Jessica Jonas, chief legal officer of the nonprofit Bitcoin Legal Defense Fund, discussed the potential legal ramifications of a high profile lawsuit against Bitcoin core developers during the Bitcoin 2023 event in Miami on May 18.
The case in question is a U.K. legal action filed by Craig Wright, the owner/operator of Tulip Trading. Wright’s perhaps most well-known for his assertion that he is Bitcoin creator Satoshi Nakamoto — a claim driving another unrelated lawsuit.
I would just want to say a quick reminder for BTC Core and Roger Inc.
You are under litigation hold. Those telegram groups, the signal groups, the others that you think I don’t know about are all discoverable evidence and spoliation is a criminal offence. pic.twitter.com/vtjFmeGrRd
— Dr Craig S Wright (@Dr_CSWright) February 3, 2023
In the case between Tulip Trading and 14 named individuals allegedly involved in the open source development of Bitcoin Core, in addition to others, Wright alleges that the said developers owe him a fiduciary duty. Jonas described the case as being about “an allegation that Tulip Trading owned, allegedly, 111,000 Bitcoin and was hacked, allegedly, and lost that 111,000 Bitcoin in some very Ocean’s 11 style hack.”
In order to obtain compensation for the alleged loss, Wright is demanding, per Jonas, that Bitcoin developers “create a backdoor into the Bitcoin core blockchain such that Tulip Trading can recover the funds it allegedly lost,” a remedy Jonas asserts can’t be implemented:
“They are asking the court to order that this group of software developers write a patch into the software that diverts funds. That’s not how Bitcoin works. It’s impossible.”
Jonas explained that implementing such a change would require hard forking the Bitcoin blockchain and then expecting everyone in the world to shift to the new fork instead of continuing to use the existing core chain. Describing the area of law surrounding fiduciary duty as “complicated,” Jonas went on to describe the lawsuit as extraordinarily dangerous for reasons beyond technical limitations.
“This case has actually already gone through an appeal and the appellate court found that the question of whether open source developers should owe a fiduciary duty to people who use their code is an important one,” claimed Jonas. Furthermore, Jonas described the potential threat to the open source community as “existential.” “Open source software makes up 97% of the world’s software,” she said.
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Jonas also framed the case as a matter of free speech. Despite the fact that many of the defendants named in the suit are U.S. citizens operating in the U.S., the case is being tried in the U.K. per the appellate court’s decision that it held jurisdiction due to the potential outcome being in the public interest in that country.
According to Jonas, software development is considered free speech in the U.S. and, per her assessment, “Tulip Trading is acting in a U.K. court in a civil action to compel many Americans to speak.” While the U.K. court can’t necessarily enforce free speech laws in the U.S., Jonas pushed back against the idea that it would be far-fetched for the court to rule in Wright’s favor.
Bitcoin open-source development is under the Massachusetts Institute of Technology’s (MIT’s) open-source license. Because open-source software is generally available to anyone, anywhere, assigning fiduciary duty to developers could lead to a situation where someone in one country is liable for damages to someone in another simply because they contributed to an open-source project. Current law, explained Jonas, is meant to protect open-source developers from being sued by strangers:
“They are volunteering their time to work on public infrastructure. They’re doing it for free. They’re doing it under MIT license, which is supposed to protect them from things like this.”
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