Dr Craig Wright is not Bitcoin creator, but legal threat to Bitcoin developers remains

Dr Craig Wright has maintained for many years that he is the elusive creator of Bitcoin, known by the pseudonym of Satoshi Nakamoto. Some accuse him of attempting to exert control over the cryptocurrency world through intellectual property and defamation lawsuits based on his identity as Satoshi. However, in a scathing judgment from the High Court, in which Dr Wright was found to have “lied to the Court repeatedly and extensively”, it was held definitively that Dr Wright is not Satoshi.

In this briefing, Jolyon Connell and Hannah Bohm-Duchen discuss the significance of the judgment and why, despite the judicial evisceration of Dr Wright’s claims to be Satoshi, the threat to Bitcoin developers is not over yet.

Why did the English Court need to determine whether Dr Wright was Satoshi?

Since claiming in 2016 to be Satoshi, Dr Wright has brought multiple claims in connection to his alleged identity across several jurisdictions, including in libel and copyright actions. In one such action, he claimed to have certain ‘database rights’ in the Bitcoin blockchain by virtue of being Satoshi (the BTC Core Claim). He also launched passing-off claims against crypto exchanges for using the term ‘Bitcoin’, for example against Kraken and Coinbase.

To counter Dr Wright’s allegation that he is Satoshi, the Crypto Open Patent Alliance (COPA), a non-profit group aiming to prevent individuals from acquiring patents for cryptocurrency, launched a claim in 2021 against Dr Wright. In that action, COPA sought negative declarations that Dr Wright is not Satoshi. Consequently, those of Dr Wright’s claims which depended upon the resolution of his identity (the claims against Kraken and Coinbase) were stayed pending the conclusion of a joint trial for the COPA claim and the associated preliminary BTC Core Claim ‘identity issue’.

What did the Court decide?

The High Court concluded that the evidence in support of COPA’s case was overwhelming and declared that Dr Wright is not Satoshi. The judge noted that a primary reason for making the declarations was to “ensure that Dr Wright would not have any possible basis on which to threaten [developers] with copyrights or database rights stemming from the work done by Satoshi Nakamoto”. The declarations fundamentally undermine Dr Wright’s BTC Core Claim and the claims against Kraken and Coinbase (given their reliance upon Dr Wright’s identity), showing the potential potency of negative declarations and the court’s willingness to utilise them occasionally in an interventionalist fashion.

What next?

For the claims relying upon Dr Wright’s asserted identity as Satoshi, the High Court’s decision appears damning. The judgment leaves limited room for appeal and Dr Wright may now be at risk of perjury proceedings.
However, Dr Wright is also involved in other claims (in both separate and related lawsuits) that do not rely on his claimed identity as Satoshi. These claims are therefore largely unaffected by the recent judgment, although one issue that remains to be determined from the current case is whether an injunction should be granted which prohibits certain further claims by Dr Wright.

A notable example of a case that will seemingly proceed either way is the Tulip Trading v Bitcoin Association and others case, which is headed to trial after a successful appeal of the initial High Court judgment. That case considers whether Bitcoin is truly decentralised and whether developers owe Bitcoin owners certain tortious and fiduciary duties. We have written on the decision of the Court of Appeal in Tulip Trading here and here. If pursued, the trial will potentially have important implications not only for common law fiduciary duties, but more widely also for the decentralised status of blockchain and the future recovery of stolen Bitcoin.

Consequently, while the question of whether Dr Wright is Satoshi has now been answered definitively (and in the negative), the question of who is, or should be, truly responsible for Bitcoin remains to be determined on another day.

Crypto Open Patent Alliance v Craig Steven Wright [2024] EWHC 1198 (Ch)

With thanks to Daniel Pearce, current trainee in the team, for their help in preparing this briefing.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, June 2024