A recent report released by the UK Legal Commission may weaken a key argument made by Craig Wright in his controversial lawsuit against 12 core Bitcoin developers, the Bitcoin Legal Defense Fund (BLDF) argues.
In a 300-page report on digital assets released in late June, the UK Law Commission – an independent body that reviews and recommends reforms to UK and whale laws – cited a fiduciary duty classification that strengthens the defences of developers, that this is not the case is directly responsible for the loss of 111,000 Bitcoin (BTC) at the hands of hackers.
Wright, owner of Tulip Trading, claimed in a 2021 lawsuit that developers involved in the open-source development of Bitcoin Core owed him a fiduciary duty related to his loss. To recover the allegedly stolen funds, Wright is looking for a backdoor into the Bitcoin Core blockchain. Wright is also known for claiming to be the pseudonymous creator of Bitcoin, Satoshi Nakamoto.
The UK report sheds light on the definition of fiduciary duty and claims that legally recognized categories of trustee include “agents, trustees, partners, directors and solicitors”. According to the report, fiduciary duties rarely exist outside of these categories. According to BLDF, the developers’ legal representative, the defendants do not meet any of the criteria set out by the Commission.
“They are not agents, trustees, partners, directors, or attorneys, and they have never undertaken or been given any authority to administer property or make discretionary decisions on behalf of anyone else,” BLDF explained in a recent blog post. adding that “Bitcoin was created to facilitate transactions between individuals without the need to delegate authority to a third party.”
The University of Texas defines fiduciary duty as “the legal responsibility to act solely in the best interests of another party.” Common examples of fiduciary duties include undivided loyalty, duty of care, full disclosure of conflicts of interest, and confidentiality.
The Tulip Trading lawsuit could create a case law on liability of open source developers for assets, with a trial in the case expected to take place in 2024. During the Bitcoin 2023 conference in May, Jessica Jonas, BLDF’s Chief Legal Officer, pointed out this potential. The legal ramifications of the lawsuit could have a profound impact on the open-source developer community, given that 97% of the world’s software programs are open-source programs are.
The UK Law Commission report also urged the creation of a new and distinct category of personal property to reflect the unique characteristics of digital assets.
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