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

Findings of fact made by another court are inadmissible in a subsequent trial as evidence of their truth. A party cannot avoid that rule by pleading earlier adverse findings merely to justify requiring strict proof.

On an amendment application, the court should distinguish a new claim or defence, which must have a real prospect of success, from further particulars supporting an existing plea. The latter ordinarily raises matters for trial.

Security for costs depends first on whether a gateway under the Civil Procedure Rules 1998 is established and then on whether security is just in all the circumstances. Security should ordinarily be readily enforceable, and volatile digital assets need not be accepted as security.

Two passing-off actions were brought by Dr Craig Steven Wright and Wright International Investments Ltd against the Coinbase and Kraken defendants. The claims concerned use of the term Bitcoin and alleged defining characteristics of the Bitcoin system.

At case management hearings, the defendants sought to amend their defences, including by pleading adverse findings made about Dr Wright’s evidence in other proceedings. They also sought security for costs against the second claimant, a Seychelles company. The court determined the Hollington issue, the proposed amendment concerning transaction reversibility, and the security applications.

1. Earlier findings. The rule in Hollington v Hewthorn, as explained in Rogers v Hoyle, prevents findings of fact by another decision-maker being admitted in a later trial as evidence of the truth of those findings. The trial judge must decide the case on the evidence received in the proceedings. The pleaded references to earlier adverse findings were framed as findings of fact and offended that rule. The relevant paragraphs were struck out, or permission to amend was refused. The ruling did not determine what documents might be put to Dr Wright in cross-examination.
2. Amendment. The proposed plea concerning the alleged reversibility of Bitcoin transactions was sufficiently intelligible. The court declined to resolve the underlying technical issue on the application, particularly because expert evidence would be relevant. The amendment was allowed, but the words “For example, the” were replaced by wording requiring the defendants to identify specifically the respects relied upon.
3. Security for costs. Under CPR 25.13, the gateways are factual conditions; once a gateway is established, the decision whether security is just, and its amount and form, are discretionary. The court must consider all the circumstances and balance the parties’ interests. The evidence did not establish that either claimant had substantial liquid assets readily available to meet a substantial costs order. There were also material enforcement difficulties in the Seychelles and uncertainty over ownership and control of the claimed digital assets.
4. Where security is ordered, payment into court or a guarantee from a first-class UK bank ordinarily provides the required protection. Digital assets were not accepted as an alternative because of their volatility and the anticipated difficulties in realising them. The common identity issue with the COPA proceedings did not prevent security being ordered in these separate actions.
5. Orders. Wright International Investments Ltd was ordered to provide security of £250,000 for the Coinbase defendants and £150,000 for the Kraken defendants, by payment into court or a first-class UK bank guarantee, within 28 days. If security was not provided, the actions would stand struck out seven days after expiry of that period.