The self-described creator of Bitcoin must post security for a lawsuit seeking to force developers to rewrite the code to his account after hackers allegedly stole the keys to £4 billion ($5.3 billion) in cryptocurrency, a judge in London ruled on Wednesday.
High Court Master Julia Clark ordered a Seychelles-based holding company owned by Craig Wright to provide security for future legal costs in his legal push against more than a dozen developers based in the U.S.
Wright, who lives in England, is suing the developers to regain access to his Bitcoin account after he was locked out following a hack that deleted the private keys on his computer, according to court documents.
The software developers argued that Wright’s holding company, Tulip Trading Ltd., should have to post security because it will be stuck with their legal costs if the litigation fails.
The court agreed, finding that there was no evidence of Tulip’s assets and that suggestions Wright could transfer Bitcoin to an independent nominee were not feasible.
Lawyers for Wright’s company had explained that they were working with another software developer to write the software to grant him access to the Bitcoin. But they said the plan would need consent from the developers and other Bitcoin system users if it was to be implemented.
However, Master Clark said the plan was not a solution that guaranteed Wright would be able to meet the developers’ costs. It was “doubtful” that other users would agree to the idea, because there is no evidence to show how Wright’s ownership could be independently verified without the private keys, the judge said.
“In these circumstances, even if the software is available in the next few months, in my judgment there is insufficient evidence to show that the claimant will be able to access the [Bitcoin],” the judge said.
Tulip Trading said in a legal filing at the High Court in May that hackers stole and then deleted private keys to two of its addresses in February 2020, leaving Wright without access to the digital assets.
Although the bitcoin in the addresses has yet to be moved elsewhere, lawyers for the holding company claim the developers have a fiduciary duty to help Wright recover access to the funds, as each “in effect controls and runs the network in question.”
But the software developers have opposed the move, arguing that it would leave their reputation in tatters as it is not clear that the cryptocurrency belongs to Wright. They also oppose the litigation on jurisdictional grounds as they all live outside Britain.
Wright is an Australian computer scientist who claims he authored Bitcoin’s founding white paper under the pseudonym Satoshi Nakamoto. But this claim has been treated with skepticism by some in the cryptocurrency industry.
Wright is involved in numerous legal actions, including a recent lawsuit in which he claims copyright ownership of Bitcoin’s founding white paper and a libel lawsuit against a Norwegian man.
The defendants are represented by Matthew Thorne of 4 Pump Court and James Ramsden QC of 39 Essex Chambers.
Tulip is represented by John Wardell QC of Wilberforce Chambers, instructed by Ontier LLP.
The case is Tulip Trading Ltd. v. Bitcoin Association for BSV and others, claim number BL-2021-000313, in the Business and Property Courts of the High Court of Justice of England and Wales.
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