A man has failed in an attempt to sue his local council for not letting him dig up a hard drive containing around £600m worth of Bitcoin — but he has a new plan. James Howells, from Newport, is set to start a new cryptocurrency based on his inaccessible Bitcoin wealth.
The 39-year-old dad-of-three, who learned about Bitcoin in 2009 by spending time on internet forums, believes he was one of the first miners of the cryptocurrency. He created 8,000 coins which cost him nothing beyond pennies’ worth of electricity to run his laptop. He stored the private key needed to access the coins on a 2.5-inch hard drive which he put in a drawer at his home office — but disaster struck in 2013 when his then-partner mistakenly threw out the hard drive.
In the time since, Mr Howells has watched his coins’ value rocket to around £600m while he has desperately tried to get the hard drive back from the Docksway landfill site where it is buried. Last year he took Newport council to the High Court in a “last resort”. His claim demanded that the council let him excavate the landfill or pay him £495m in damages.
The claim has now been thrown out by Judge Keyser KC, who said it would have “no realistic prospect” of success at trial. Mr Howells told WalesOnline he now feels “the dig is completely off the table” — but he believes a comment made by the judge could help him in a new scheme to finally make the most of his inaccessible Bitcoin.
“During the hearing, the judge himself stated it was his belief that the council owned the physical hard drive but that I am the owner of the Bitcoin,” said Mr Howells. But he was disappointed that this finding did not feature in the written judgement handed down by Judge Keyser on Thursday. “What was issued was the judgment but there is also going to be a final order,” Mr Howells added. “I am hoping the order will recognise my ownership of the Bitcoin in law which will allow me to legally tokenise them into a new asset.”
Mr Howells admitted his tokenisation plan has been a difficult concept for some people to understand but he made this analogy to explain it. “In the old days, gold bars would be held in a vault and the notes traded in public would represent the value held in the vault. I could use the Bitcoin as backing, like a financial vault, and create a new currency — let’s imagine it’s called James Coin — which would replicate one for one the assets in the Bitcoin wallet.
“Everyone can see the Bitcoin is never going to move. I can’t get the private key so it’s going to be sat there for eternity. But I believe with a court declaration of ownership, I can tokenise them into a sub-currency. I would become a figurehead for James Coin and it would be marketed as a child currency of Bitcoin. Its value would always be derived from Bitcoin — James Coin’s value will go up and down as the market price of Bitcoin goes up and down.”
We asked Mr Howells if his inability to access the Bitcoin would be an obstacle to these ambitions. “It’s not an obstacle,” he replied. “It’s a benefit. The landfill acts like a super-duper storage vault. The coins never come out of the vault, and something else that’s traded represents what is in the vault.”
James Howells
(Image: WALES NEWS SERVICE)
Mr Howells believes he could get the cryptocurrency running within a year. Even in a best-case scenario the scheme would not see him recover all of his £600m wealth, he acknowledged. “It’s a very small win for me but it would allow me to do something else, rather than sit there and look at the Bitcoin I can’t access.”
He added that James Coin was only a “placeholder” for the currency’s yet-to-be-decided name. When we asked if he had considered using ‘Bin Coin’ for marketing purposes, he said he saw the funny side but he was more likely to go with Ceiniog Coin. “Ceiniog is the Welsh word for penny, or the smallest denomination of money,” he said, adding that he liked the “old-school” association with ancient Welsh money.
After securing backing from investors, Mr Howells had assembled a team of experts who were prepared to carry out a £10million landfill dig at no cost to the council. He had also offered the council 10% of the Bitcoin’s value if recovered. But James Goudie KC, representing the council in court, argued that this could have amounted to a “bribe” and would have been playing “fast and loose” with regulations. He said that the hard drive had become council property when it entered the landfill and that the site’s environmental permits would prevent the proposed excavation.
Mr Howells’ team had narrowed down the likely location of the hard drive and estimated the dig would take 18 to 36 months followed by around a year of remediation work. His barrister Dean Armstrong KC said the search was not so much a “needle in a haystack” case as a “finely tuned plan by expert excavators”.
Judge Keyser found that there were “obvious practical reasons for declining to permit such activities”. He concluded: “I also consider that the claim would have no realistic prospect of succeeding if it went to trial and that there is no other compelling reason why it should be disposed of at trial.”
Mr Howells said: “Obviously I am very disappointed with the judgment that has been handed down today. I feel that my case was not given the proper level of consideration that the value of the asset in question deserved and I feel that the UK court system in general has failed me in the fact that I have not even been given the opportunity for justice at full trial.”
But he added that his disappointment was “slightly mitigated” by the council and judge not challenging his ownership of the Bitcoin itself. “It follows that I am now indisputably the owner of the Bitcoin,” he said. “My legal team remain in negotiation with Newport City Council and the court over the final wording of the order being issued.”
Mr Howells has devoted the last decade to finding the hard drive as “a full-time operation”. He gave up his IT job and reached an agreement with investors that would have seen him left with around 30% of the Bitcoin if the hard drive had been found. You can read more about his story here.
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