The Alibi of Form: On Power That Refuses Its Own Name
In which we discover that the oldest trick in governance is not tyranny, but the denial that governance is occurring at all.
There is only one thing worse than being governed by those who admit what they are, and that is being governed by those who insist they are nothing at all.
The modern technology economy has perfected this trick. Across the landscape of cryptographic systems, open-source infrastructure, platform governance, and digital custody, a recurring figure has emerged: the actor who wields discretionary power over the economic fate of millions while maintaining, with an air of wounded innocence, that he is merely a volunteer, a maintainer, a contributor to a community project. He holds the keys but disclaims the vault. He controls the release pipeline but protests that code is, after all, open. He shapes the informational environment on which entire markets depend, then retreats behind a disclaimer drafted in boilerplate so dense it could stop a bullet — or at least a lawsuit.
This is not innovation. It is evasion. And the law already knows what to do about it, if only it would stop being distracted by costumes.
The Doctrine Nobody Reads
American fiduciary law is not a sentimental artifact. It is not a moral sermon dressed in judicial robes, nor a relic of an era when gentlemen shook hands and meant it. It is an institutional technology — precise, functional, and ruthlessly practical — designed to solve a specific problem that recurs wherever human beings organise economic life: one party is entrusted with discretionary power over another’s interests under conditions where the other party cannot effectively monitor, negotiate, or escape. The law responds not with trust in human virtue but with the opposite — a prophylactic assumption that where discretion meets opacity and self-interest, opportunism is not an aberration but a rational outcome.
Cardozo understood this when he wrote of “the punctilio of an honor the most sensitive.” That phrase is quoted endlessly and understood rarely. It is not a call for moral elevation. It is an acknowledgment that the fiduciary relationship is structurally dangerous, and that only obligations exceeding “the morals of the market place” can counterbalance the temptation that concentrated power and asymmetric information produce. The law demands more precisely because the circumstances make less so easy.
Delaware corporate law says the same thing in a more economic dialect. Directors owe fiduciary duties not because we admire them but because they sit atop a machine of discretionary power — corporate decision-making — that shareholders cannot supervise in real time. The duty of loyalty exists because a director who controls the pipeline of corporate opportunity can divert it to himself before anyone notices. The remedy is not gentle. It is disgorgement: the surrender of gains, the stripping of profits, the refusal to let the disloyal fiduciary keep what was taken even when the victim cannot prove precisely what was lost. The severity is the point. In a world of opaque discretion, only the certainty of losing the upside makes honesty rational.
This is the doctrine. It is not obscure. It is not controversial. It is simply ignored the moment someone puts on a hoodie and calls himself a developer.
The Migration of Power
Here is what has happened, and it is not complicated: power has moved. The instruments of governance have migrated from boardrooms and trust instruments into release pipelines, administrative key sets, repository permissions, and authoritative disclosure channels. The migration is real. The accountability has not followed.
Consider the anatomy of control in a technology-mediated system. Merge authority — who decides what code becomes canonical — is agenda control in its purest form. It determines not merely what is proposed but what becomes the baseline to which everyone else must adapt. Release authority goes further still, because it controls timing and framing: when users learn of a change, whether a security issue is characterised as minor or existential, whether an alternative version is treated as legitimate or rogue. Parameter authority — the ability to adjust fees, thresholds, access permissions — can shift economic outcomes as decisively as any board resolution. Key custody is dominion by another name: the holder of upgrade or emergency keys can pause, redirect, or reconfigure entitlements at moments when those affected are least able to respond.
And then there is signalling power — control over the channels the market treats as authoritative. Security advisories, roadmaps, compatibility guidance, “official” announcements. These are not soft instruments. In markets characterised by technical uncertainty and high verification costs, the party who controls what is communicated, when, and in what frame, controls the informational environment in which others must decide whether to hold, trade, build, or exit. That is governance. To call it “community management” is like calling a bank vault a filing cabinet.
None of this requires malice. The fiduciary problem is not a story about villains. It is a story about structure. When discretion is concentrated, information is asymmetric, monitoring is costly, and exit is impractical, opportunism does not require evil intent. It requires only the ordinary human capacity to prefer one’s own interests, exercised behind a curtain that others cannot afford to lift.
The Contractual Mirage
The standard defence is contractual. Participants “agreed” to terms of use. Disclaimers were posted. Licence terms were available. Nobody was compelled. Therefore — the argument runs — no fiduciary duty can arise, because everything was voluntary.
This argument is elegant in the way a forged painting is elegant. It has every surface feature of the real thing except the one that matters: truth.
Fiduciary doctrine exists precisely for the class of relationships in which contract cannot do the work. The entire point of imposing loyalty and disclosure obligations by operation of law is that the relevant discretion cannot be specified in advance, the relevant information cannot be priced at arm’s length, and the relevant monitoring cannot be performed by dispersed parties at tolerable cost. Telling those parties they “consented” to whatever may happen — through browsewrap terms they did not read, in a system they cannot audit, governed by actors they cannot replace — is not a legal argument. It is a confession that the argument has no other ground to stand on.
Courts have understood this for a very long time. Even sophisticated commercial parties are not excluded from fiduciary protection when the defendant’s conduct induced reliance and informational dependence. The question is never whether a disclaimer exists on paper. It is whether the structure of the relationship — power, dependence, opacity — makes loyalty and disclosure the only credible constraints. Where the answer is yes, boilerplate cannot do the work of equity, no matter how many fonts it is printed in.
And the exit premise that ordinarily makes contract self-policing? In systems governed by network effects, coordination dependencies, and liquidity concentration, exit is not a discipline. It is a fiction. When switching is prohibitively costly and collective migration is a coordination problem no individual can solve, the threat of exit disciplines no one. It merely reallocates the burden of governance risk to those least able to bear it — which is to say, precisely the parties fiduciary law was invented to protect.
What We Refuse to See
The deepest error in the current legal treatment of technology-mediated governance is not analytical. It is perceptual. Courts and commentators look at a system and see novelty where they should see familiarity. They see code and conclude that the old categories do not apply. They see the absence of a board of directors and conclude there is no governance. They see a GitHub repository and conclude there is no fiduciary. They see an emergency key and do not see a trustee.
This is exactly backwards. Fiduciary law has never required a particular costume. It has required a particular configuration of power and reliance. Control over the pipeline of opportunity. Discretion exercised behind informational barriers. Monitoring that is costly beyond what dispersed beneficiaries can bear. Exit that is theoretical rather than practical. Where that configuration exists, fiduciary duty attaches — not because someone used the right title, but because the function of the relationship demands it.
Crypto merely presents this ancient problem with the comforting formalities stripped away. There is no trust instrument. There is no corporate charter. There are no board minutes. There is just power — real, discretionary, economically consequential — exercised by identifiable actors over the conditions under which others must operate. The question is not whether the actors hold an office the law recognises by name. The question is whether they hold power the law was built to police.
Anyone who cannot see the fiduciary relationship in a system where a small group controls releases, holds administrative keys, manages the authoritative disclosure channels, receives sponsorship from parties with material interests in governance outcomes, and operates under no enforceable obligation of loyalty or candour — anyone who cannot see that relationship has not been paying attention to what fiduciary law actually says. They have been paying attention only to what it is called.
The Framework That Already Exists
The reconstruction required is not radical. It is conservative in the only sense that matters: it asks courts to apply the law they already have, to the facts they already face, using evidence they already know how to evaluate.
Four elements. That is all.
First, control — the defendant exercises discretionary authority over governance conditions with foreseeable economic impact. This is provable through permissions, key custody records, release authority, and control of signalling channels. It does not require proof of malice. Fiduciary law is prophylactic. The opportunity for abuse is sufficient.
Second, induced reliance — the plaintiff cannot practically self-protect. The governance structure and the defendant’s conduct placed participants in a position of dependence that monitoring, negotiation, or timely exit could not cure. This is provable through market behaviour, switching costs, and the treatment of governance channels as authoritative by exchanges, custodians, and infrastructure providers.
Third, non-substitutable discretion — there is no realistic alternative. The defendant’s governance function operates as a coordination point that participants and intermediaries treat as indispensable. This is provable through market facts: which releases intermediaries accept, which advisories they treat as binding, whether alternative governance sources exist in practice rather than in PowerPoint slides.
Fourth, foreseeable consequences — exercising that discretion predictably affects others’ economic exposure. This ties the inquiry to the setting fiduciary remedies were designed for: discretionary power over others’ interests under conditions of costly monitoring and limited exit.
Where those elements are proved, fiduciary duty is not a novel imposition. It is what the law has always required when power looks like this. Where they are not proved — where discretion is genuinely substitutable, exit is real, and authority is dispersed — fiduciary duty should not attach, and courts need not venture into technical controversy to say so.
The Remedy Must Match the Wrong
Classification without remedy is decoration. If the law recognises that technology-mediated governance can produce fiduciary relationships but limits recovery to compensatory damages, it has understood the problem and chosen not to solve it.
Fiduciary remedies are severe by design. Accounting. Disgorgement. Constructive trust. These are not punitive excesses. They are the only instruments that work where the harm consists in the exploitation of informational advantage that the victim cannot quantify after the fact. If the disloyal fiduciary were allowed to keep gains whenever the beneficiary could not prove precise loss, opportunism would be rational whenever detection is uncertain — which is to say, always, in settings defined by opacity.
The Supreme Court imposed a constructive trust on a former intelligence officer who profited from breaching a fiduciary-type obligation, even though no damages could be proved. The logic was clear: ordinary damages would be “wholly inadequate” because the harm was the breach of trust itself and the resulting distortion of incentives. The constructive trust eliminated the temptation to exploit a position of confidence where monitoring was impossible. That logic applies with equal force — perhaps greater force — to governance actors who exploit timing, selective disclosure, and agenda control in systems where participants cannot observe what is happening until the opportunity for self-protection has passed.
The Safe Harbour for the Honest
A framework of accountability need not be a framework of fear. The proposal includes process-based safe harbours for governance actors willing to earn deference rather than demand it. Publish a stable governance charter. Maintain auditable logs of decisions and release provenance. Disclose conflicts — not in boilerplate, but with specificity sufficient to allow reliance decisions to be informed. Adopt a disciplined vulnerability disclosure policy. Subject governance processes to independent review.
None of this requires courts to become technical regulators. It requires only that courts do what they already do: evaluate whether power was exercised under procedures that make self-dealing and concealment difficult. Delaware already grants business-judgment deference to controllers who adopt structural protections — independent committees, informed minority approval. The parallel is direct. Where a governance actor can demonstrate genuine transparency, meaningful conflict protocols, and verifiable accountability, courts should defer. Where those procedures are absent — where authority is concentrated yet denied, where conflicts exist yet are concealed, where disclosures are managed as strategy rather than obligation — fiduciary law should attach with its ordinary force.
The choice is not between innovation and regulation. It is between governance that is made legible and governance that is permitted to exercise real power behind the alibi of form.
The Conservative Case for Accountability
There is a species of argument, increasingly fashionable, that holds that applying existing law to new forms of power is somehow hostile to progress. This argument mistakes comfort for principle. It confuses the absence of accountability with the presence of freedom.
Freedom requires that power be identifiable, contestable, and accountable. A system in which a small group can alter the economic conditions under which millions operate — through releases, keys, and authoritative signals — while owing no enforceable obligation to anyone, is not a system of freedom. It is a system of unaccountable discretion. And unaccountable discretion is simply power that has not yet been named.
Fiduciary law names it. Not by moralising. Not by regulating technology. Not by inventing new categories or demanding new statutes. Simply by following power where it has moved and applying the obligations that power has always required: loyalty where discretion is exercised for others, and candour where reliance is induced.
The alternative — categorical non-fiduciary status for controllers who happen to operate through technical levers rather than boardroom votes — produces a predictable result. Participants cannot price loyalty and candour when the legal system refuses to recognise the relationship that generates the obligation. Markets cannot function where trust cannot be verified and disloyalty carries no consequence. The accountability vacuum is not a feature of innovation. It is a failure of classification.
Coda
The question before courts is not whether technology-mediated governance is special. It is whether power is real. Whether discretion exists. Whether reliance is induced. Whether the people who hold the keys, control the releases, manage the disclosures, and receive the sponsorship money are exercising authority over others in circumstances where loyalty and candour are the minimum conditions of legitimacy.
The law already knows the answer. It has known it since Cardozo and before. Fiduciary duty attaches to the function, not the title. To the power, not the costume. To the reality of control, not the rhetoric of decentralisation.
All that remains is for courts to stop being charmed by novelty and to apply the doctrine they already possess. The instruments of governance have changed. The nature of power has not. And the law that was built to police discretionary power under conditions of reliance and opacity does not need to be reinvented.
It needs to be applied.