Millions of ordinary investors in crypto assets could potentially be at risk if a key decision on fiduciary duty is not reversed, the Court of Appeal heard this morning. In Tulip Trading v Wladimir van der Laan & Ors the court must decide whether developers of crypto products have the duty to assist a high profile figure in the crypto community recover losses caused by a computer hack. 

In March this year, Mrs Justice Falk found that the developers had no fiduciary duty to write new code to help a company owned by Dr Craig Wright, the computer scientist who claims to have invented bitcoin, unlock assets worth $3bn. 

On the first day of a two-day hearing, Lord Justice Lewison, Lord Justice Popplewell and Lord Justice Birss heard that the Falk ruling was wrong in law and had important public policy implications. For Tulip Trading, John Wardell KC of Wilberforce Chambers said, the case is 'without doubt, the most significant' to have come before the courts in relation to digital assets.

Wardell likened the position of the appellant to that of the owner of a safe whose key had been stolen. The developers were in the position of the safe maker: they had a duty to help Wright secure his own assets rather than allow them to be stolen by unknown hackers. 'It would be contrary to public policy and irrational for a person to be denied access to valuable assets known to be owned by him. That is particularly so where there is a real risk that those assets could be misappropriated by a third-party fraudster, and where it is within the fiduciary's gift to resolve the situation,' he said.

Arguing that crypto assets 'are now mainstream', Wardell said that tens of millions of private investors as well as financial institutions are susceptible to 'increasingly sophisticated hacks and could find themselves in the same position'. 

He also argued that Falk had been wrong to determine summarily in 'a developing, complex and uncertain area of law' that the claimed fiduciary duties and duty of care do not exist. 

The hearing continues. 

 

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