BSV mastermind Craig Wright, through his lawyers, is asking Bitcoin developers to confiscate Bitcoins for him. The demand is so absurd that Bitcoin developers are annoyed at best – and that the BSV scene is increasingly distancing itself from the self-styled Satoshi. What does that mean for the future of Bitcoin? Is it a threat? Are my wallets or cards for cryptocurrency at risk? We will clarify in this article.
Persistence may be one of the central qualities of Craig Wright, the self-proclaimed Satoshi, legal scholar, security expert and Bitcoin SV (BSV) guru. Although his previous court cases have been rather less successful, he keeps trying. His latest prank is aimed directly at the developers of Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin ABC (BAB), and – absurdly – Bitcoin SV (BSV). He demands that they hand over to him 110,957 Bitcoins for which he does not have the private keys.
Ontier’s lawyers assigned to the case call the process “groundbreaking.” It will, they promise, “have remarkable implications for others who have lost their Bitcoins through misfortune or theft.” But let’s start at the beginning. “All responsible steps to provide Tulip Trading with access and control to the Bitcoins at these addresses”.
As early as mid-2020, Craig Wright had lawyers notify the developers of Bitcoin, as well as forks like BCH, that he had been custodian of the Bitcons on two Bitcoin addresses on behalf of his company, Tulip Trading. But it happened that on February 5, 2020, a hacker penetrated the computer of security expert Craig Wright, copied the keys there and deleted them from the hard drive. Since the holder of what he claims to be the world’s highest IT security certificates had failed to back up the Bitcoins, they are gone; however, the hacker does not seem to have felt the need to transfer the coins any further, which is why they are still resting at the two addresses.
The announcement, of course, caused laughter on the scene. Wright, the security guru, forgets the backup, and keeps almost 111,000 Bitcoins only on a hot wallet? Logical. The story became even more absurd when Mark Karpeles, former CEO of the former power exchange Mt. Gox, stated that the 1Feex address was related to the Mt. Gox hack. So, unless Craig Wright is the hacker, it cannot belong to him at all.
However, the lawyers ignore this. Also in the current letter they repeat the story of the keys kept by Craig for Tulip Trading and stolen by a hacker. The letter is addressed to the developers of Bitcoin Core as well as Bitcoin Forks. It informs the developers that their position gives them “substantial influence over the digital network that forms the BTC Blockchain,” and that this influence imposes fiduciary duties on them to Craig Wright or his company, Tulip Trading. Because of these, the developers are now obligated to do the following, he said: They must take all reasonable and responsible steps, first, to provide Tulip Trading with access to and control of the Bitcoins at those addresses and, second, to prevent the Bitcoins from being used by anyone else.
In other words, the core developers should break Bitcoin. They are supposed to blacklist the addresses to block payouts that have a valid signature, and they are supposed to make it possible for the coins to move to Craig Wright’s wallets without one.
Technically an interesting scenario
Technically, the demand is not that uninteresting. The first requirement would be relatively easy to fulfill: The developers would only have to write the rule into the code that outgoing transactions from these two addresses are invalid. This would be a so-called soft fork, which takes effect as soon as the miners activate it. The cooperation of nodes from other companies and users would not be necessary, which is why they cannot prevent such a “blacklist softfork”. Technically, censorship in Bitcoin is trivial.
The second requirement, however, is more difficult: confiscation. To get the coins from these addresses onto Wright’s wallets would require overriding an existing rule: that a transaction is valid only with a valid signature from the address from which it originates. For example, the developers would have to write the exception that transactions from the two addresses are valid if they are signed with the key of another address belonging to Craig. This is not impossible in principle – something similar happened on Ethereum after the DAO hack. However, it requires a so-called “hardfork”: Not only the miners must accept the exception to the rule, but also the nodes of companies and users. Otherwise, they will reject the block containing the exception transaction. Such a hardfork would carry the great risk of splitting the network.
But of course, it won’t come to that. At the very least, no developer is likely to comply with Craig Wright’s demand under the current circumstances. First, there is a complete lack of evidence that Craig is the owner of the coins. Even if a court in London upholds Craig, it doesn’t mean that the ruling is valid in other countries. And even in that case, it would be questionable whether developers could – and therefore would have to – implement the ruling at all.
Threatening Bitcoin in the long run
At Core, one reacts with annoyed equanimity to this latest legal fool’s errand from Craig Wright. They’re not worried, but they’re not necessarily pleased either. “So far the details are unclear, but we’re working with lawyers right now,” says a Core developer who remains unidentified but concerned. He suspects Wright has initiated a legal process in London, but is still waiting for confirmation. “Now that I’m affected, of course it’s going to be costly (in time, money),” he frets. However, he does not see a “threat to Bitcoin” in Wright’s actions.
The developer strongly doubts that the demand can be implemented in terms of content: “Assuming a technical solution exists, it would have to be adopted by the entire Bitcoin network, which is also very doubtful.” Furthermore, the action would possibly be illegal: “I’m not a lawyer, but if the coins belong to the Mt. Gox hacker, or to a miner or early adopter – then it would be theft to send them to someone else, right?”
Another core developer makes similar comments. He, too, gives Craig Wright’s claims no chance of success. “Is it provable for him that the 1Feex coins belong to him?” he asks. “Unlikely, since Marc Karpèles said that everything indicates that they were stolen. Would a judge see fit to create new money to compensate someone injured through his own fault? Craig claims to have lost access because he has no other backup. Even if this was brought about by a hacker as Craig claims, that’s who would be liable for the damage, not the public.”
This developer doesn’t feel directly affected and isn’t nervous about it. “Some of my fellow developers are directly affected, so of course that’s annoying because they really would have better things to do than deal with the court case.” “Threatening Bitcoin in the long run is not at all.”
Anger is also spreading in the BSV scene over the high frequency with which CSW is nagging the crypto scene with silly legal concerns. It really wouldn’t be necessary to make Bitcoin SV even more unpopular in the broader crypto scene. That’s why a Chinese association of BSV supporters is explicitly distancing itself from him.
In a “Declaration Against CSW,” they state that while they recognize Craig Wright’s work, they are opposed to him controlling BSV. Developers and entrepreneurs need not only the “stable protocol” that Craig prayerfully invokes, but also “a stable and conducive market environment.”
Developers don’t mince words about what they think of “Craig’s conduct.” It is “a hindrance to the situation and development of BSV,” and any market crisis brought about by him prevents BSV from reaching new supporters. Therefore, the Chinese BSV Association will no longer recognize Craig as Satoshi until he has proven this with a cryptographic signature. The association distances itself from Craig’s behavior and his legal action against other developers.
There is a quiet consensus in the BSV scene that Wright is shooting up his own chain with this action. “Twonkers go brrr” comments Josh Petty, as CEO of Twetch one of the most successful businessmen in BSV, perhaps the only one who has set up a BSV-based platform that at least shows signs of life. The saying could be roughly translated as “morons on an assembly line.”
Another member of the BSV scene who is known to me, but who remains anonymous, is also cautiously enthusiastic: “It has gone over the top with some. For some, because CSW announced something big and they had hoped for more. For others, because it makes BSV even more unpopular in the existing crypto community.” Some in the BSV community are also disappointed, he said, because Craig now appears to want to have Bitcoins instead of sell them, contrary to his widely quoted announcement that he would destroy Bitcoin with a “rolling iceberg order.” “Personally, I have long noticed that CSW has its own agenda and that it is not necessarily congruent with mine,” the BSV member, who remains anonymous, concludes. “I think the development is good because CSW has been idolized too much by many. As long as people stay with BSV but are no longer focused on CSW, that ends up being a positive.”
Another developer working with Bitcoin SV is even more outspoken: “Craig suing developers is 100 percent hurting the BSV ecosystem. But people around Craig don’t think rationally anymore anyway.” He also prefers to remain anonymous. “The only reason this case is so intolerable to a lot of people is because Craig is involved.”
However, Craig continues to have supporters. One BSV developer, who does not want to be named, says, “The case is only so intolerable to a lot of people because Craig is involved. But if you ignore that, it has a hand and a foot. A person had access to their property stolen. That person wants their property back. Imagine if it was a car. Now she has to prove to the legal system that it’s hers, and if you assume she can, there should be nothing to argue about.” It’s time for Bitcoin to grow up, he said, and that means meeting the demands of the legal system.
Technically, he said, it is rather trivial to assign coins to a different owner. “When that happens, there will be a fork,” the developer is certain. “One side of the fork implements a court order, the other ignores it. Which side do you think the exchanges will follow, and what will they call it? Who will the big money follow? Tesla, Greyscale, Coinbase, Kraken and so on?”
The developer wishes “Craig hadn’t done this.” However, he admits that there are good reasons for this and is sure that this will not be the only case. He recalls that recently a convicted criminal was not willing to give out the password to his wallet, which, by the way, had happened in Kempten, Allgäu. “Bitcoin is not immune to seizures. That’s a big lie. But Bitcoin makes such actions visible and public.”
Cracks in the fabric?
One of the first organizations to comply with the lawsuit is expected to be the Bitcoin Association. This umbrella organization of Bitcoin SV is formally responsible for development, which makes the official channel of the claim relatively absurd: Craig Wright is the head of the BSV developers at nChain, but they report to the Association, which is based in Switzerland. So Craig’s lawyers have written to that Association as well to get Craig’s staff to do what Craig wants.
Does this show that Craig’s control is slipping at nChain? Or is this just a farce to feign discussion when it has long since been decided what will happen?
Naturally, the Bitcoin Association responds sympathetically. It said it generally agrees with Craig’s position “that the digital currency and blockchain industry should strive to develop technical mechanisms and best-practice models to return lost or stolen coins to their rightful owners based on valid evidence and due legal process.” One also agrees “that implementing such a solution would help generate more trust in Bitcoin among everyday users, businesses, and government bodies.” However, one disagrees with “aspects of the legal position taken by Dr. Wright’s company and its attorneys according to the letter we received.” The Association doesn’t get more specific than that, however. Presumably they mean the evidence – or lack thereof – of Craig’s ownership of the two addresses.Are tender cracks in the fabric becoming visible here? The Bitcoin Association is more or less an organization of Calvin Ayre, who is generally considered a patron of Craig Wright. Is a rift brewing here? Does Calvin suspect that his protégé will go too far this time, and do too much damage with his actions?
Or is this just another scene in the farce being played out?
Will it end with Bitcoin SV signing over the nearly 111,000 BSV to Craig? After all, that would be no small amount of money. Or is it a rigged game that ends with the Association and the courts striking down Craig’s request – but not in principle, but specifically because Craig failed to prove ownership this time? Do Craig and his allies want to set an example, show a path that can become the basis of a long wave of lawsuits by those who have lost millions or hundreds of millions of euros in Bitcoin? And which can become the basis of another lawsuit in which Craig claims to receive the coins from Satoshi? But does that really make sense anymore? Probably rather not.