Crypto Open Patent Alliance v Craig Steven Wright (WFO Application)
[2024] EWHC 743 (Ch)
Dr Craig Steven Wright & Anor v Coinbase Global, Inc & Ors
25 July 2023
[2023] EWHC 1893 (Ch)
High Court
Dr Wright sued Coinbase and Kraken. The judge threw out some of their arguments because they used evidence from old cases improperly. The judge also made Dr Wright's company put money aside to pay for the lawsuits if they lose, because there was a lot of doubt about whether they could afford to pay if they lost. The judge paused the lawsuits until another case is finished.
Key Facts
- •Dr Craig Steven Wright claims to be the creator of Bitcoin and is involved in four actions.
- •Two actions are for passing off against Coinbase and Kraken.
- •Two other actions, COPA and BTC Core, involve similar issues.
- •A common issue in all four actions is Dr Wright's identity as Satoshi Nakamoto.
- •Defendants applied for a stay, security for costs, and amendments to pleadings.
- •Claimants proposed that the identity issue be tried as a preliminary issue.
- •The court considered the admissibility of evidence from prior proceedings (Hollington v Hewthorn issue).
- •Amendments to the defence were considered.
- •Defendants applied for security for costs against Wright International Investments Limited (C2).
- •The court considered C2's residency, financial standing, and the possibility of enforcement in the Seychelles.
Legal Principles
Hollington v Hewthorn principle: findings of fact from other courts are inadmissible as evidence of the truth of those findings.
Hollington v Hewthorn [1943] 1 KB 587 CA
CPR 25.13(2)(a), (c), (g) and CPR 3.1(5) govern security for costs applications.
CPR 25.13(2)(a), (c), (g); CPR 3.1(5)
When considering security for costs, the court considers all circumstances of the case, including residency, impecuniosity, and ability to enforce an order.
CPR 25.13(1)(a), Infinity Distribution Ltd v The Khan Partnership LLP [2021] EWCA Civ 564
The court has discretion to refuse security for costs where the same issues arise in a counterclaim.
BJ Crabtree (Insulation) Ltd v GPT Communications Systems (1990) 59 B.L.R. 43, CA
Outcomes
Paragraph 33 of the defences (referencing adverse comments on Dr Wright's evidence in other proceedings) was struck out.
The paragraph violated the rule in Hollington v Hewthorn by using findings of fact from other proceedings as evidence.
The proposed amendment to paragraph 64(a) of the defences was allowed with modifications.
The amendment clarified an allegation about the reversibility of Bitcoin transactions. The court required more specific pleading of the points.
Security for costs was ordered against C2.
The court was not satisfied that C2 was resident in the UK, enforcement in the Seychelles was problematic, and evidence of C2's financial means was unconvincing and unreliable.
The amount of security for costs was set at £250,000 for Coinbase and £150,000 for Kraken.
The court considered the costs already incurred and the high potential costs, balancing this with the substantial security already in place in the COPA action. The court also considered the lack of clarity regarding the ownership of assets and the risk of enforcement difficulties.
The passing off actions will be stayed pending the outcome of the COPA claim.
This decision is explained in a separate judgment from the second CMC (not included in this document).
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