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BIT & COIN: Merging Digitality and Physicality
The trial of COPA v. Wright is set to start in mid-January 2024 (UPDATE: the trial is now rescheduled to start on February 5, 2024). For the first time, the central issue of a lawsuit is the truth (Satoshi’s identity) itself. Thus, the case has a unique significance.
In anticipation of COPA v. Wright, I wrote a separate analysis of that case: The key issue in COPA v. Wright. I also wrote a piece on cases co-pending with COPA v. Wright.
Briefly, COPA (Crypto Open Patent Alliance), a coalition of some of the most powerful companies in the cryptoverse, wants the court to declare that Dr. Craig S. Wright is not Satoshi.
At the same time, the public remains misinformed about the cases involving Dr. Wright’s Satoshi identity. People’s general impression, including that of many otherwise highly intelligent individuals, is that ‘Craig Wright has been proven a fraud in all lawsuits he is involved in’.
The present article provides a brief summary of several major cases involving Dr. Wright’s Satoshi identity.
We look at the court records at two different levels:
(1) the judgments (the court decisions); and
(2) specific pieces of evidence.
The judgments
Let’s first see what has happened at the first level, i.e., the court judgments. These judgments were either for Dr. Wright, or against him on company property distribution or on the legality of defamation but not on the truth in identity. Given the facts, one should wonder why people think every one of these cases was a judgment against Dr. Wright with regard to his Satoshi identity.
1. Kleiman v. Wright
The court decided that there was no partnership between Dr. Craig Wright and David Kleiman, because, after hearing three weeks of evidence and testimonies, the jury decided that Dr. Wright alone created Bitcoin.
The court also decided that the post-Bitcoin-release intellectual property belonged to W&K, a company created by Wright and Kleiman, and therefore, Wright should return $100 million to W&K.
Note it is a fact that the judgment against Dr. Wright in that case was about intellectual property created after the creation of Bitcoin, not the Bitcoin creation, which was valued at over $100 billion, rather than $100 million.
It is irresponsible for anyone to fail to see the distinction between Bitcoin creation and post-creation activities (prior to David Kleiman’s death in April 2013), as indicated by the difference between the $100 billion and $100 million valuations.
The former is a thousand times greater than the latter. Only the $100 billion question is directly related to the Satoshi identity. With that respect, Dr. Wright won a complete victory in the Kleiman case.
The $100 million question is about post-creation activities Dr. Wright had with David Kleiman in the name of W&K (see more below in the next section).
Some quickly came up with another argument: It is because the jury decided that there were no Bitcoin-creation activities!
But that is frivolous reasoning because it totally disregards the facts in the case. The entire case from its pleadings, evidence and arguments presented from both sides, the jury instructions, and the verdict, all indicate the opposite. The jury had not only recognized but in fact deliberated over the Bitcoin-creation activities. They just found that David Kleiman had no part in it.
The verdict of the case with regard to the post-creation activities, however, may also have an indirect relationship with the Satoshi identity. This is because once the case is finalized at the appellate court level, Dr. Wright will need to make a payment of about $143 million ($100 million plus interest) to W&K. There is a possibility that the payment may be made in the form of transferring assets from the Tulip Trust, which may confirm Dr. Wright’s claims made in the past with regard to his Satoshi identity. But it’s also possible that Dr. Wright may choose to make the payment from an alternative venue. It is up to him. But even if he chooses to do the latter, one may still wonder how he would be able to finance the payment if he didn’t own the Satoshi coins, because Dr. Wright does not seem to have another substantial business outside of Bitcoin.
However, because the Kleiman case was about property, not about identity (even though the latter is the basis of the former), the court did not write in its verdict that Dr. Wright was Satoshi. The court had no duty to make that decision.
The media has not truthfully reported the decision. Most reports aimed to create an impression such as these: “Craig Wright loses the court case in which he self-claims to be Satoshi.” “Craig Wright stole $100 million and was ordered by the court to return the money.” These are not merely inaccurate interpretations of the court judgment but total lies.
2. Wright v. McCormack
The court decided that Peter McCormack committed defamation against Dr. Wright by calling him a liar for claiming himself to be Satoshi. But the court awarded a symbolic £1 (1 pound) to Dr. Wright as damages.
Because Mr. McCormack prudently maneuvered the case to avoid a trial, the court did not have a trial to test the evidence. But Mr. McCormack’s own decision to avoid trial was based on the quality of the evidence presented to him before the trial.
If anything, the court judgment itself had nothing negative against Dr. Wright. The court’s decision about the amount of damages Mr. McCormack owed to Dr. Wright was a separate issue. It only had to do with Dr. Wright’s failure to show economic damages the defamation had caused to him (see more below in the next section), not the defamation verdict itself.
3. Magnus v. Wright
The court declared that Mr. Magnus’ written statements did not constitute defamation under Norwegian law.
The court heard evidence presented by both sides. The presentation from Dr. Wright focused on evidence to prove that Dr. Wright created Bitcoin, while the presentation from Magnus’ side focused on incidences where they believed Dr. Wright lied or presented false evidence.
But the court did not decide on the question of ‘truth’ (that is, whether Dr. Wright is Satoshi or not), but declared that, as a matter of law, Mr. Magnus’ statements did not constitute defamation under Norwegian law, whether the statements are true or not. (Many jurisdictions, including Norway, do not require a statement to be true as a defense to a defamation charge. In other words, just because what one says is not true does not necessarily constitute defamation.)
The lower court decision is clearly a negative to Dr. Wright’s defamation claim against Magnus.
The case is on appeal. But the final outcome may be more important to Mr. Magnus than to Dr. Wright and the public because several other cases pending in the UK High Court supersede this one in their general significance.
It was unfortunate that the Norwegian court did not decide on the truth but only on legality. As a result, even if Dr. Wright wins the case on appeal, the outcome is likely to be still on legality and will not change many people’s views of the truth.
However, the legality does not stop the media from reporting the case as if the court ruled that Dr. Wright was not Satoshi.
4. COPA v. Wright
This case is ongoing, and the trial is set for January 2024. COPA wants the court to declare that Dr. Wright is not Satoshi. COPA focuses on negative evidence showing incidences where they believe Dr. Wright failed to prove he is Satoshi. Dr. Wright is expected to present positive evidence showing that he is indeed Satoshi.
The trial has not started, so one should not reach any conclusion about this case.
This case is uniquely important. I wrote a separate analysis of the case: The key issue in COPA v. Wright.
Specific pieces of evidence
Let’s then look at the second level: specific pieces of evidence.
Literally thousands of pieces of evidence have been presented in court proceedings. But the media so far only focused on about five pieces among the thousands where the authenticity of the evidence was called into question by the court.
1. The perjury allegations
On one occasion, the judge even explicitly said that Dr. Wright was not a trustworthy witness because he had submitted false evidence. This was widely used by the media and influencers against Dr. Wright.
That was in the Kleiman case. But the reporters and readers pay no attention to the basic facts. It happened during the pretrial stage when Judge Reinhart decided to deny Wright’s plea for summary judgment. Whatever the judge said in that pretrial opinion is both moot and nulled in fact.
It is moot because the judge’s decision to deny a summary judgment in favor of Dr. Wright was that a trial on the facts was necessary, which trial, of course, eventually did happen, making the pretrial decisions irrelevant.
But perhaps more importantly, the specific issue that the judge had with Dr. Wright concerned the assets held by Tulip Trust. The judge had ordered Dr. Wright to make a comprehensive list of all bitcoins held by Tulip Trust, but Dr. Wright seemed to be reluctant and at least was slow in complying with the judge’s order. That in itself should not be surprising, considering that Dr. Wright was sued by Kleiman who claimed part of his property. He didn’t go to the court to declare his property and demand recognition of it (but the world obsessed with Satoshi seems always to assume that is the case).
The following was what triggered the judge’s pretrial opinion: Dr. Wright gave a ‘strange’ explanation as to why his compliance was slow. He said it depended on a forthcoming missing piece of ‘key slices’ held by some other individual because he used the so-called ‘Shamir’s Secret Sharing Scheme‘. The judge was deeply skeptical of that explanation. The judge probably thought the scheme involving ‘multiple slices of a key distributed among various individuals’ was laughably fictional and therefore Wright must be lying to him. Thus it’s understandable that the judge became vindictive when the missing piece failed to arrive on time.
That was the factual background of the judge’s pretrial opinion. Dr. Wright’s opponents were all excited seeing that. They had all presumed that Dr. Wright was lying, so the events surrounding that were highly satisfying to them.
But they all conveniently ignore or forget one thing: shortly after the judge’s scornful pretrial opinion, the missing piece did arrive, and Dr. Wright was able to completely satisfy the court order of disclosing the bitcoins held in Tulip Trust. This is not an opinion but a fact. Without that compliance in fact, the subsequent trial could not have happened the way it did.
You simply don’t hear Dr. Wright’s opponents ever mentioning any of that. In fact, they don’t seem to be aware of such basic facts at all.
The way people selectively filter out factual information is nothing short of amazing.
Another occasion occurred in the case of Wright v. McCormack. The judge ruled that Dr. Wright’s original claims of serious reputational damage suffered due to Peter McCormack’s defamation were false. The court found that some evidence put forth in an attempt to show serious harm by Dr. Wright was not supported. This was about the rescission of several accepted invitations to speak at conferences due to McCormack’s tweets. Dr. Wright could not provide evidence. Consequently, the judge awarded Wright only a nominal award of £1 for the damages.
A victim of defamation may have indeed suffered damages but is unable to produce concrete evidence for that. In Dr. Wright’s case, the fact that he suffered reputation damage is a plain fact to observers outside of the courtroom. In fact, it is something that his opponents widely celebrate. But still, he could not produce a concrete piece of evidence to show the mental state of others with regard to his reputation. This amounted to the judge’s decision against him because the judge wanted to see an actual document showing a rescission caused by his damaged reputation.
Regardless of whether and how the rescission of speaking invitations in certain conference events has happened, the crypto community looks away from the defamation itself and focuses on the victim’s failure to prove ‘serious harm’. They then tell themselves and the world that Dr. Wright committed perjury.
2. The stealing allegation
Many have been misled to believe that Dr. Wright was convicted of stealing $100 million and was ordered to return the money. This comes from the $100 million conversion verdict from the Kleiman case.
It is important to note that it wasn’t like W&K had $100 million cash or hard assets in its account, and Dr. Wright took it after David Kleiman died. W&K had nothing in its account, except for some intangible intellectual property that was pledged by Dr. Wright himself alone.
W&K was a company started by Dr. Wright and David Kleiman as a vehicle to expand the reach of Dr. Wright’s inventions to the US. Especially, the two founders hoped that through W&K they might receive sponsorship or contract business from the US government. The company had no employees. It was only Dr. Wright’s ideas and David Kleiman’s experience and connections in the US.
At the time, David was already too ill to do much. After David died, Dr. Wright decided to consolidate the business. He was in Australia, but W&K was registered in the US, and nobody else had authorized access to the company’s legal status. There were no bank accounts or other assets involved. Just the company as a legal entity and its registrations. So he performed some heavy-handed actions to take W&K into his hands to move forward. At the same time, he contacted David’s father to inform him of his relationship with David.
That was the circumstance of the alleged ‘conversion’ of W&K’s property. After rejecting Kleiman’s claim of partnership in inventing Bitcoin, the jury agreed that the conversion did happen. The jury then kind of magically decided the W&K assets to be worth $100 million in total (I can’t help but speculate that the jury, after considering and rejecting the claim on $100 billion, thought that $100 million was a very small amount – such is human psychology and I can’t blame them, as we are all susceptible to such psychological influences). For that, Dr. Wright decided not to contend.
3. The forgery allegations
There are widespread allegations that Dr. Wright forged documents in lawsuits. These questions will be answered in the upcoming COPA case. I will not comment on them until that case is over.
4. The ‘faketoshi’ fraud allegations
All the above allegations center on Dr. Wright’s Satoshi identity. The majority of the crypto community is convinced that Dr. Wright is not Satoshi. But more than that, they also believe that he is committing fraud claiming that he is Satoshi.
The upcoming COPA case trial will decide on the identity issue. Much of the evidence already presented in the past, and new evidence, will be presented. COPA will focus on Incidences seemed to have shown inconsistencies of Dr. Wright because that is all COPA could rely upon.
COPA must focus on the negatives because too much positive evidence points to Dr. Wright’s Satoshi identity. We shall wait and see what happens in the COPA trial.
But at the same time, even if assuming the worst case against Dr. Wright, that the court finds Dr. Wright has committed forgery with regard to several pieces of evidence, one should remember that this is about only several specific pieces of evidence, not all evidence which literally has thousands of pieces, and further not the overall case (which is the first level discussed above).
See more analysis of the COPA case: The key issue in COPA v. Wright, and an introduction on cases co-pending with COPA v. Wright.
Implications
These cases, especially COPA v. Wright, are important to watch because the final result not only concerns the identity of the person who started a new technology that may bring profound transformations to the whole world, but may also determine which vision and version of implementation of the technology works and is good for the world.
Thick fog of misinformation
Anyone who takes Satoshi’s identity seriously should give it a deeper and more careful look into the matter.
But it won’t be easy. It requires one to go beyond the dominant media noises and much more to learn about the truth.
As a result of dedicated attacks on Dr. Wright, there is a thick fog of misinformation. Some of the misinformation is difficult to see through because it can be well-researched, well-reasoned, and well-written.
Here is an example of what one might encounter. On Medium.com and Twitter, you may encounter an article written by an anonymous MyLegacyKit: ZeMing M. Gao, A Craig Wright Apologist Debunked (2). If you read it, you may be convinced that I am all wrong about these cases.
You would not understand how MyLegacyKit does it unless you see a hidden scheme. He starts from a hidden premise that is factually false, and carefully and quite rationally builds arguments on top of the false premise. If you fail to see the falsity at the root, you will be convinced as you find the rest of the logic well-reasoned.
There really is no need to comment on the detailed arguments. The key difference in the logic is very simple:
MyLegacyKit’s makes an assumption: because the Kleiman court did not decide on the identity issue, therefore the case did not decide on any issues regarding activities related to Bitcoin creation.
I focus on a fact: although the Kleiman court did not decide on the identity issue, the case in fact decided on the key issues regarding activities related to Bitcoin creation.
So everything rises from confusing ‘explicit Satoshi identity’ with ‘Bitcoin creation activity’.
I deliberately emphasize the difference between the two. I point out in my article that the court did not decide on Satoshi identity, but the case was nevertheless primarily about the Bitcoin creation activity.
In contrast, MyLegacyKit assumes they are the same. From that assumption, everything I say becomes an attacking point. If I had made the same assumption, I would very much agree with him.
That Kleiman court did not decide on Satoshi identity is indisputable. And I do not imply anything in contradiction. The jury instructions were very clear on that point.
However, if one respects the case history and especially the trial itself, one should understand the reason why the judge explicitly instructed the jury to avoid deciding on the issue of Satoshi identity.
It was precisely because in the trial so much evidence on the Bitcoin creation activities was presented that the judge was concerned that Kleiman might suffer prejudice if the jury’s minds were focused on the Satoshi identity, which was not part of the pleadings.
Jurisprudence required the judge to make that legal distinction to prevent the jury from being unduly influenced by the impression that Wright appeared to be Satoshi.
For those who can’t decide which position is based on facts, they will have to carefully study the case record themselves, for otherwise it just sounds like two people speaking about their own opinions.
But I do put forth the following questions below, for anyone who is interested in finding the truth.
(1) Kleiman’s case had seven claims (see below), conversion of W&K property was only one of them. Kleiman’s asked for over $100 billion in damages over seven claims together. The value attached to the conversion claim was $100 million. The rest were about $100 billion. W&K property was only a small portion of the entire claim.
If the case weren’t about Bitcoin creation, what were the other activities from which the $100 billion valuation came? (Note this is not a mere rhetorical question, because you can actually find answers to it in the case record. The US law requires case pleadings to spell out the particulars of damage the plaintiff claims.)
(2) Other than the conversion, most other claims were related to Bitcoin creation activities. The trial lasted three weeks. Much of the testimonies and evidence presented by Dr. Wright was about when and how he created Bitcoin, and why he didn’t have David Kleiman’s help on that part.
If the case didn’t relate to Bitcoin creation activities, the trial judge managed the trial foolishly because he wasted the court resources and jury’s time by allowing irrelevant evidence to such an extent. Yet no one said anything about the judge being foolish in basic trial management.
Let’s now look at some details of the case claims and the verdict.
The jury was asked to decide about seven claims against Wright after several weeks of trial hearing numerous testimonies under oath and legal arguments:
1. Breach of partnership with David Kleiman
2. Breach of fiduciary duty to David Kleiman
3. Conversion (unauthorized exercising of control) of W&K property
4. Civil Theft of property
5. Unjust Enrichment from services provided by David Kleiman
6. Fraud committed against David Kleiman, Ira Kleiman, or W&K
7. Constructive Fraud against David Kleiman, Ira Kleiman, or W&K (fraud in effect without proving intent)
Altogether, the Plaintiff asked for over 100 billion USD in damages.
On all accounts except for Conversion, the jury found “No”, in favor of the Defendant.
On the Conversion, the jury found for the Plaintiff and decided the Defendant owes W&K Info Defense Research LLC (but not the estate of David Kleiman) 100 million USD, but no punitive damages.
It’s important to remember that Wright was sued for fraud. And the jury found no fraud.
The only part the jury found against Craig Wright was the conversion of W&K property.
Conversion in general is an act of changing one form of property to another. It is true that in a lawsuit, conversion always means unauthorized conversion, but it doesn’t have “fraud” as an element. If it does, it would be specified as “fraudulent conversion”, or theft, embezzlement if it is such.
As a matter of fact, in this case, fraud and theft were specifically charged on different accounts separate from conversion. Mixing them together in a post-trial analysis is wrong and dishonest.
In addition, even with the conversion verdict, the jury did not award any punitive damages against Wright. The $100 million was the jury’s straight estimate of the value of the IP that belonged to W&K. This is a clear indication that the jury did not find any fraudulent or outrageous behavior in Wright’s handling of the W&K property. The jury just found the conversion of the property was unauthorized.
The jury found no fraud. No post-trial analysis can change that fact.
Again, unless one is clear about both the legal distinction and the factual connection between ‘Satoshi identity’ and ‘Bitcoin creation activities’, none of the details matter. From different premises, two people may reach entirely different conclusions even if they all follow flawless downstream logic.
Smart people are wrong not because they err in apparent downstream logic, but because they start from a wrong root premise in the first place, often intentionally. The fact that MyLegacyKit reaches an opposite conclusion on almost every major point of the Kleiman case is a good example to illustrate this phenomenon.
People who don’t start from the same premise can never reach an agreement.
But it is not about opinions. The premise in this particular case is factual. People will have to study the case record to reach their own conclusions. I emphasize not a mere conceptual distinction, but the actual trial record. It is a fact, not an interpretation, that the Kleiman case did not allow jury deliberation on the matter of Satoshi identity, but nevertheless had a heavy emphasis on Bitcoin creation activities.
The upcoming COPA trial has the potential to clarify a lot of things. There is no guarantee of an outcome one way or the other, but let’s wait for the outcome of the COPA trial.
[Recommend my two-volume book for more reading]: