Dr Craig Steven Wright & Anor v Coinbase Global, Inc & Ors

This judgment resolved interlocutory issues arising at a joint case management conference in two passing off actions brought by Dr Craig S. Wright and Wright International Investments Limited against Coinbase and Kraken groups. The court applied the rule in Hollington v Hewthorn to strike out pleaded reliance upon prior adverse judicial findings where those findings were pleaded as evidence of the truth of those findings. An amendment to a defence paragraph alleging that the BSV system does not implement the White Paper was permitted but required to be particularised. The defendants’ applications for security for costs were allowed in part: the Second Claimant (a Seychelles company) was ordered to provide cash or a first‑class UK bank guarantee of £250,000 for the Coinbase defendants and £150,000 for the Kraken defendants, payable within 28 days, failing which the actions will be struck out. The court identified and confirmed that the common 'identity issue' (whether Dr Wright is Satoshi Nakamoto) should be tried in the COPA action but deferred determination of the stay application to further proceedings.

Background and parties. The claimants (Dr Wright and a company) bring passing off claims relating to the term 'Bitcoin' and allege ownership of goodwill and defining "Bitcoin Characteristics". Two sets of defendants (Coinbase and Kraken) sought various interlocutory orders at the CMC: a stay pending the COPA first‑instance trial, security for costs, and amendments/striking of parts of the defendants' pleadings. There are two other related actions (COPA and BTC Core) and a single common question — the "identity issue" (whether Dr Wright is Satoshi Nakamoto) — which the court directed should be tried once in the COPA action.

Nature of relief sought. Defendants sought (i) a stay pending the COPA trial, (ii) security for costs under CPR 25.13 (non‑residence and impecuniosity gateways and related grounds), and (iii) permission to amend or to rely on prior judgments in their pleadings. The claimants applied to resist those applications and to strike out parts of the defences.

Issues framed by the court.

• whether pleaded references to prior adverse judicial findings violated Hollington v Hewthorn and should be struck out;
• whether the particular proposed addition to paragraph 64(a) of the defences (alleging a confiscation transaction protocol allowing reversal of transactions) should be permitted;
• whether security for costs should be ordered against the Second Claimant and, if so, in what amount and form.

Court's reasoning and conclusions. On Hollington v Hewthorn the court held that pleaded reliance on prior judicial findings as evidence of their truth contravened the rule that earlier decisions are not admissible as proof of facts at a later trial; the relevant paragraphs in the defences (Paragraph 33 as pleaded) offended that rule and were struck out. The court emphasised this ruling did not affect the ability to challenge credibility at trial by cross‑examining witnesses or by adducing admissible evidence of inconsistency.

The proposed further wording to paragraph 64(a) was allowed but only insofar as it was particularised. The court declined to decide the technical point about whether the alleged protocol permits "reversals" on a preliminary application and required the defendants to plead specifics because the matter will be the subject of expert evidence at trial.

On security for costs the court applied the CPR gateway principles. It was not persuaded on the evidence that the Second Claimant was resident in the United Kingdom or that either claimant had sufficient readily realisable liquid assets to meet potential adverse costs orders. The court found material deficiencies and unreliability in the claimants' financial evidence (notably the Chesher statement), and noted enforcement difficulties in the Seychelles and public statements by the first claimant about asset structuring. Balancing the circumstances, the court ordered security for costs from the Second Claimant: £250,000 (Coinbase) and £150,000 (Kraken), by payment into court or a first‑class UK bank guarantee within 28 days, with strike‑out if not provided.

Procedural note. The court recorded that the stay application was preliminarily to be decided in the context of the wider case management and that the identity issue should be tried in the COPA action listed for hearing at first instance.

The court struck out parts of the defendants' pleadings that sought to rely on prior judicial findings as evidence of their truth (applying Hollington v Hewthorn), allowed a restricted and particularised amendment to paragraph 64(a) of the defences (requiring specifics because the point is technical and will be addressed with expert evidence at trial), and ordered security for costs. The Second Claimant (Seychelles company) must provide security by payment into court or a first‑class UK bank guarantee of £250,000 in favour of the Coinbase defendants and £150,000 in favour of the Kraken defendants within 28 days; failure to do so will lead to strike‑out. The court deferred final determination of a stay application and confirmed the identity issue should be tried in the COPA action.