In a recent judgment, the High Court ruled on fiduciary duties of Bitcoin developers. The ruling concerned the granting of permission to serve a claim form out of the jurisdiction, for which a claimant must establish a serious issue to be tried on the merits.
The case concerned a claim against the developers of four relevant digital asset networks (Bitcoin Satoshi Vision network, Bitcoin Core network, Bitcoin Cash network and Bitcoin Cash ABC network). The claimants were the victims of a hacking attack by which it lost control of digital currency assets that TTL claims to own but is currently unable to control over “a very substantial amount of digital currency assets “. In a nutshell, the claimants argued that the defendants owe them fiduciary and/or tortious duties which have the effect that they should assist them in regaining control and use of their assets.
The defendants contested that they were in a position to provide such technical assistance. In particular, in relation to Bitcoins they explained that “they are part of a very large, and shifting, group of contributors without an organisation or structure. Further, any change that they were able to propose to address TTL’s complaint would be ineffective, because miners would refuse to run it and instead would continue to run earlier versions of the software.” The issue of feasibility had not to be decided by the judge, as she rules out any duty of care due to other reasons.
The judge was quick to rule out that developers have fiduciary duty towards crypto owners (“I do not think that bitcoin owners can realistically be described as entrusting their property to a fluctuating, and unidentified, body of developers of the software, at least in the sense and to the extent claimed by TTL”). Accordingly, she concluded that there was no serious issue to be tried on the merits and to set aside permission to serve the claim form out of the jurisdiction.
Nonetheless, she noted that other circumstances could in theory give rise to duties of developers. In particular, a duty may arise where the developer has acted in its own, and against the interest of the owners. The judge gave the following example:
“This is not a case where it is alleged that, in making an update to the software, the Defendants acted in their own interests and contrary to the interests of owners, for example in introducing for their own advantage a bug or feature that compromised owners’ security but served their own purposes. I can see that it is conceivable that some form of duty could be engaged in that situation, although whether it would properly be characterised as a fiduciary duty is another matter. At least it could be said that in that situation the developers making the update had arguably assumed some responsibility by performing that function, although I think it is much more doubtful whether that would amount to a relationship requiring single-minded loyalty.”
The judge further observed that “developers are a fluctuating body of individuals”. As such, they are not required to remain as developers. There is no duty of continuity owned to Bitcoin owners.
Finally, the judge also assessed the disclaimer of liability in the terms of the generic MIT Licence under which Bitcoin Core code is released. While the issue was not decisive for the case, the judge leaned against a broad interpretation of the disclaimer: “It is true that the disclaimer is in broad terms, but it is not clear to me that it would reasonably be understood to mean that controllers of the BTC Network assume no responsibility for any aspect of its operation”.
In conclusion, under English law it seems highly unlikely that a claim against crypto developers can be argued successfully, unless the developers have clearly acted in their own interest to the detriment of the owners. A court ruling under Swiss law is likely to reach the same conclusion.