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Our daily job is to keep our user’s digital keys secure, but non-technical attacks misusing the legal system can be just as devastating. This is why we at Shift Crypto donated $10,000 to Defending BTC through the non-profit OpenSats Legal Defense Fund. These are community campaigns to fundraise for legal fees and help defend open-source Bitcoin contributors from being targeted in lawsuits.

Please consider donating to the defense fund as well. Any funds not required for current lawsuits will be used to defend against future lawsuits. We wrote this blog post because (i) we believe that everyone should be encouraged to stand up for what they believe is right and (ii) to help spread the word about ways to defend Bitcoin against attacks like these.

The lawsuit security vulnerability

There’s a lot of money secured in Bitcoin. It is the greatest “honeypot” for hackers there ever was. If you can hack Bitcoin, you might walk away with millions or billions of dollars. The fact that Bitcoin itself was never hacked, is a great testament to its robustness. Overall, it’s certainly one of the most battle-tested computer networks ever.

But Bitcoin is not only computer code. It’s free and open-source. It relies on people for continuous development. These aspects are easier to attack than its cryptography. Patent trolls can try to limit its open nature. Given enough money, anyone can be sued under false pretences to “punish” them for being involved in Bitcoin. Attacks like these exploit existing legal systems, where anyone with enough lawyers can cause enormous financial damage to their targets, forcing them to defend themselves over years in courts, even if there’s no chance of actually winning the case.

Current lawsuits

Craig Wright, the man insisting on the (many times disproven) claim that he is Satoshi Nakamoto, is doing exactly that. He is suing numerous people involved in Bitcoin, and in the process threatening those speaking their minds and discouraging contributions to Bitcoin.

The latest example has been his lawsuit against Peter McCormack. Wright had sued McCormack for libel after the popular podcaster called him "a liar" and "a fraud" in 2019. As Coindesk wrote, “Though finding that comments made by McCormack caused ‘serious harm’ to Wright's reputation, the judge awarded Wright only nominal damages of one British pound.”, mainly because Wright deliberately submitted false evidence material.

Wright’s ongoing campaign targets the pseudonymous bitcoiner @Hodlonaut and is even more extreme. In order to sue Hodlonaut for some tweets labeling Wright “a fraud”, he started by offering a bounty for doxxing Hodlonaut’s true identity.

According to this timeline put together by Bitcoin Magazine, in May 2019 “a private investigator located his place of employment, posed as a police officer on the phone to get personal details/contact information”. Hodlonaut was then sued in the U.K. - where lawsuits like this are especially hard to counter without enormous costs.

Hodlonaut filed a lawsuit against Wright to establish in court that “my tweets were lawful, covered by truth and freedom of speech and that I am not liable to pay damages to Wright”. This trial starts today in Oslo, Norway.

The overall back and forth is complicated by design. Greg Maxwell wrote a great (and courageous) summary of the current situation and why it is a serious threat against Bitcoin on Reddit:

The deck is stacked enormously against hodl and Wright's other targets: Wright's laughable claims across multiple countries should have been possible to discharge in a summary judgement, limiting the legal costs to merely hundreds of thousands instead of millions-- but since he has nothing to lose, he'll tell whatever lies are required to keep the litigation going for as long as possible. And with Wright burying his opponents under a hundred of thousands of documents (a substantial percentage of which are forgeries) he easily can drive trial costs into the millions or tens of millions of dollars.

He goes on to conclude the following:

Wright's fraud is an attack on Bitcoin. Not a conjectural or hypothetical attack but a real one that has already done significant damage. I'm confident that this is an attack Bitcoin will survive because I'm confident that when people will stand up to fight for it and not wait forever for it to be solved by the invisible hand without realizing that each of us is the invisible hand. Wait for him to go away has been tried and it just allowed the situation to fester.

To follow the current trial in Norway, check defendingbtc.com.


Shift Crypto is a privately-held company based in Zurich, Switzerland. Our team of Bitcoin contributors, crypto experts, and security engineers builds products that enable customers to enjoy a stress-free journey from novice to mastery level of cryptocurrency management. The BitBox02, our second generation hardware wallet, lets users store, protect, and transact Bitcoin and other cryptocurrencies with ease - along with its software companion, the BitBoxApp.