The actual identity of the person assumed to have created bitcoin, the cryptocurrency, is on the line in a court case that could affect the viability and long-term prospects of such entities.

When it comes to legal tussles over assets, one area that presents challenges is the fast-changing field of digital assets, for example non-fungible tokens and cryptocurrencies such as bitcoin – entities based on blockchain technology. A sign of how fast and far this technology is moving is that it has now entered the field of legal dispute and ideas on how to resolve problems in the sphere. The author of this article is Chris Recker, senior associate in the dispute resolution team at law firm Kingsley Napley. Recker specialises in digital asset disputes and recovery.

The usual editorial disclaimers apply to views of guest writers. Email tom.burroughes@wealthbriefing.com if you wish to respond and join the conversation.

Cryptocurrency and NFTs have become familiar terms for many over recent years. However, for the next few weeks the attention of the digital asset world will be focused (both physically and remotely) on London where several combined cases (commonly referred to as being the case brought by COPA – the Crypto Open Patent Alliance) are being heard. These will determine on the available evidence whether Dr Craig Wright is truly Satoshi Nakamoto, the pseudonymous creator of bitcoin and author of the famous 2008 white paper. 
 
The case is hard fought on all sides (including allegations that documents have been forged). The implications of the case have the capability to significantly impact users and developers of the bitcoin ecosystem in the future (particularly on the development and governance of the network).  

The underlying subject matter and theme of each of the cases stems from the identity of Satoshi – whether Dr Wright (as someone alleging to be Satoshi) has the right to use or control certain intellectual property rights connected with the bitcoin network and ecosystem. The determination of this issue is not necessarily the end for all of those claims because there will undoubtedly be other issues that need to be addressed by the court (which may include the extent to which those rights can be exploited, and which will be most relevant if Dr Wright is found not to be Satoshi).
 
Why is this relevant to crypto investors and the investor community? 

The short answer is that it depends. Those who are heavily rooted within digital asset ecosystems may see this issue as an attack on the integrity of the bitcoin network (and being averse to the core principles of decentralisation and anonymity). This would be the case if the court determines at a later stage that one single person has the ability to dictate or control development and governance decisions on the networks. However, for the casual investor (or a semi-interested spectator) this may be less of a concern.
 
The obvious knock-on effect could be to bitcoin’s value (and by extension confidence in the digital asset ecosystem generally). Projects that somehow integrate with or involve transactions on the bitcoin network may be keen to understand what that could mean for them going forward (and those who have invested in or are running those businesses may also be very concerned as to what that means for their future viability). A consequence could be, for example, that other tokens become more popular which could result in a seismic shift in the digital asset market as we see it today.
 
However, the other important point to consider is what the determination of the identity of Satoshi might mean for those engaged in the ecosystem (particularly investors and their advisors). While many have made significant investment gains by participating in the digital asset ecosystem in some way, many have lost life savings by those same decisions or otherwise have been the victims to significant and calculated frauds. Another case (the Tulip Trading case) involving Dr Wright concerns the extent to which the developers of certain blockchain networks owe fiduciary duties to users of the network. 

One issue being considered is whether developers can be compelled to deploy software patches which might help users regain access to addresses that are inaccessible because they have lost private keys or possibly gain access to a third-party address to recover digital assets following a theft or a hack. This is a very interesting development and, in the right cases, a powerful asset recovery tool.
 
The Tulip Trading case is also hard fought. If Dr Wright is found to not be Satoshi, then it is likely that this finding will be deployed in the Tulip dispute. It is possible in fact that this may result in the case being determined or compromised at an early stage. This could be before the question of whether a developer can be compelled to support a victim in the manner suggested above is considered. It is equally possible that this point is considered and rejected by the court. From an asset recovery perspective only, this would be less satisfactory for victims because those victims are potentially left without the potential recourse associated with the ability to seek an order compelling the deployment of a software patch which may help them gain or regain access to an address.
 
Therefore, both investors and their advisors should take an interest in the Dr Craig Wright developments. The ramifications of both these cases could be significant and have the potential to change the landscape of an already volatile and risky asset class. 

For those who are victims of fraud, or have clients who are victims of fraud, the importance could be that a new and innovative asset recovery strategy (i.e. the potential application of software patches) is stopped before it even starts. The same applies for those who are hopeful of a recourse to access addresses when private keys have been lost.