participate in these projects. This is why it is critical to provide them adequate legal support to mount a strong defense.
| 3/22/2022 | Craig Wright and Wright International issue a “Letter Before Action” announcing their intention to take legal action against certain entities and Bitcoin developers. |
| 7/29/2022 | Craig Wright and Wright International file their case. |
| 2/7/2023 | England and Wales High Court (Chancery Division) rejects Wright’s application to serve his claim out of jurisdiction unless he deletes the portion of the claim pertaining to infringement of the copyright for the Bitcoin File Format. |
| 2/14/2023 | Craig Wright and Wright International Investments file their Amended Particulars of Claim as ordered by the High Court against Bitcoin developers and a number of corporate entities associated with Bitcoin. |
| 3/16/2023 | Developers file their substantive defence. |
| 7/25/2023 | Court orders a trial of a preliminary issue commencing on January 15, 2024 on whether Craig Wright is the pseudonymous “Satoshi Nakamoto”, i.e., the person who created Bitcoin in 2009. |
| 9/19/2023 | COPA’s skeleton argument for the September 19 & 22, 2023 hearings to address a number of applications that arise as the parties approach the close of evidence and the upcoming pre-trial review in advance of the January 15, 2024 preliminary issue trial. |
| 9/19/2023 | COPA’s Re-Re-Re-Amended Particulars of Claim as ordered by the Court on September 19, 2023 hearing. |
| 10/3/2023 | Judgment handed down from the September 19 & 22, 2023 application hearings. |
| 10/24/2023 | Judgment handed down from the October 12, 2023 application hearing of COPA’s application to amend their Particulars of Claim to add the Forgery Amendments. |
| 10/30/2023 | Order requiring that Craig Wright provide security of £650,000 for the Developers’ costs related to the Identity Issue, and an £75,000 for the Developers’ costs for the applications related to security. |
| 10/31/2023 | COPA’s Re-Re-Re-Amended Particulars of Claim with the Forgery Amendments as ordered by the Court on October 24, 2023. |
| 11/30/2023 | Judgment on the applications of the Developer Defendants heard on October 17, 2023, most significantly awarding the Developer Defendants security for costs. |
| 1/15/2024 | Preliminary issue trial commences on the issue of whether Claimant is Satoshi Nakamoto. |
The Bitcoin Legal Defense Fund is a grassroots non-profit organization funded by individuals around the world who believe in protecting developers working on Bitcoin and related open source software.
Please reach out to info@bitcoindefense.org
All press inquiries should be sent to press@bitcoindefense.org
Bitcoin developers have been subject to increasing litigation over the past few years and often do not have the time, resources, or legal expertise to defend themselves in court. Bitcoin developers are often supported with grants from individuals and organizations within the community that cover their living expenses, but do not provide legal support. BLDF fills that gap by helping developers find and retain defense counsel, develop litigation strategy, and pay legal bills.
Many other cryptocurrencies launched with “pre-mines” or “ICOs” where the creators of the cryptocurrency award themselves a substantial share of the newly created coins to fund the network’s development. Unlike these tokens, Bitcoin did not launch with a pre-mine or ICO. There are no privileged parties that get payments. Anyone who has obtained Bitcoin has done so on an equal and competitive basis by mining or purchasing it. The defendants in the Tulip Trading case are not the creator(s) of Bitcoin, but volunteers who began working on Bitcoin after its creation. Any support for Bitcoin’s development is from volunteers who choose to fund development efforts or contribute their own time.
Tulip Trading brought a suit against multiple open source developers who have worked on Bitcoin on the grounds that these developers have fiduciary and/or tortious duties to Tulip to grant them coins they claim to have owned and lost.
The central question that must be decided by the court is whether Bitcoin developers, and indeed all open source software developers, owe fiduciary duties to users of their software irrespective of their use of license which disclaims liability. But a duty to perform the impossible can’t exist so, as a result, Bitcoin’s decentralization is also central to the case. Bitcoin’s decentralization is what prevents parties, such as defendants or Wright, from imposing unwelcome changes on other users of Bitcoin such as the backdoor demanded by Tulip Trading.
There are 16 defendants in the lawsuit, all of whom are current or former developers working on Bitcoin, Bitcoin Cash, Bitcoin SV, or Bitcoin ABC. The Bitcoin Legal Defense Fund supports the Bitcoin developers.
Some of the individuals named in the Tulip Trading lawsuit are or have been maintainers of Bitcoin Core. Bitcoin Core is an open source software client that allows users to interact with the Bitcoin network. Bitcoin Core is by far the most popular Bitcoin client, although several other clients exist such as Bitcoin Knots and BTCD.
The maintainers of Bitcoin Core have write access to the “Bitcoin” repository hosted on Microsoft’s GitHub and use that access to merge updates proposed by other community members into the software distributed there. At any given time there are around half-a-dozen Bitcoin maintainers, but there are only four currently. Several have recently resigned and only one defendant in the Tulip Trading case is currently a maintainer.
If the UK High Court rules in favor of Tulip Trading and concludes that Bitcoin developers have a fiduciary duty to users of the Bitcoin network, it may attempt to compel them to publish software containing a backdoor that allows Tulip to bypass Bitcoin’s public key authentication and seize coins they claim belong to them.
The problem, however, is that there is no means for enforcing this ruling because Bitcoin maintainers do not control the software run by participants in Bitcoin. As such, even if they published software containing a court-ordered backdoor, any effect would be limited to users who chose to adopt the update. Because a change allowing bitcoins to move without their required keys would be incompatible with the prior consensus rules, users running such a change would form a separate network and currency from users who didn’t adopt the change.
It is highly unlikely that an economically significant portion of users would adopt the Tulip version. In 2018, Wright created his own version of Bitcoin with incompatible rules. It currently trades under the name “Bitcoin Satoshi Vision” for $35 per coin, compared to Bitcoin’s $30k and appears to be used almost exclusively by Wright affiliated entities.
Nevertheless, this ruling would set a dangerous legal precedent that would disincentivize developers from contributing to Bitcoin and other open source projects in the future.
No. The Bitcoin network is decentralized and each participant decides for themselves what bitcoin rules they follow through the software they choose to run. Bitcoin software is open source and can be modified and distributed by anyone. Most Bitcoin participants currently use Bitcoin Core, which is the original Bitcoin software developed by a large public collaboration. Since 2009, thousands of individuals have contributed to it. If users adopt software with mutually incompatible rules the result is the creation of multiple distinct currencies, which would be disruptive and so the Bitcoin community collaborates and doesn’t adopt incompatible rules.
In short, Bitcoin maintainers have significant prestige in the community because of their work on the most popular software that is used to interact with the network, but they have little power in terms of being able to change the network on their own. The true power in the Bitcoin network is wielded by the tens of thousands of people operating Bitcoin nodes and the many more who decide what they accept as Bitcoin when they trade it for goods and services.
A fiduciary duty is a duty of “single-minded loyalty” where the fiduciary is obligated to put the principal’s best interest above all others, including their own. This is an exceptional obligation far beyond an ordinary duty of care to deal honestly or without negligence. In fact, it is the strongest duty of care under the law.
Tulip argues that in this case a fiduciary or positive duty exists: An obligation to take action in their interest to rescue them. This is a stronger duty than even a police officer owes to a person in front of them who is about to fall in front of a train, for example. In general the law avoids positive duties (the obligation to act) because of the potential for creating impossible conflicts with negative duties (the obligation to not act), even in the context of fiduciaries. To the extent that any authors of Bitcoin software owe any heightened duties to other users it would be a duty to not act to undermine the well understood and long advertised security and economic properties of the system as Tulip demands.
Any discussion about duties cannot ignore that like many open source projects, Bitcoin is developed and distributed under the MIT License, one of the most popular and permissive open source licenses in the world. The license explicitly states: “The software is provided ‘as is’, without warranty of any kind, express or implied, including but not limited to the warranties of merchantability, fitness for a particular purpose, and noninfringement. In no event shall the authors or copyright holders be liable for any claim, damages, or other liability, whether in action of contract, tort or otherwise, arising from, out of or in connection with the software or the use or other dealings in the software.”
Without this kind of protection many open source developers wouldn’t participate at all because it would be unreasonable and unfair to take on substantial liability for software they give away on a volunteer basis.