A recent report by the United Kingdom’s Law Commission has the potential to weaken a key argument made by Craig Wright in his ongoing lawsuit against 12 Bitcoin core developers, according to the Bitcoin Legal Defense Fund (BLDF). The report, which was published in late June and spans 300 pages, discusses digital assets and includes a classification of fiduciary duty that supports the developers’ defense that they are not directly responsible for the loss of 111,000 Bitcoin to hackers.
Craig Wright, who owns Tulip Trading, filed a lawsuit in 2021 claiming that the developers involved in the open-source development of Bitcoin Core owed him a fiduciary duty in connection with his loss. He is seeking a back door into the Bitcoin Core blockchain to recover the allegedly stolen funds. Wright is also notorious for claiming to be the pseudonymous creator of Bitcoin, Satoshi Nakamoto.
The U.K. report shines a light on the definition of fiduciary duty and states that the categories of fiduciary recognized by the law include agents, trustees, partners, company directors, and solicitors. According to the BLDF, the defendants in the lawsuit do not fit any of these criteria mentioned by the Law 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. The BLDF argues that Bitcoin was created to facilitate transactions between individuals without the need to entrust any authority to a third party.
Fiduciary duty, according to a definition by the University of Texas, refers to the legal responsibility to act solely in the best interest of another party. It includes undivided loyalty, due diligence, full disclosure of conflicts of interest, and confidentiality. The BLDF’s blog post emphasizes that the developers in the lawsuit do not have a fiduciary duty towards Wright because they do not meet the criteria established by the Law Commission.
The outcome of the Tulip Trading suit has the potential to set case law for the liability of open-source developers regarding assets. The trial is set to take place in 2024, and the BLDF’s chief legal officer, Jessica Jonas, has expressed concerns about the potential legal ramifications for the open-source developer community. As 97% of the world’s software programs are open-sourced, the lawsuit could have a significant impact on this community.
In addition to the fiduciary duty discussion, the U.K. Law Commission report also recommends the creation of a new and distinct category of personal property to accommodate the unique features of digital assets. This recommendation reflects the need for updated laws and regulations to keep up with the rapidly evolving cryptocurrency landscape.
Overall, the Law Commission’s report presents arguments that could undermine Craig Wright’s claims against the Bitcoin core developers. The discussion on fiduciary duty supports the developers’ position that they are not directly responsible for the loss of Bitcoin, and the recommendation for a new category of personal property shows a commitment to adapting the legal framework to the digital asset ecosystem. The outcome of the Tulip Trading lawsuit will be closely watched as it could have significant implications for the open-source developer community and the future of digital asset regulation.
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