The ruling came as part of a larger lawsuit in which the man who claims to be Satoshi Nakamoto seeks to force 16 developers to rewrite the Bitcoin code to give him 111,000 BTC.
Of all the claims Craig Wright has made in his hotly contested quest to be recognized as the pseudonymous creator of Bitcoin and blockchain, nothing is as momentous as his claim to control its file format via copyright.
That intellectual property (IP) claim, which could — in theory — legally allow him to force a halt to both Bitcoin and its Bitcoin Cash hard fork, was tossed out by a London judge on Feb. 8.
That decision was, however, on technical grounds involving the way courts determine if computer codes are literary works protected by both copyright law and, in the U.S., the freedom of speech protections granted by the First Amendment.
It does not impact the broader court case, in which Wright is suing to force 16 Bitcoin Core developers to rewrite the Bitcoin blockchain's code in order to give him access to a pair of digital wallets holding a combined 111,000 BTC, currently worth $2.5 billion.
He claims his private keys to those wallets were stolen in a hack and subsequently erased, leaving them permanently inaccessible and lost. Blockchain intelligence firm Chainalysis has estimated in 2020 that some 3.5 million BTC are permanently lost in this manner.
Who is Satoshi Nakamoto?
That includes 1.1 million BTC that are believed to have been mined by Satoshi Nakamoto, the pseudonym used by the author of the Bitcoin whitepaper. Despite court orders in an earlier lawsuit in the U.S., Wright was unable to produce the private keys that would allow him to move some of those coins, which would prove he is Nakamoto.
Wright, who has repeatedly claimed to be Nakamoto in courts in the U.S., U.K. and Australia, has also claimed copyright control of the Bitcoin whitepaper. While his claims are widely disbelieved within the crypto community, the litigious developer of the Bitcoin Satoshi's Vision (BSV) fork of Bitcoin has sued to defend his claims repeatedly.
He has lost some and won others. In December, Wright won a $1.1 million court costs ruling against Bitcoin podcaster Peter McCormack in a British libel suit after McCormack called him a liar for claiming to be Nakamoto.
But he lost one in October against Crypto Twitter personality Hodlonaut in a Norwegian court.
Who Would Write the Code?
The Bitcoin IP claim trial argues that the developers of the open source Bitcoin Core software have a fiduciary duty and "duties in tort" to rewrite the blockchain's code to create a hard fork that would give Wright access to the 111,000 BTC.
Fiduciaries have a legal responsibility to act in the best interest of the beneficiaries — for example the trustee of an estate and the children it is held in trust for. Tort law covers virtually all non-contractual civil suits and requires redress for harm done to a person — for example a medical malpractice lawsuit against a doctor.
Wright's lawsuit against the 16 was thrown out by the trial judge but reinstated on appeal on Feb. 3.
In it, Wright's firm, Tulip Trading Limited, claims that the Bitcoin Core developers named effectively control and run the Bitcoin blockchain, and "should be recognized as a new ad hoc class of fiduciary, owing fiduciary duties to the true owners of bitcoin cryptocurrency," the ruling ordering a trial stated.
It's worth noting that the difficulties this approach would bring if upheld start with Bitcoin Core's actual control of the blockchain.
While it is the most popular Bitcoin client — the software used to connect to the Bitcoin network and run a node — it is not the only one, and the developers cannot force Bitcoin node owners to implement any changes. A core feature of any blockchain is that it is outside the control of authorities assuming it is sufficiently decentralized — that is, its nodes are spread far enough around the world.
However, a successful trial could see the developers, who are often volunteers, required to pay damages. And not just to Wright.
