The English Court of Appeal has granted leave in Tulip Trading v Van de Laan & Ors to further consider the question of whether developers of cryptocurrency and other digital assets have fiduciary or tortious duties to token holders.
The first instance judgment by Mrs Justice Falk (Falk J) delivered in March summarily dismissed a claim by Tulip Trading Limited (Tulip) alleging breach of fiduciary and tortious duties by 16 international bitcoin developers. Ruling last week, Lady Justice Andrews (Andrews LJ) granted Tulip - and by extension, its CEO, Dr Craig Wright, leave to appeal that decision on the basis that it was at least arguable that the relevant claims were not susceptible to summary determination. It remains to be seen whether the Court of Appeal will accept that there is a serious issue to be tried and remit the matter to a full trial before the English High Court.
Tulip alleges that 16 international bitcoin developers are bound to write software ‘patches’ to enable the recovery of assets valued at over £1 million, which were stolen in a hack on Dr Wright’s computer. Dr Wright famously claims to have invented the bitcoin digital currency.
Andrews LJ, in handing down her decision, said that:
'The issue as to whether developers owe duties of care and/or fiduciary duties to the owners of digital assets and if so, what is the nature and scope of those duties is one of considerable importance and is rightly characterised as a matter of some complexity and difficulty. Given that in addition to its complexity and difficulty the underlying facts will play a significant role in determining that issue, it is arguable with a real prospect of success that it is not susceptible of summary determination in the context of a challenge to the jurisdiction, and therefore that the judge fell into error in deciding that there was not even a serious issue to be tried and in the approach she adopted.'
Tulip Trading is the first case heard by the English Courts to consider the roles and duties of cryptocurrency software developers, and one closely watched by others around the world. While that battle will now continue in the Court of Appeal, it is unlikely that the Court of Appeal will reach any definitive conclusions even if it dismisses the appeal on the facts in this case. This topic is one that developers and start-ups will need to continue to monitor for some time to come.