In this article we review the conclusion of a major court case revolving around the fate of bitcoin and present some of the more telling details of its latest court document release.

wright doc

Craig Wright’s Testimony Ruled “Fraudulent” By U.S. Court

The year and a half-long court case of the Kleiman estate vs. the self-proclaimed Satoshi, Craig Wright, finally came to an end today, with a federal judge ruling against Wright. According to the judge, Wright perjured himself in court in more than one instance, and as a result is responsible for paying the Kleiman estate half of the value of the approximately 1 million BTC believed to be mined by Wright and his business partner, Dave Kleiman, before Kleiman’s death in 2013. The judge will recommend to the District Judge presiding over the matter that Wright pay the Kleiman estate $5 billion in BTC as well as 50% of the intellectual property rights obtained by Wright prior to Kleiman’s death.

In a previous article, we covered the results of the June 28th court case in which Wright testified on his own behalf as the defendant in the case. It was a curious display for onlookers and the subject of thousands of social media posts in the days that followed. Though nobody knew for sure how things would turn out afterward (except for perhaps the judge), Wright put on an almost spectacle-like performance, being reprimanded by the judge for throwing court documents, accusing bitcoin developers and experts of sharing child pornography, and even openly weeping at one point.

Wright dropped a number of bombshells as well: he didn’t know the BTC addresses of the coins he mined, he didn’t know who was in the Tulip Trust responsible for holding said bitcoin, and he didn’t know when he would be granted access to said bitcoin, if ever.

On August 27th, one thing became known for sure: the judge wasn’t buying Wright’s story.

“You just can’t lie to a federal judge over and over again and expect to get away with it. Craig Wright just learned this the hard way.” – Stephen Palley, U.S. attorney

According to Katie Anina, who had been inside the court room live tweeting both trials at which Wright was present, at one point the judge stated that “Dr. Wright did not impress me as someone telling the truth. All Craig’s testimonies have been rejected on this matter.” According to another live tweeter, “Defense wants all pleadings and evidence to go to the jury and let them decide. Defense wants all pleadings stricken.” Neither event looked very prosperous for Wright, but that did not stop the likes of Calvin Ayre, owner of the CoinGeek mining pool and ardent Wright/BSV supporter, from coming up with his own alternate take on what the trial’s ending signified.

One man who was assuredly relieved over the outcome was podcaster / Twitter personality Peter McCormack, who is currently the defendant in a defamation lawsuit launched by Wright. Wright accused McCormack of damaging his reputation by repeatedly claiming that he was a “fraud;” an allegation which will appear all the more substantial after this U.S. court ruling against Wright. On Twitter, McCormack did not hide his feelings over the matter:

There is already an overwhelming amount of incorrect conclusions being made about the outcome of the case by the media, so presented below are words from the judge presiding over the matter himself, in a court ruling released on August 27th:

“For purposes of this action, it is established that Dr. Wright and David Kleiman entered into a 50/50 partnership to develop Bitcoin intellectual property and to mine bitcoin; any Bitcoin-related intellectual property developed by Dr. Wright prior to David Kleiman’s death was property of the partnership, all bitcoin mined by Dr. Wright prior to David Kleiman’s death (“the partnership’s bitcoin”) was property of the partnership when mined, and Plaintiffs presently retain an ownership interest in the partnership’s bitcoin, and any assets traceable to them.”

The above text serves to establish the grounds for the Kleiman estate’s assertions that half of the bitcoin mined by Wright and Kleiman was owed to the estate, along with their forked components (BCH, BTG, BCD and BSV), and half of the intellectual property (patents) developed between the two. Also from the ruling, quoted straight from the court document in order to not introduce unintentional bias, here are some of the overarching points made by the judge across the 29-page document:

“Two preliminary points. First, the Court is not required to decide, and does not decide, whether Defendant Dr. Craig Wright is Satoshi Nakamoto, the inventor of the Bitcoin cybercurrency. The Court also is not required to decide, and does not decide, how much bitcoin, if any, Dr. Wright controls today. For purposes of this proceeding, the Court accepts Dr. Wright’s representation that he controlled (directly or indirectly) some bitcoin on December 31, 2013, and that he continues to control some today…

I completely reject Dr. Wright’s testimony about the alleged Tulip Trust, the alleged encrypted file, and his alleged inability to identify his bitcoin holdings…

Dr. Wright’s story not only was not supported by other evidence in the record, it defies common sense and real-life experience… He is a latter-day Dr. Frankenstein whose creation turned to evil when hijacked by drug dealers, human traffickers, and other criminals.

To save himself, he engaged David Kleiman to remove all traces of his involvement with Bitcoin from the public record. As part of his efforts to disassociate from Bitcoin and “so that I wouldn’t be in trouble,” he put all his bitcoin (and/or the keys to it – his story changed) into a computer file that is encrypted with a hierarchical Shamir encryption protocol. He then put the encrypted file into a “blind” trust (of which he is one of the trustees), gave away a controlling number of the key slices to now-deceased David Kleiman, and therefore cannot now decrypt the file that controls access to the bitcoin. His only hope is that a bonded courier arrives on an unknown dated in January 2020 with the decryption keys. If the courier does not appear, Dr. Wright has lost his ability to access billions of dollars worth of bitcoin, and he does not care. Inconceivable…

During his testimony, Dr. Wright’s demeanor did not impress me as someone who was telling the truth. When it was favorable to him, Dr. Wright appeared to have an excellent memory and a scrupulous attention to detail. Otherwise, Dr. Wright was belligerent and evasive. He did not directly and clearly respond to questions. He quibbled about irrelevant technicalities. When confronted with evidence indicating that certain documents had been fabricated or altered, he became extremely defensive, tried to sidestep questioning, and ultimately made vague comments about his systems being hacked and others having access to his computers. None of these excuses were corroborated by other evidence…

While it is true that there was no direct evidence that Dr. Wright was responsible for alterations or falsification of documents, there is no evidence before the Court that anyone else had a motive to falsify them. As such, there is a strong, and unrebutted, circumstantial inference that Dr. Wright willfully created the fraudulent documents…

There was credible and conclusive evidence at the hearing that Dr. Wright did not control Tulip Trading Ltd. until 2014. Moreover, computer forensic analysis indicated that the Deed of Trust presented to the Court was backdated. The totality of the evidence in the record does not substantiate that the Tulip Trust exists. Combining these facts with my observations of Dr. Wright’s demeanor during his testimony, I find that Dr. Wright’s testimony that this Trust exists was intentionally false…

I have found that Dr. Wright intentionally submitted fraudulent documents to the Court, obstructed a judicial proceeding, and gave perjurious testimony. No conduct is more antithetical to the administration of justice.” – Judge Bruce Reinhart

In summary, things are definitely not looking on the up-and-up for Wright or Bitcoin SV. As we have outlined in one of our previous articles on the subject, at least part of the BSV market cap is inexorably tied to the notion that Wright is Satoshi, and while the judge refused to rule on the matter in court, he did state his belief that the Tulip Trust which supposedly held the famous “Satoshi stash” of BTC did not exist during the time of Wright and Kleiman’s partnership. By stating that Wright’s testimony was not credible and that he had the propensity to be less than truthful, it also casts further doubt on the likelihood that Wright is telling the truth about being Satoshi.

There is little doubt that there are some technical merits behind the Bitcoin SV platform in that it has evolved from being simply a “bigger block solution” to bitcoin’s scaling problems and into a permanent data storage solution as well. Whether or not this is sufficient for BSV to retain a multi-billion dollar market cap without having the actual Satoshi Nakamoto at the helm remains to be seen.