Fresh from our inboxes on Wednesday:
Litigation law firm ONTIER LLP has today begun ground-breaking legal proceedings against a number of Bitcoin developers on behalf of Tulip Trading Limited (TTL), a Seychelles company whose primary beneficial owner is Dr Craig Wright.
They remind us, as if we needed reminding, that:
Dr Wright is the inventor of Bitcoin who set out his vision for the digital currency in his famous White Paper under the pseudonym Satoshi Nakamoto.
Mais bien sur! They continue (emphasis ours):
The defendants in this action are the developers for BTC, BCH, BCH ABC and BSV. The action will, for the first time, examine the nature and extent of legal duties conferred upon and owed by developers resulting from the control they exercise over their respective blockchains.
In February 2020, Dr Wright’s personal computer was hacked by persons unknown and encrypted private keys to two addresses, which hold substantial quantities of Bitcoin belonging to TTL, were stolen. These assets were, and continue to be, owned by TTL. The theft is the subject of an on-going investigation by the Cyber Crime division of the South East England Regional Organised Crime Unit.
As set out in the Letters before Action issued today, TTL is requesting that the developers enable TTL to regain access to and control of its Bitcoin on the grounds that they owe Bitcoin owners both tortious and fiduciary duties under English law as a result of the high level of power and control they hold over their respective blockchains.
The value of the claim as at today’s market rates will be in excess of £3.5bn.
If all of that makes little sense to you, it’s because this case is rather a strange and complex one, even for Craig-Toshi himself. What he is alleging is that a year ago, someone managed to hack into his computer and access the private keys to the addresses of two bitcoin wallets, which contained more than $3.5bn at current market rates (though rather a lot less than that at market rates of a year ago, given bitcoin’s recent sharp rally).
But Wright is not going after the hackers. Oh no that would be much too simple. Wright is taking action against the developers, as in the people who write the code, of bitcoin; bitcoin cash (BCH); bitcoin cash ABC; and, bizarrely even bitcoin SV, which is his own branch of bitcoin (yes these days there are multiple bitcoins).
That’s not because he believes the developers are the ones who stole his bitcoin, but because he believes that bitcoin “was designed to work within the law” so that illegal activity could be reversed. In other words, Wright believes that the idea that the blockchain that underpins bitcoin and all other cryptocurrencies should be “immutable” — what might fairly be called its USP — is wrong. So while he does not believe that the developers are at fault, he is taking legal action against them because he believes they have the ability to return the coins that he says have been stolen from him — ie, to make the blockchain . . . mutable.
We are not quite sure how many developers he is going after with his case, but in order for Wright to succeed, he would need to have more than 50 per cent of the nodes that keep the various blockchains running agreeing to reverse the transactions on these stolen bitcoins. So does Wright believe that the system is far more centralised than we are led to believe?
The whole thing seems rather odd. We asked why this $3.5bn worth of crypto was only kept in just two wallets, given that was a bit of a security risk, and Craig replied:
Do you put your share certificates in 100 places? The narrative that bitcoin is outside the law needs to end. The Bitcoin White Paper defines ownership, not holding keys. Ownership is not about secrecy. The security risk is minimal when you consider that bitcoin is a recoverable asset that can be provably returned to the owner.
We should also point out that his PR also told us:
NB: Please note that personal views on Dr Wright should not cloud the fact disagreeing with his stance on this matter is to allow you and your publication to directly condone crime.
So we’ve held back, here, from the kind of crime-condoning we’d usually do.
Update 13:20pm: Craig Wright’s team has been in touch to clarify he is not asking for the network to be rendered immutable, but rather to have the stolen tokens replaced with new ones, all with a full train and under court order.
The idea, it seems, is to ensure both the thief and the victim can keep the money. This differs to a conventional payment network, where an illicit transaction can be reversed, thus reimbursing the victim but also confiscating the proceeds of crime from the thief. The question then is: who is on the hook for reimbursing the victim?
Related links:
Bitcoin’s lien problem – FT Alphaville
