Trust me, I’m a developer – Tulip v Van der Laan and ors

The recent decision in the case of Tulip v Van der Laan and ors sees the Court of Appeal venturing once more into the neo-wild west of cryptocurrency markets and, like the lawmen of yore, staking out the ambit of certain parties’ legitimate claims.

The Court of Appeal has considered that a fiduciary relationship might exist between the developers of a cryptocurrency network and the purported owner of the cryptocurrency used within that network. The issue will now be determined at trial, but if such a duty does transpire to exist, the resulting judgment will undoubtedly open up an entirely new frontier of recovery for victims who have had their cryptocurrency stolen.


Tulip Trading Limited (“Tulip”) claim to be the owner of approximately 4 billion USD worth of BTC (valued April 2021), held at two addresses on the blockchain. It contends that the “private keys”, which allow access to its bitcoin, were stolen and, as a result, it can no longer access its assets. Tulip argues that the defendant developers effectively control and run the BTC network, and, as such, they can reinstate Tulip’s control of the BTC, by shifting it to another address and providing Tulip with the key to that new address.

Tulip claim that the relationship between the developers and the bitcoin owners amounts to a new example of a fiduciary relationship, and their reluctance to act to restore control of the bitcoin to Tulip amounts to a breach of its fiduciary duty.

So, if you lose or otherwise have your key/password stolen, do the developers have a duty to take positive steps to change the ledger? The court of first instance said “no”. The Court held that there was no realistic prospect of establishing that the facts pleaded amounted to a breach of fiduciary or tortious duty owed by the defendant developers. However, when the Court of Appeal focused its careful legal eye on the question, they did not support the proposition of the lower courts.

Fiduciary duties

The Court of Appeal set out the classic definition of a fiduciary, set out in Bristol and West Building Society v Mothew:

“A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary.”

The Court of Appeal clarified further:

“70. … a fiduciary is someone who has undertaken a role with the relevant characteristics. Key characteristics are that the role involves acting for or on behalf of another person in a particular matter and also that there is a relationship of trust and confidence between the putative fiduciary and the other person. The reason for spelling this out is because in the present case, in my judgment, the developers are people who it is clearly arguable have undertaken a role which at least bears some relationship to the interests of other people, that is to the owners of bitcoins.”

Nonetheless, the court acknowledged that the fiduciary relationship of which the claimant argued existed in this case was “new and quite a long way from factual circumstances which the courts have had to examine before in the context of fiduciary duties”

Who can you trust in a brave new world?

In assessing the nature of the relationship between bitcoin owners and network developers, the Court observed:

  • It is software that controls all of the properties of the asset in question, namely BTC and, on Tulip’s case, it is the developers who have unique and unfettered control over that software. (The Court observed that, on the defendants’ case, this was not correct, and the decentralised nature of bitcoin ultimately meant that the control they exercised was extremely limited in scope. This, however, was a matter to be determined on evidence at trial, and not at an appeal against a preliminary application such as the present one).
  • If developers owe a duty to BTC owners to refrain from compromising the security of their assets, this duty would be “single minded in nature at least in the sense that it puts the interests of all the owners as a class, ahead of the developer’s self-interest. It is, I would say, arguably a fiduciary duty. It is difficult to see what other sort of duty it could be.”
  • That the developers were the only parties with the power to fix any “bugs” within the blockchain network. Doing so would amount to an “exercise of their de facto power.” The court held: “In a very real sense the owners of bitcoin, because they cannot avoid doing so, have placed their property into the care of the developers. That is, in my judgment, arguably an “entrustment”.
  • Bitcoin owners could be said to have a “legitimate expectation” that developers would act in good faith and not exercise this power in their own self-interest, to the detriment of the owners.


Having drawn the above conclusions, the Court of Appeal summarised the position as follows:

86. Pulling all this together, I recognise that for Tulip’s case to succeed would involve a significant development of the common law on fiduciary duties. I do not pretend that every step along the way is simple or easy. However there is, it seems to me, a realistic argument along the following lines. The developers of a given network are a sufficiently well defined group to be capable of being subject to fiduciary duties. 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. That property has been entrusted into the care of the developers. The developers therefore are fiduciaries. The essence of that duty is single minded loyalty to the users of bitcoin software. The content of the duties includes a duty not to act in their own self interest and also involves a duty to act in positive ways in certain circumstances. It may also, realistically, include a duty to act to introduce code so that an owner’s bitcoin can be transferred to safety in the circumstances alleged by Tulip.

A New Frontier?

This is only a preliminary judgment, and the issue of whether a fiduciary duty exists will ultimately be decided on the evidence at trial. However, if the Court finds that the developers of bitcoin owe a fiduciary duty to owners, there is the potential that this would open up a gateway for the victims of crypto fraud to the immediate restitution of their property. What a world that would be.

Drafted by Nikos Keim, Ashley Fairbrother and Bridie Burnett