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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539

Fiduciary Duties and Cryptocurrency

Author: Syedur Rahman  21 February 2023
2 min read

Do the developers who run bitcoin networks owe fiduciary duties to the owner of that cryptocurrency?

The Court of Appeal handed down judgment in Tulip Trading Limited (A Seychelles Company) v Bitcoin Association For BSV & Ors [2023] EWCA Civ 83 on 3 February 2023. The judgment is arguably one of the most important decisions on cryptocurrency in the courts today, and helps to define the legal relationship between token holders and blockchain developers.

The question before the court was whether or not the developers might owe fiduciary duties to the owners of the bitcoin. In the first instance, the High Court ruled that there was no issue to be tried, but the Court of Appeal disagreed.

Brief summary of the facts

Tulip Trading Ltd (Tulip) claims to be the owner of bitcoin to the value of around $4 billion (USD).

Tulip was hacked and they now argue that the developers of bitcoin can help recover their stolen bitcoin funds.

Tulip’s suggestion is that software developers should be compelled to “write code” which fundamentally changes the design of the blockchain, thereby enabling the crypto assets to be transferred without the use of private keys.

The key legal remedy that Tulip seeks in the case is an injunction to require the developers to act. The code update would transfer the bitcoin into a safe account controlled by the true owner (Tulip) or safeguard that bitcoin in some other way.

The essence of Tulip’s case is that the developers have undertaken to control the software of the relevant bitcoin network. They exercise control over the property held by others (i.e. bitcoin). As a result, they owe fiduciary duties to the true owners of that property.

The Court of Appeal considered whether it could accept this proposed extension to the usual settled categories of fiduciary duties, as set out in Al Nehayan v Kent [2018] EWHC 333. Or in other words, should the developers who run the bitcoin networks be recognised as a new ad hoc class of fiduciary?

Do the developers owe fiduciary duties to Tulip?

Lord Justice Birss (delivering the leading judgment, with which Lord Justice Popplewell and Lord Justice Lewison agreed) found that it was clearly arguable that the developers had undertaken a role which at least bears some relationship to the interests of other people (the owners of bitcoins).

However, a fundamental difficulty for Tulip was one of the defining characteristics of a fiduciary relationship - the obligation of undivided loyalty. The developers’ ‘loyalty’ would be divided among all of the owners of bitcoin.

Lord Justice Birss’ held that even if a change was only for the benefit of one owner (as in the current case) that does not preclude it being in accordance with the relevant fiduciary duty. The essence of that duty is single minded loyalty to the users of bitcoin software.

In reaching this decision, the Court recognised that for Tulip’s case to succeed, it would involve a significant development of the common law on fiduciary duties. However, the Court considered that such a duty could not be dismissed summarily.

If so, how far do those duties extend?

Even if a fiduciary duty exists, would it extend to the remedy sought by Tulip? i.e. Would it extend to implementing the necessary software patch to solve Tulip’s problem and safeguard their assets from the thieves?

The Court considered that the relationship could 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.


The Court allowed the appeal. The conclusion does not go as far as saying definitively that there is a fiduciary duty in law in the circumstances alleged by Tulip. But it does consider that it is a possibility, and that the case advanced raises a serious issue to be tried. The time to decide on the duty in this case is once the facts are established.

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Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, international arbitration, civil recovery, cryptocurrency and high-stakes commercial disputes.

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