Kleiman v. Wright: Bitcoin’s Trial of the Century Kicks Off in Miami

MIAMI — The civil trial Ira Kleiman vs. Craig Wright kicked off here Monday and it may provide insight into some of Craig Wright’s claims that he is Satoshi Nakamoto, the inventor of Bitcoin.

Wright, an Australian computer scientist and early cryptocurrency pioneer, has been claiming to be the pseudonymous creator of Bitcoin since 2016. This lawsuit posits that Wright did not act alone. According to Ira Kleiman, his late brother David – a fellow computer expert and longtime friend of Wright’s – was the co-creator of Bitcoin and is entitled to a share of a trove of bitcoin currently valued at $66 billion.

The suit alleges that David Kleiman and Wright formed a partnership and established an entity called W&K Info Defense Research, LLC, that they used to mine bitcoin and organize their intellectual property, including the Bitcoin source code.

According to emails shown to the jury on Monday, Ira Kleiman alleges that his brother was solely responsible for mining the entire stash of bitcoins in question, and has accused Wright of swindling them from David’s estate through a combination of forgery and deceit.

Wright denies the allegations and says that while David Kleiman was a friend and confidante, the two were never partners and that he alone is Satoshi Nakamoto.

A panel of 10 jurors selected Monday will have three weeks to hear the evidence and decide the fate of what Wright’s team is calling “Satoshi’s bitcoins.”

‘Partnership’ paper trail

In his opening statement on Monday, Kyle Roche, an attorney for the Kleiman estate, established a timeline for the jury that aimed to demonstrate Wright’s conflicting statements about the nature of his relationship with David Kleiman.

In those emails shown to the court, Wright repeatedly referred to David Kleiman as his “partner” and his “business partner” until after the latter’s death in April 2013.

Roche told the jury that after David Kleiman’s death, Wright’s story began to change: he continued to call David his partner but started to distance himself, and claimed that David had transferred their shared intellectual property into Wright’s possession.

According to Roche, Wright’s relationship with Kleiman’s surviving family members began to sour sometime in 2015, when Ira was informed by Australian tax authorities that he fraudulently claimed to pay David Kleiman approximately $40 million for materials belonging to their shared company, W&K Info Defense Research, LLC.

Roche told the jury that after 2018, when Ira Kleiman filed suit against him, Craig Wright began to deny that he and David Kleiman had ever been partnered – or that he’d ever had a partner at all, aside from his wife Ramona Watts.

In deposition footage dated April 4, 2019, Wright said, “He was never my partner. … I hate the whole concept of partnership.”

Inside the defense

Wright’s defense seems to largely hinge on two factors: his diagnosis with Autism Spectrum Disorder and the lack of a written agreement between him and David Kleiman.

In her opening statement, Amanda McGovern, counsel for Wright, claimed that Wright’s autism made him difficult to communicate with, overly literal and combative. Rather than pushing back against the veracity of the plaintiff’s timeline, McGovern instead attempted to convince the jury that Wright and Ira Kleiman simply have a different understanding of the word “partner.”

McGovern painted a picture of Wright’s lifetime of social difficulties, claiming that he came from “a very difficult home,” had “very few friends in his childhood” and “he was considered strange … even by his sister.”

“At 13, he wore a ninja outfit to a playground and all the other kids called him a freak,” McGovern said.

For Wright, math and cryptography became a refuge away from bullying at home and at school.

According to Roche, however, Wright’s diagnosis with autism is a recent development: He was diagnosed sometime after 2018 by Dr. Ami Klin, director of the Marcus Center for Autism – and an expert witness for the defense. Roche told the jury that Wright was diagnosed over the phone by Klin who had, at the time of diagnosis, never met Wright in person.

Will the real Satoshi please stand up?

While both the plaintiffs and the defense posit that Craig Wright – either alone or alongside David Kleiman – invented Bitcoin, reality is murkier.

Despite Wright’s claims (as well as his history of lawsuits against his detractors) he has not been able to definitively prove that he is Satoshi Nakamoto.

After announcing in May 2016 that he would move Satoshi’s bitcoin – proving that he had access to Satoshi’s private keys and was therefore Satoshi – Wright failed to do so, writing, “I do not have the courage. I cannot,” in a now-deleted blog post.

The cryptographic proof he provided instead has been accused of several high profile cryptography experts as being fraudulent.

Past accusations of document forgery and other fraud repeatedly came up during the first day of trial, as the plaintiffs’ attorneys showed the jury examples of “doctored” emails from Wright, where they allege that Wright added and deleted sentences from David Kleiman, changed dates and more.

Follow the money

If the jury finds in favor of the plaintiffs and Ira Kleiman is awarded his brother’s share of “Satoshi’s bitcoins,” the question remains whether the court has any way of retrieving them.

The still-unsolved mystery of Satoshi Nakamoto’s identity, and Wright’s seeming inability to retrieve the coins in his wallet, mean that recovering the coins may not be possible. If Wright is not Satoshi – or, if he is and has somehow lost access to the wallet – it is unclear how Ira Kleiman will get his hands on half of the stash.

Furthermore, there are some in the crypto community who question whether the 1.1 million bitcoins at the heart of this case even exist. In a blog post from 2018, Tokyo-based software developer and self-proclaimed “Bitcoin archaeologist” Kim Nilsson traced wallet addresses supposedly held by Wright, tying many of them back to the 2014 Mt. Gox hack.

UPDATE (Nov. 2, 13:48 UTC): Modifies subheading and several passages to clarify the nature of the case against Craig Wright and potential ownership of coins the defense refers to as belonging to Satoshi Nakamoto.

UPDATE (Nov. 3 14:31 UTC): Corrects spelling of defense attorney’s last name.

UPDATE (Nov. 3, 15:51 UTC): Adds embedded video.