Suing Bitcoin out of existence?

One might think that Bitcoin would have little to no fear regarding lawsuits.

It’s a decentralized phenomenon with no company behind it, has a transparent ledger and code, and a perfect history of protecting the integrity of its ledger.

But legal suits have become a problem.

The Bitcoin Legal Defense Fund (BLDF), which was formed in 2021, recently kicked into gear to provide legal counsel to a group of 11 bitcoin developers who are being sued by Craig Wright, who has claimed he is the creator of Bitcoin.

Protecting open source development of projects like Bitcoin is at the center of the BLDF’s purpose, says Jack Dorsey, co-founder of Block (formerly Square), co-founder and former CEO of Twitter.

He commented regarding the suit filed by Wright in a U.K. court:

“The outcomes of these cases are important for everyone, even those who may not be interested in Bitcoin, because these lawsuits could have serious detrimental effects on open-source development writ large, which will negatively impact our lives in ways we may not even realize until it’s too late.”

In late April, BLDF counsel filed a brief in the case with the High Court in the U.K., which described Wright’s allegations, filed via his “Tulip Trading Limited (TTL)” entity, as “fraudulent.”

Wright is seeking claim to 111 thousand bitcoins he says rightfully belong to him.

Bitcoin Open Source Meets Court Controversies Over Its Longtime Mysterious Creation 

Bitcoin, like any other software technology, has seen updates over the years, and it has a community of developers, as well as built-in protocols for node operators to accept or reject those updates.

But one thing Bitcoin hasn’t had since its emergence in 2008-2009, is clear provenance regarding who created it. The bitcoin code has long been tied to “Satoshi Nakamoto,” an otherwise unknown figure (or group) who published the bitcoin code. 

But in 2016, Craig Wright, a computer scientist, began to assert that he, along with now deceased computer security expert Dave Kleiman, invented the Bitcoin protocol.

Since then multiple court suits surrounding Wright and Kleiman have been playing out. One case in Miami has involved Kleiman’s estate suing Wright, partly over a cache of 1.1 million bitcoin in a wallet that had been tied to “Satoshi Nakamato.”

As reported by CNBC, a December 2021 Federal Court jury found that Kleiman’s estate could not require Wright to pay half of the bitcoin in that wallet. (“Miami jury rules in favor of Craig Wright, who claimed to invent bitcoin,” 6 Dec 2021.)

But other aspects of that case involving a joint business venture between Wright and Kleiman, continue to play out, as Coindesk recently detailed. (“Craig Wright Shows ‘Prima Facie Evidence’ of Contemptuous Conduct, U.S. Judge Says,” 5 May 2023.)

February of this year saw mixed rulings regarding Wright’s claims filed in the U.K.

A judge dismissed Wright’s claims to copyright ownership of the file format of the Bitcoin blockchain.

But a U.K. Court of Appeal re-opened the case and ordered a trial in an action by Wright’s Tulip Trading company against a group of Bitcoin developers.

At stake is Wright’s claims via Tulip Trading, which involve two bitcoin addresses which have long been attributed to Satoshi.

Tulip Trading has argued that the control of those addresses have been lost due to a “hack,” but that Bitcoin (and Bitcoin SV developers, a hard fork of bitcoin which occurred in 2017) can recover the Bitcoin (BTC) and Bitcoin (BSV) and hand it over.

The specific U.K. court case appears to only be litigating Wright’s claims as far as Bitcoin SV.

Many Bitcoiners have expressed skepticism regarding Wright’s overall claims, dismissing him as a fraud seeking to acquire rights to bitcoin wallets associated with Satoshi.

Shortly after the Bitcoin Legal Defense Fund launched, it communicated its mission to the bitcoin community in an early 2022 letter, which is posted at linuxfoundation.org:

“The Bitcoin community is currently the subject of multi-front litigation. Litigation and continued threats are having their intended effect; individual defendants have chosen to capitulate in the absence of legal support. Open-source developers, who are often independent, are especially susceptible to legal pressure. In response, we propose a coordinated and formalized response to help defend developers. The Bitcoin Legal Defense Fund is a nonprofit entity that aims to minimize legal headaches that discourage software developers from actively developing Bitcoin and related projects such as the Lightning Network, Bitcoin privacy protocols, and the like.

“The main purpose of this Fund is to defend developers from lawsuits regarding their activities in the Bitcoin ecosystem, including finding and retaining defense counsel, developing litigation strategy, and paying legal bills. This is a free and voluntary option for developers to take advantage of if they so wish. The Fund will start with a corps of volunteer and part-time lawyers. The board of the Fund will be responsible for determining which lawsuits and defendants it will help defend.”