In this second article of a 2 part series, we go in depth on one of the biggest court cases in crypto history, which pits Bitcoin SV founder (and self-proclaimed inventor of Bitcoin) Craig Wright against the estate of one of his former business partners to demonstrate further reasoning as to why Wright is probably not Satoshi, and therefore why Bitcoin SV probably isn’t the “real bitcoin.” 

 

the Bitcoin SV (BSV) logo

 

Why BSV Probably Isn’t the “Real” Bitcoin – Part II

 

Last week, we covered some basic groundwork that serves to establish the premise that, contrary to claims by its supporters, Bitcoin SV (BSV) probably isn’t the “real bitcoin.” This statement is based on a presentation of the evidence thus far, which points to the likelihood that Craig Wright, BSV’s de facto leader and chief spokesman, hasn’t been entirely honest about his involvement with Bitcoin thus far. As seemingly just another fork of Bitcoin (or a fork of a fork, to be precise) – one that actually champions itself being based on an early, somewhat antiquated version of the protocol – the technical merits of Bitcoin SV are debatable, and without Wright’s status as Satoshi Nakamoto, it is seemingly just another altcoin fighting for recognition and legitimacy.

Just a few of the things Wright has claimed to do as Satoshi, without actually providing proof of so thus far, include:

  • Writing the Bitcoin white paper
  • Launching the original Bitcoin protocol
  • Mining several of the first bitcoin blocks from 2009 to 2010
  • Transferring BTC from some early addresses to Hal Finney and Zooko Wilcox O’Hearn

On June 28th, Wright headed to a Florida court room in order to explain why he could not produce a list of bitcoin addresses that belonged to part of a trust fund that supposedly contained the private keys to a fortune of bitcoins mined by Craig and his deceased business partner, Dave Kleiman, during bitcoin’s early days. The court hearing is part of a civil suit against Wright by Kleiman’s estate, which alleges that Wright defrauded the estate of Kleiman’s share of bitcoins, for which they are seeking $10 billion in compensation. At today’s prices, this would equal around 1 million BTC, which is about the number of coins estimated to have been mined by Satoshi.

During the day-long court proceeding, which was quite dramatic and heavily followed by the crypto community, several pieces of evidence were brought forward by Wright and his legal team that were later released for public inspection, along with the entire transcript of the hearing. The contents of the hearing were widely dissected by legal and crypto experts alike, with the majority of opinions basically unfavorable of Wright.

Interestingly, it should be noted that a ruling against Wright in the suit will mean 2 things:

  1. Wright has access to Satoshi’s famous bitcoin stash, and
  2. Wright, therefore, is Satoshi.

Simply put, and rather contradictorily, this is one court case that BTC fans hope Wright will win, and that BSV fans hope he will lose. If Wright wins the court case, it will not necessarily mean that he is not Satoshi, but it certainly becomes less of a possibility. The Kleiman estate lawsuit against Wright puts him in an odd predicament where he must somehow maintain credibility with BSV investors and other supporters by keeping up the narrative that he is Satoshi without having to pay the Kleiman estate the proceeds of the bitcoin he mined as Satoshi. He could certainly wriggle his way out of the case by saying that he is not Satoshi, and that he never mined 1 million bitcoins (with or without the help of Dave Kleiman), but instead he’s said the exact opposite – in court, and under oath, no less.

The following are some key excerpts from the transcript of Wright’s June 28th court case, reviewed individually, along with some context as to what they might be inferring.

In his first court appearance, Wright suggested that not only did he not have access to the private keys of the 1 million BTC stash as they were held in a secretive trust fund, but that the concept of public bitcoin addresses doesn’t even exist, which is part of his rationale as to why he couldn’t provide the court with a list of BTC addresses under his control. In the following excerpts of the hearing transcript, it should be noted that “Q” refers to a question asked by the prosecution, “A” refers to an answer by Wright, and “The Court” refers to comments by the judge.

Q    The questions that I’m going to ask you today are going to relate directly to the Court’s order and to the circumstances surrounding, Dr. Wright, the fact that you have not provided the pub — a list of the public addresses to the plaintiffs. Dr. Wright, you are familiar, are you not, with the term “public address” as referred to in the Bitcoin system?

A    No, there are no public addresses in the Bitcoin system.

Q    I’m simply asking whether you are familiar with the fact that people have used that nomenclature, “public address,” as it relates to the Bitcoin system.

A    I know people incorrectly use that term.

Q    That’s my next question. Is the use of a public address an accurate use with respect to the manner in which the Bitcoin system was originally intended to operate?

A    No.  That is how BitGold and eGold were derived.  Bitcoin was exactly the opposite.  There are no public addresses at all in Bitcoin.  Bitcoin was derived such that a key would only be used once.  And if you look at the section in the white paper later on, it states that as an additional firewall, keys should not be reused.

Q    So what role in its original design and creation of the Bitcoin system did the public address, as it is known today, have?

A    Public addresses don’t exist.

Q    So it would be irrelevant; is that right?

A    Yeah.  It’s like saying:  “How do unicorns relate to this Court.”

Wrights denial of the term “public addresses” is puzzling, but fits his narrative as being unable to produce addresses for the sake of identifying coins under his (supposed) control. Even if Satoshi never mentioned the term “public addresses” during his known correspondence, there certainly are such things as “bitcoin addresses,” and they are publicly identifiable using the blockchain. As mined coins are sent directly to a bitcoin address which can be verified using the blockchain, it is hard to believe that Satoshi himself would deny the existence of “public addresses;” nor would he liken their relevance to unicorns in a court case heavily revolving around bitcoin addresses.

This next segment demonstrates a few more problems with Wright’s claims of being Satoshi, in that not only is Wright’s timeline of events mistaken, but his testimony seems to contradict what are thought to be the actual reasons why Satoshi decided to leave the bitcoin space.

“I left Bitcoin, or started leaving, in August 2010.  I did not want to be associated with the public name Satoshi at all after that point.  The problem occurred because in June 2010 people would start — who had been working on Bitcoin, decided, when I was pushing for a commercial application, to make the first commercial application as a heroin marker.  Martti Malmi set up the forum…

Theymos… who is known as Michael Marquardt, who was a college student at the time, he was also running the Bitcoin.org domain.  He set up the forums for Silk Road. Both of them, together with Ross Ulbricht, set up Silk Road, Hydra and a number of other darker websites.  I protested this to them.  I set up Bitcoin to be honest money. I set up Bitcoin to fix the problems of every other digital cash that had been, whether it be eGold, or Liberty ReserveCash, or DG Cash, or Brands Cash, every single one had fallen to crime, and I thought by having an evidentiary trial, I would create the world’s first digital cash that would not be linked to crime.

Between August and December of 2010, I pleaded, I said it was a bad idea with Martti and with Michael, and I finally left publicly as Satoshi in 2010 because they launched Silk Road.  On top of that, they launched Hydro. Silk Road was designed to sell heroin, MDMA, Fentanyl, weapons, et cetera.  Martti also started working on a reputation system to allow assassination markets.  They started actually working on a system designed to allow people to fund terrorism and others who were involved, such as Amir… went to Syria to promote the idea of Bitcoin as a funding mechanism.  Hydra was worse than Silk Road.  The nature of Hydra that Theymos wanted was as a mechanism to have children exchange hard drugs for pornographic photographs.  They sought to alter Bitcoin to allow the distribution of encrypted child pornography that would be exchanged in schools for Fentanyl and other such drugs. The — I stopped mining because of that reason completely in August 2010…” – Craig Wright

There are a few problems with Wright’s timeline of events that make it evident that Satoshi probably didn’t leave bitcoin for the reasons Wright mentioned. First off, the Silk Road darknet marketplace wasn’t launched until 2011, and the Hydra marketplace wasn’t launched until 2014. Second of all, Bitcointalk administrator (the “forum” founded by Satoshi and referred to by Wright) Theymos had no involvement with Silk Road, as it was entirely set up and run by Ross Ulbricht. When asked if Wright’s statements had any truth behind them, Theymos answered:

“Of course not, do you really need to ask?

– I was made a forum admin in 2011, after Satoshi left. (Silk Road also appeared after Satoshi left.) I didn’t have any special access to bitcoin.org until around 2013, and in fact I didn’t even have any access to the bitcointalk.org DNS until 2013.

– I’ve never bought or sold anything on Silk Road, Hydra or similar sites; nor did I have anything whatsoever to do with their operation; nor AFAIK did I even have interactions with anyone involved in running these sites…

– I never had any interaction with CSW…” – Theymos, admin of the Bitcointalk forum

Martti Malmi, also mentioned by Wright in his testimony in a rather derogatory manner, was even less amused, asking Twitter if he should take legal action against Wright for defamation / slander.

The exact reasons why Satoshi left the bitcoin scene in 2010 are not clearly known, but what is known is that he could not have left because of the rise of Silk Road.

Perhaps the most damning line of questioning involves the “Tulip Trust,” which is the trust fund that supposedly holds the 1 million bitcoins originally mined by Satoshi (or Kleiman and/or Wright, as far as the context of the court case is concerned). A few pieces of evidence produced during the court hearing point to the idea that the trust may not exist at all, as the name “Tulip Trading” is likely taken from a company purchased by Wright in 2014, one year after Kleiman’s death.

Q    Dr. Wright, you’ll recognize exhibit 14 as an e-mail from Denis to you dated October 20th, 2014?

A    No, I don’t.

Q    Do you see it has a “from” of Denis atAbacusOffshore.com?

A    Yes, I do.

Q    And it’s to [email protected]?

A    Yes, I see that.

Q    And the e-mail says in the body, quote:  “Please find attached corporate documents for Tulip Trading, Limited”?

A    Yes, I see that.

Q    And it attaches Tulip Trading’s Certificate of Incorporation, Memorandum of Association and Articles of Association?

A    Yes, I see that.

Q    Well, let me get this straight.  A company you didn’t buy until 2014 is listed as a beneficiary of a trust document you claimed was formed in 2012?

A    No.  You have put documents I don’t recognize.

Q    Documents you produced in discovery?

A    Yes, from other machines in my organization.

This exchange may not have been so controversial if it weren’t for the fact that it was Wright (or Wright’s legal team) who submitted the documents in question as evidence to the court. This suggests that the Tulip Trust may never have actually existed at all, which would then mean that neither Wright nor Kleiman mined Satoshi’s 1 million bitcoins, which could be interpreted as meaning that there was no way Wright could be Satoshi.

The final kicker is that a few key pieces of evidence which suggest Kleiman intended to hand over a massive sum of bitcoins to Wright’s control have been withdrawn by Wright’s legal team after questions of their authenticity abounded in and outside of the hearing.

While it is hard to definitively prove that Wright is not Satoshi based on what has been produced during phase 1 of the trial, things certainly are not looking good for Wright’s claim, and because of this, nor are they looking good for BSV’s chances of being or becoming “the real bitcoin.”