A Master has rejected a request by a claimant to provide security for costs to the defendants by way of digital assets. The defendants obtained security for costs in relation to the legal costs incurred in making jurisdiction applications on the grounds of the claimant's impecuniosity. But the Master held that provision of the security by the claimant in the form of digital assets would expose the defendants to the risk of a fall in value. 


The judgment of Master Clark (the Judgment) dealt with consequential matters arising out of a successful security for costs application made by several of the defendants to an underlying dispute worth over $4 billion with Tulip Trading Ltd (the Claimant).

The Claimant is a company based in the Seychelles whose only asset was Bitcoin. The ultimate beneficial owner of the Claimant is Dr Craig Wright, who claims to have invented the Bitcoin system under the pseudonym Satoshi Nakamoto. The Claimant claims that the 16 defendants, open-source software developers who have developed or improved Bitcoin software on a non-commercial basis (the Defendants), owe fiduciary and tortious duties to amend or re-write software code which would enable the Claimant to access Bitcoin assets which have been blocked since an alleged computer hack in February 2020. 

15 of the Defendants, who are all domiciled outside the jurisdiction, were successful in their application for security for their costs in relation to making applications to challenge an order granting permission for documents to be served on them outside of the jurisdiction (the Jurisdiction Applications). 

Security for costs was ordered on the grounds that the Claimant had failed to demonstrate that it had sufficient funds to meet the Defendants' legal costs. The Defendants were unsuccessful on three other grounds.

As part of its submissions in relation to consequential matters, the Claimant had offered to provide the security by transferring the value in digital assets (either Bitcoin Satoshi Vision or Bitcoin Core) to their solicitors, plus a 10% "buffer" to alleviate any potential volatility in the value of those assets. 

The basis for the Claimant's request was (i) that it did not hold a UK bank account and (ii) that it would need to exchange Bitcoin for sterling which would incur a Capital Gains Tax liability, preventing the Claimant from providing the traditional forms of security (payment into court or guarantee by a first-class UK bank).


  • The Court considered the principles set out in Monde Petroleum SA v Westernzagros [2015] EWHC 67 (Comm) and Infinity Distribution Ltd (in administration) v Khan Partnership [2021] EWCA Civ 565 which provide that:
    • alternative forms of payment of security for costs should allow a defendant to simply and swiftly enforce a costs order in an equivalent way to traditional methods of security; 
    • the court is obliged to fairly balance the interests of the parties and in line with the Overriding Objective; 
    • if the alternative form of payment provides "equal protection" to the defendant, and "all else being equal", then the form which is "least onerous to the claimant" should be ordered.
  • Master Clark held that, although refusing to allow payment using Bitcoin would place a practical burden on the Claimant, digital assets would not afford the same protection for the Defendants as traditional forms of security.
  • The 10% buffer offered by the Claimant did not counter the risk to the Defendants of exposure to high levels of volatility in the value of Bitcoin which could devalue their security. Additionally, if the Claimant failed to comply with the security for costs order, the Defendants would not be able to enforce the order before the Jurisdiction Applications were heard. This was "not a case where all other things are equal" and placing a more onerous obligation on the Claimant was justified. 
  • In considering the balance of the relative interests of the parties, Master Clark commented that there were several areas where the Claimant had not provided evidence, including about its overall financial position. There was also no suggestion that the claim would be stifled if the Claimant were to be ordered to provide security otherwise than by way of digital assets.
  • On the other consequential matters, Master Clark concluded that:
    • the decision in Danilina v Chernukhin [2018] EWCA Civ 1802 was not an authority for determining any reduction of costs on assessment when considering the value of the security to be paid; 
    • the level of security ordered should not be on the assumption that the Defendants' costs would be awarded on an indemnity basis due to the weakness of the Claimant's case. The merits of a case do not determine the level of security;
    • a Defendants' costs are to be assessed on a "robust basis and applying a broad brush" in line with the decision in Pisante v Logothetis [2020] EWHC 3332 (Comm)
    • guideline hourly rates were largely irrelevant in this case, given its value and complexity. A 30% discount would be deducted from the Defendants' total £354,792.20 combined costs for the Jurisdiction Applications; and 
    • as the Defendants had only succeeded on one of the grounds, a 15% discount would be applied to their legal costs for the security for costs application itself.


This decision shows that the English courts are reluctant to accept payment of security for costs in digital currencies due to their inherent volatility, even where all parties to the dispute are themselves engaged in the cryptocurrency markets, as in this case. 

Key Contacts

James Herring

James Herring

Partner, Finance Disputes
London, UK

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Sivan Daniels

Sivan Daniels

Partner, Finance Disputes & Commercial Litigation

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Rachel Barnett

Rachel Barnett

Associate, Finance Litigation

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