Law Commission report disputes Craig Wright’s lawsuit against Bitcoin developers.

A recent report from the United Kingdom’s Law Commission, published in late June, could weaken a key argument made by Craig Wright in his controversial lawsuit against 12 Bitcoin Core developers, according to the Bitcoin Legal Defense Fund (BLDF). In the 300-page report on digital assets, the Law Commission, an independent body that reviews and recommends reforms to UK and Whales laws, cited a classification of fiduciary duty that supports the developers’ defense that they are not directly responsible for the 111,000 Bitcoin lost to hackers.

Wright, the owner of Tulip Trading, claimed in his 2021 lawsuit 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 blockchain to recover the allegedly stolen funds. Wright is also known for claiming to be Bitcoin’s pseudonymous creator, Satoshi Nakamoto.

The UK report clarifies the definition of fiduciary duty, stating that the recognized categories of fiduciary include “agents, trustees, partners, company directors, and solicitors.” The report also notes that fiduciary duty rarely exists outside of these categories. According to the BLDF, the developers being sued do not fit any of the criteria mentioned by the Commission.

“They are not agents, trustees, partners, company directors, or solicitors, and they never undertook or were entrusted with the authority to manage the property or make discretionary decisions on behalf of another person,” stated the BLDF in a recent blog post. They also highlighted 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, is the legal responsibility to act solely in the best interest of another party. Common examples of fiduciary duties include undivided loyalty, due diligence, full disclosure of conflicts of interest, and confidentiality.

The Tulip Trading lawsuit could establish case law regarding the liability of open-source developers for assets. The trial is expected to take place in 2024. During the Bitcoin 2023 conference in May, Jessica Jonas, the chief legal officer of the BLDF, emphasized that the lawsuit’s potential legal ramifications could deeply impact the community of open-source developers, as 97% of the world’s software programs are open-sourced.

The UK Law Commission report also advocated for the creation of a new and distinct category of personal property to accommodate the unique features of digital assets.

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