Cryptoassets In Litigation: A New 'Tulip Mania'? ' English High Court Clarifies Duties Owed By Cryptocurrency Developers To End Users

• Published date: 08 June 2022
• Law Firm: Matheson
• Author: Mr Rory O'Keeffe, Michael Byrne, Tom Mullen, Ruairi O'Connell and Samuel Elliott

Introduction

The English High Courthas delivered judgment in Tulip Trading Limited v Bitcoin Association for BSV & Ors¹, a seminal case considering the duties owed by open-source cryptocurrency developers to cryptocurrency end-users.

The claimant company, beneficially owned by Dr Craig Wright, Tulip Trading Limited ("TTL") alleged that it suffered significant losses following a hack against Dr Wright's computer. This hack resulted in the plaintiff becoming unable to access $4.5bn in cryptocurrency. TTL issued proceedings against the defendant developers alleging a breach of fiduciary and common law duties and seeking an alteration of the code (i.e. a fork to the Bitcoin blockchain), allowing TTL to access the cryptocurrency it claimed was stolen from it.

The High Court rejected the claimant's submission that there was a duty of care on the part of the open source software. Notably, the Court also considered whether it would be appropriate to grant an order for security of costs and whether it was permissible to provide security for costs in Bitcoin.

Substantive Proceedings before the...