Key Facts
- •Tulip Trading Limited, associated with Dr. Craig Wright, claims ownership of bitcoin worth approximately $4 billion held at addresses 1Feex and 12ib7.
- •Private keys to access the bitcoin were lost in a hack.
- •Tulip alleges that bitcoin developers control the relevant networks and could easily secure Tulip's assets by moving them.
- •Tulip claims the developers owe fiduciary duties or duties in tort to protect its assets.
- •Developers deny owing any duties, arguing they lack the control Tulip alleges and that such duties would be onerous.
- •Defendants are mostly resident outside the UK jurisdiction.
- •The High Court set aside service on the grounds that Tulip had not established a serious issue to be tried.
- •Tulip appealed the High Court's decision.
Legal Principles
Merits test for jurisdiction disputes: There must be a serious issue to be tried (a real, not fanciful, prospect of success).
Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2011] UKPC 7, Vedanta Resources v Lungowe [2019] UKSC 20
Definition of a fiduciary: Someone who undertakes to act for or on behalf of another, creating a relationship of trust and confidence; core obligation is loyalty.
Bristol and West Building Society v Mothew [1998] Ch 1 (Millett LJ)
Reasonable expectations as a tool for identifying fiduciary relationships: While it may have explanatory power, it cannot be the sole touchstone for classifying a relationship as fiduciary.
Children's Investment Fund Foundation (UK) v Attorney General [2020] UKSC 33
The question of whether someone is a fiduciary is objective, not subjective.
Bristol and West Building Society v Mothew [1998] Ch 1
A fiduciary is in breach if they act for two principals with conflicting interests without informed consent from both.
Bristol and West Building Society v Mothew [1998] Ch 1
Cryptoassets such as bitcoin are property.
AA v Persons Unknown [2019] EWCH (Comm) 3556
Outcomes
Appeal allowed.
The Court of Appeal found that Tulip had raised a serious issue to be tried regarding whether the bitcoin developers owed fiduciary duties. While not deciding the existence of the duty itself, the court determined that the case was arguable and should proceed to trial.
High Court's decision to set aside service overturned.
The High Court erred in concluding there was no realistic prospect of establishing fiduciary duty based on disputed facts and an arguably flawed premise of the developers being an 'unidentified, fluctuating' body.