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An open door to imposing fiduciary duties on digital asset developers

28 Feb 2023

In the latest decision in the Tulip Trading litigation ([2023] EWCA Civ 83), the English Court of Appeal has held that the question of whether developers of Bitcoin networks owe fiduciary duties to Bitcoin owners is a "serious issue to be tried", leaving the door open for an expansion of the law on fiduciary duties that could trigger a wave of new digital asset claims.


In proceedings in the English High Court, Tulip Trading Limited (Tulip) claims that its CEO’s computer was hacked, resulting in the private keys to two addresses being misappropriated and, with them, the approximately USD 4 billion (as at April 2021) worth of bitcoin stored at those addresses.

The defendants in the proceedings are the alleged developers of the bitcoin networks (the Developers). Tulip seeks wide-ranging relief against them, including a declaration that the Developers owed it (as the owner of the bitcoin) fiduciary or tortious duties, which require them to assist Tulip in regaining control of the stolen bitcoin. Tulip claims the Developers can apply a software patch to either (i) move the misappropriated bitcoin to a new address under Tulip’s control, or (ii) re-issue new private keys for the two affected addresses.

Each of the Developers are outside of the jurisdiction of the English court, so Tulip applied for and obtained an ex parte order permitting service outside of the jurisdiction. The majority of the Developers then applied to set aside service. The Developers succeeded at first instance, with Falk J holding that he could not see any realistic basis for imposing a fiduciary duty in favour of Tulip, such that it was unable to satisfy the first limb of the test for permitting service out in demonstrating a serious issue to be tried.

Tulip appealed on six grounds, the principal one being that Falk J was wrong to hold that Tulip had no real prospect of establishing that the claimed fiduciary duties exist. The Developers opposed the appeal, arguing inter alia: (i) adopting a fiduciary relationship is contrary to and would defeat the decentralised nature of bitcoin; and (ii) the Developers did not have sufficient control over the stolen assets to repatriate them to Tulip, as any patch could be rejected by miners thereby causing a "fork" whereby the bitcoin network diverges into two (those that adopt the new patch and those that do not).

The court of appeal’s decision

Giving the lead judgment on behalf of a unanimous Court of Appeal, Birrs LJ granted Tulip’s appeal, finding that there is a "real prospect" that Tulip’s claim will be successful.

Birss LJ considered the defining features of the fiduciary relationship: (i) that the role involves acting for or on behalf of another person in a particular matter and (ii) that there is a relationship of trust and confidence between the fiduciary and the other person. He then went on to conclude that while “not every step along the way is simple or easy”, there is a potential case as follows:

  1. “The developers of a given network are a sufficiently well defined group to be capable of being subject to fiduciary duties’”
  2. “Viewed objectively, the developers have undertaken a role which involves making discretionary decisions and exercising power for and on behalf of other people, in relation to property owned by those other people.”
  3. “That property has been entrusted into the care of the developers.”
  4. “The developers therefore are fiduciaries.”

Birss LJ also noted that, while it is exceptional for fiduciary duties to arise other than in certain settled categories, the facts of this case are novel and a long way from the cases the court has considered before. In these circumstances, and with the logical case set out above, it would be wrong to say that the common law on fiduciary duties cannot develop as far as Tulip argues it ought to.


The Court of Appeal has not found that Tulip will or is likely to succeed in its argument that the Developers owe fiduciary duties to blockchain owners, it has merely found that there is a real, as opposed to fanciful, prospect of that argument succeeding. However, even this is significant given the way in which such a relationship would, if established, impact the digital asset space. The existence of fiduciary relationships and duties in these circumstances would appear to be inconsistent with blockchains and applications being genuinely decentralised and might require developers to retain some element of ultimate control, even if day-to-day decisions and development are left to the consensus of miners/token holders.

With the door still open to Tulip’s argument, the litigation will no doubt continue to garner wider interest. We will be following this one closely.


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