Macauley Peterson

<div id="highlights-block_61a416f02d14a" class="highlights">
        <ul>
                <li>Wright’s defense team declared victory, as their client avoided the worst outcomes</li>
                <li>The jury was initially unable to reach agreement last week but were instructed by the judge to keep trying</li>
            </ul>
    
</div>



<p>Jurors in the Florida trial of Craig Wright, an Australian computer scientist who claims to have invented Bitcoin, were deadlocked as recently as last Wednesday, after several days of deliberations. The judge in the case, US District Judge Beth Bloom, issued what’s known as an <a href="https://www.law.cornell.edu/wex/allen_charge" target="_blank" rel="noreferrer noopener">Allen charge</a>, instructing them to “carefully reexamine and reconsider all the evidence” in an attempt to reach an agreement. Now they have.</p>



<p>On Monday, the jury found Wright liable on one of the plaintiff’s claims, that of conversion — unauthorized possession of personal property,&nbsp; in this case intellectual property — and awarded $100 million in damages, according to <a href="https://storage.courtlistener.com/recap/gov.uscourts.flsd.521536/gov.uscourts.flsd.521536.812.0_1.pdf" target="_blank" rel="noreferrer noopener">court documents</a>. Notably, no bitcoin was directly ordered to be paid.</p>



<p>Wright <a href="https://cms.blockworks.co/craig-wright-trial-goes-to-florida-jury-which-could-award-as-much-as-189b/" target="_blank" rel="noreferrer noopener">could have been found liable</a> for a range of behavior including fraud, theft, breach of fiduciary duty, with damages potentially reaching into the billions, therefore he and his legal team see the outcome as a victory.&nbsp;</p>



<p>“This has been a remarkably good outcome — I feel completely vindicated,” Wright told his supporters in a <a href="https://twitter.com/JimmyWinSV/status/1467910308953997314?s=20" target="_blank" rel="noreferrer noopener">recorded video message</a>.</p>



<p>The jury rejected plaintiff Ira Kleiman’s claim that his deceased brother David was a business partner of Wright’s, and decided that Wright would owe nothing to the David Kleiman estate. Instead, the sole monetary award went to W&amp;K Info Defense Research LLC, a company for which Ira Kleiman is now the only registered director, but that was once a joint venture between Wright, his wife at the time Lynn Wright, and David Kleiman.</p>



<p>In <a href="https://cryptopotato.com/wp-content/uploads/2020/08/lynn-wright-ira-kleiman-petition-071620.pdf" target="_blank" rel="noreferrer noopener">a separate legal maneuver</a>, the ownership of the company is an ongoing matter of dispute, and Lynn Wright contends that Ira Kleiman was “not authorized to act on behalf of W&amp;K Info Defense.”</p>



<p>Lawyers for Ira Kleiman, see the jury award as a win for their client, even if it falls far short of what they claimed:</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">Kleiman v. Wright update: We are incredibly gratified the jury found Craig Wright has to pay our client, W&amp;K, $100,000,000 for the bitcoin-related assets he stole. This is a great win for our client and for justice!</p>&mdash; Vel Freedman (@VelvelFreedman) <a href="https://twitter.com/VelvelFreedman/status/1467923812075421701?ref_src=twsrc%5Etfw">December 6, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<h3 class="wp-block-heading"><strong>Satoshi Nakamoto’s bitcoin stash</strong></h3>



<p>The identity of Satoshi Nakamoto was not a subject of this case. It was simply assumed that Wright had access to Satoshi&#8217;s 1.1 million bitcoins, which could have been awarded as damages. The jury elected not to award any bitcoins, opting instead to levy money damages in dollars.</p>



<p>For Ira Kleiman to collect on the $100 million from Wright due to <meta charset="utf-8">W&amp;K Info Defense Research, he will first have to resolve the dispute over the company’s ownership. If he does retain control, and successfully turns the jury award into a definitive money judgment that Wright must pay, the question remains, where will the money come from?</p>



<p>Earlier in the trial, the initial judge, Judge Reinhart, <a href="https://www.govinfo.gov/content/pkg/USCOURTS-flsd-9_18-cv-80176/pdf/USCOURTS-flsd-9_18-cv-80176-9.pdf" target="_blank" rel="noreferrer noopener">found</a> that Wright submitted forged documents and offered perjured testimony related to the production of a list of bitcoin addresses under his (supposedly Satoshi’s) control.</p>



<p>Wright has so far failed to prove that he is in possession of, or has access to, the private keys needed to move those early Satoshi-mined bitcoins. Absent such proof, he is unlikely to persuade <a href="https://bitcoinmagazine.com/business/op-ed-how-many-wrongs-make-wright" target="_blank" rel="noreferrer noopener">skeptics</a> that he is in fact Satoshi.</p>



<p>Wright disputes the consensus view of what bitcoin even is. In 2018, Wright’s <a href="https://www.gemini.com/cryptopedia/bsv-what-is-bitcoin-sv" target="_blank" rel="noreferrer noopener">preferred bitcoin, BSV</a>, which stands for “Bitcoin Satoshi’s Vision”, forked from the Bitcoin Cash (BCH) blockchain, which itself forked from the original BTC chain in 2017.</p>



<p>Speculators evidently view the trial outcome as beneficial for the prospects of the bitcoin fork — BSV has surged 34% in the past 24 hours and now as a market cap of just under $3 billion. That remains a far cry from the market cap of BCH at about $9 billion, much less the BTC market cap of $962 billion.</p>




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Bitcoin

Verdict in Craig Wright Civil Trial: $100M  Award for Plaintiff; No Punitive Damages

<div id="highlights-block_61a416f02d14a" class="highlights">
        <ul>
                <li>Wright’s defense team’s Motion for Judgment as a Matter of Law was denied on November 22, ensuring a jury decision</li>
                <li>Seven counts, including Civil Theft and Fraud, are now in a jury’s hands</li>
            </ul>
    
</div>



<p>He claims to be the inventor of Bitcoin and the author of the original 2008 <a href="https://bitcoin.org/bitcoin.pdf">Bitc</a><a href="https://bitcoin.org/bitcoin.pdf" target="_blank" rel="noreferrer noopener">o</a><a href="https://bitcoin.org/bitcoin.pdf">in white paper</a>, under the pseudonym Satoshi Nakamoto. But the ultimate outcome of the civil trial of Dr. Craig Steven Wright, an Australian computer scientist, is unlikely to settle that mystery.</p>



<p>The United States District Court for the Southern District of Florida, however, accepts it as a given, by granting the plaintiff in the case standing to sue Wright in the first place. Although the prevailing view among Bitcoin proponents is that Wright’s assertion <a href="https://bitcoinmagazine.com/business/op-ed-how-many-wrongs-make-wright" target="_blank" rel="noreferrer noopener">is specious</a>, as far as Judge Beth Francine Bloom is concerned, Wright has 1.1 million bitcoins.</p>



<p>The jurors, slated to resume deliberations on Monday after a Thanksgiving break, are tasked with passing judgment on a more limited question: whether Wright is guilty of fraud, theft, breach of fiduciary duty, and a handful of other counts that could leave him liable for half of the bitcoin stash that he may have mined in Bitcoin’s early days.&nbsp;</p>



<p>The plaintiff in the case, Ira Kleiman, says that the <a href="https://cms.blockworks.co/bubbles-bitcoin-and-whats-next/" target="_blank" rel="noreferrer noopener">bitcoin,</a> while ostensibly Wright’s, rightfully belongs to the estate of Kleiman’s deceased brother David, a friend and alleged business partner of Wright’s. David Kleiman died in April 2013 at the age of 46, without ever laying hands on the fortune his brother now says should be his.</p>



<p>Ira Kleiman initially sued Wright in February 2018, claiming that Wright schemed to steal both the 1.1 million bitcoins and the intellectual property connected with Bitcoin’s open-source code that David Kleiman may have helped develop. At the time of the original suit, the quantity of bitcoin at issue was valued at just over $10 billion. The stakes are somewhat higher now — that much bitcoin is worth some $60 billion dollars today.</p>



<p>If the jury of three men and seven women finds that Wright had a partnership with David Kleiman to mine those coins, assuming they are in fact under Wright’s control, they will have to determine the value owed to Kleiman’s estate, plus any punitive damages — and the plaintiffs&#8217; lawyers have asked for plenty — bringing the total claims and damages to $189 billion. (For comparison, the world’s richest person, Amazon founder Jeff Bezos, is worth $177 billion and just the $30 billion in bitcoin alone would put Ira Kleiman among the top 50 richest people in the world, <a href="https://davidgerard.co.uk/blockchain/2021/11/13/news-craig-wright-in-court-mt-gox-settlement-bitcoin-futures-etf-reddit-community-points-miners-still-cant-sell-their-bitcoins/" target="_blank" rel="noreferrer noopener">according to Forbes</a>.)</p>



<p>Ira Kleiman <a href="https://www.law360.com/articles/1438959" target="_blank" rel="noreferrer noopener">has testified</a> that Wright and his brother created a company in Florida in 2011 — W&amp;K Info Defense Research LLC — which is how the Australian has ended up spending time in and out of a Miami courtroom <a href="https://news.bitcoin.com/judge-orders-craig-wright-to-physically-appear-in-florida-lawsuit/" target="_blank" rel="noreferrer noopener">since 2019</a>.</p>



<p>Wright denies the allegations, and says Kleiman merely helped him temporarily transfer control of the bitcoin — which <a href="https://www.law360.com/fintech/articles/1439426/bitcoin-inventor-accused-at-trial-of-lying-about-trust" target="_blank" rel="noreferrer noopener">he says</a> was purchased in 2011 from a &#8220;dodgy&#8221; Russian exchange — to keep it out of reach of Australian tax authorities.</p>



<h3 class="wp-block-heading"><strong>A last-ditch effort to avoid a jury verdict</strong></h3>



<p>Shortly before closing arguments last week, Wright’s legal team filed a Motion for Judgement as a Matter of Law — basically an appeal to the judge that the plaintiffs haven’t presented sufficient evidence. Such a preemption by the judge is only an option if there “is no legally sufficient evidentiary basis for a reasonable jury to find for the non-moving party.” According to <a href="https://www.govinfo.gov/content/pkg/USCOURTS-flsd-9_18-cv-80176/pdf/USCOURTS-flsd-9_18-cv-80176-25.pdf" target="_blank" rel="noreferrer noopener">court documents</a>, there is, and the motion was denied.</p>



<p>The court previously <a href="https://www.govinfo.gov/content/pkg/USCOURTS-flsd-9_18-cv-80176/pdf/USCOURTS-flsd-9_18-cv-80176-23.pdf" target="_blank" rel="noreferrer noopener">denied a motion</a> from the defense for Summary Judgement, which uses a similar legal standard, so this last legal maneuver was a long shot.</p>



<p>Among the Wright team’s arguments was that the market value of the bitcoins at issue could not be used as the basis for the jury judgment under a Florida precedent known as the “Blockage Discount Theory” —&nbsp; that the bitcoin could not be sold without substantially adversely affecting the price. The judge disagreed.</p>



<h3 class="wp-block-heading"><strong>To be or not to be Satoshi Nakamoto</strong></h3>



<p>Wright has never been able to prove that he is Satoshi Nakamoto by either signing a message using the PGP key for Satoshi’s encrypted emails, or moving any of the early Satoshi-mined bitcoin he presumably should control.</p>



<p>The case has yielded more sordid details of Wright’s behavior. In March 2020, a previous judge in the case, Judge Bruce E. Reinhart, <a href="https://storage.courtlistener.com/recap/gov.uscourts.flsd.521536/gov.uscourts.flsd.521536.420.0.pdf" target="_blank" rel="noreferrer noopener">reprimanded Wright</a> for forging documents and giving perjured testimony.</p>



<p>Gavin Andresen, who once claimed that he was personally convinced Wright was indeed Satoshi, expressed doubts on that view in <a href="https://storage.courtlistener.com/recap/gov.uscourts.flsd.521536/gov.uscourts.flsd.521536.589.3.pdf" target="_blank" rel="noreferrer noopener">a sworn deposition</a> during the trial, referring in particular to supposed proof proffered by Wright:</p>



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow"><p><strong>“That gobbledygook proof that he published was certainly, deception, if not an outright lie. So at the very least, that, I consider, you know, that — he bamboozled me there.”</strong></p></blockquote>



<p>When Wright set a date to prove his claims — by transferring bitcoin known to belong to Satoshi Nakamoto to Andresen — he failed to deliver. On the day that he was due to transfer the bitcoin — May 4th, 2016 — Andresen says he was told Wright attempted suicide and was taken to the hospital.</p>



<p>Wright is now in a precarious position. If the jury finds in Kleiman’s favor, it is unlikely that Wright will be able to access the half a million in bitcoin — whether or not he is Satoshi — for one simple reason: It’s almost inconceivable that he would not already have done so. Satoshi’s coins have not moved for over a decade, even as the price of 1 bitcoin has gone from less than a penny to $68,521. That’s the clearest indication that Satoshi is either dead, or has lost the keys.</p>



<p>As <a href="https://davidgerard.co.uk/blockchain/2021/11/13/news-craig-wright-in-court-mt-gox-settlement-bitcoin-futures-etf-reddit-community-points-miners-still-cant-sell-their-bitcoins/" target="_blank" rel="noreferrer noopener">David Gerard put it</a>, “Wright could end up owing half a million bitcoins he doesn’t control to the estate of the guy he didn’t invent Bitcoin with, just because he wouldn’t admit he wasn’t really Satoshi.”</p>



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