The responsibility of software developers to write blockchain software has been addressed in two recent developments.
Craig Wright, who claims to be Satoshi Nakamoto (the developer of bitcoin), through his holding company Tulip Trading, Ltd. sued 16 bitcoin developers to demand that the bitcoin developers write software “patches” to enable the recovery of more than $1 billion worth of assets that he claims were stolen in a 2020 hack of his computers.[1] His suit claims that these developers owe him a fiduciary duty, which is an unprecedented new theory and will dramatically change software development for both blockchain and other projects.
The UK High Court dismissed these duties on summary judgment, but a Court of Appeal overturned this decision and returned the case to the District Court, saying:
The question of whether developers have a duty of care and/or a duty of trust towards the owners of digital assets, and if so what the nature and extent of these duties are, is of great importance and is rightly characterized as a question of a certain complexity and difficulty. Given that, in addition to its complexity and difficulty, the underlying facts will play a significant role in deciding this question, it can be argued with a real prospect of success that it is not amenable to summary judgment in the context of a challenge to the jurisdiction, and therefore that the judge erred in ruling that there was not even a serious question to be tried and in the approach she adopted.[2]
While this decision does not mean that the bitcoin developers will owe a fiduciary duty to Mr. Wright or his company, it does raise the risk that such a decision could be imposed.
On August 10, the developer of Tornado Cash, the cryptocurrency mixer sanctioned by OFAC in the United States, was arrested in the Netherlands by FIOD, the Dutch financial police. FIOD announced that “Tornado Cash is a mixing service for cryptocurrencies. The online service makes it possible to hide the origin or destination of cryptocurrencies. The (criminal) origin of the cryptocurrencies is often not or hardly checked by such mixing services. Users of a mixing service do this to increase the anonymity.”
This announcement does not clarify the basis for the arrest, although some reports indicate that it may be based on his participation in the development of Tornado Cash. Imposing such liability on programmers raises many questions since programs like Tornado Cash have many users, only some of whom are criminals whose involvement could trigger liability.
