Craig Wright (via CraigWright.net)
Bitcoin,  Innovators

Australian CFO compelled to give deposition in $10 billion Bitcoin lawsuit

Judge rules James Wilson, who worked with Craig Wright in 2013, should be deposed

The $10 billion lawsuit between self-proclaimed Bitcoin inventor Craig Wright and the adopted brother of his deceased friend Dave Kleiman would come down to a he said/he said argument if no other witnesses came forward. However, it appears the defense has found a witness in James Wilson, a CFO who worked for Craig Wright when Dave Kleiman was still alive. Motions filed in court this past week compelled Wilson to testify when he arrived in Washington, D.C. on Friday.

Calls to the law offices associated with both parties confirmed that the deposition was scheduled for Friday. 

Wright’s team initially opposed the deposition. On November 4, they filed a response in court “Plaintiffs’ expedited motion [D.E. 290] (the “Motion”) seeks to depose Mr. Jamie Wilson—an individual that plaintiffs have known about since they filed their first Complaint in February of 2018 but never included in their initial disclosures—in five days’ time. Their expedited motion is unwarranted.”

Because this deposition is the first time we’ve heard from a disinterested witness in the Wright v Kleiman Estate case, this may be the only way to hear about what went on in the early days of Bitcoin.

Wright’s lawyers claim that they sprung the deposition on everybody without the proper 14 days to prepare. Meanwhile, Kleiman’s attorneys claim that they thought they were settling the case but then Wright pulled out. Wright’s attorney responded in a brief on November 4: “Plaintiffs know full well that a third party participated in the settlement negotiations and that almost all of what is attributed to Dr. Wright relates, in truth, to that third party.”

Modern Consensus has reached out to the person we believe to be this “third party” and we will update if we hear back.

In a still-unreleased interview with Modern Consensus from earlier this month, Craig Wright told Modern Consensus that even if documents show a relationship between Dave Kleiman and Wright’s businesses, they wouldn’t be binding.  “Adam Smith and others were really lucky. Because they had this thing in their will, and he had a friend. It said that when he dies, all the notes are going to be thrown into the fire and destroyed with only the published final works surviving, none of the things with spelling errors or scribbled out things. You get to be remembered differently when you have your notes destroyed.”

Still, attorneys for Kleiman’s estate pounced on their one chance to depose James Wilson without having to pay for a group trip to Australia. In a filing on November 1, the attorneys for  the Kleiman estate asked the court to let them speed up proceedings.  “Plaintiffs respectfully request the Court grant them leave to depose James Wilson (a resident of Australia) in Washington D.C. on November 8, 2019 if they also arrange for defense counsel to attend the deposition via videoconference if they choose.” The request acknowledges that this is “sooner than the 14 days required by Local Rule 26.1(h) for out of state depositions and therefore requires Court approval.”

Wilson is an Australian who happened to be in the U.S. on November 8, saving the expense of setting up a video deposition from Australia. But, that didn’t give Wright’s attorneys the required lead time, so a judge’s permission was required. 

In the November 1 filing, the Kleiman estate attorneys also noted that Wilson is giving his deposition willingly. In a phone call held after the courts had closed for the day, Wilson told the Kleiman attorneys that he would be in D.C. soon. The Kleiman estate attorneys filed their papers the very next day. So less than 14 days, but exactly seven. On November 1, they told the court: 

“On October 31, 2019 at 7:37pm, Mr. Wilson, who lives in Australia, told counsel that he is traveling to the United States and will be in Washington D.C. and available for a deposition on November 8, 2019. Immediately thereafter (9:19am the next morning) Plaintiffs’ counsel reached out to defense counsel to seek their consent to either take Mr. Wilson’s deposition on November 8, or consent to taking it via videoconference at a later date.”

The November 1 filing also states: “Mr. Wilson’s presence in the United States next week obviates the need for the parties to go through the legal, logistical, and expensive steps of securing a deposition in Australia. And while Craig won’t have been afforded a full 14-days notice, he has received 7-days notice.” 

On November 4, things got quite interesting. Craig went so far as to leak an email that appears to be from Kleiman to Craig and his wife in July 2015. In the email, Kleiman asked them for $6 million to liquidate 90% of Dave’s shares, while keeping 10% in the company (he didn’t say why). This was to be dispersed in quarters: $1.5 million to seal the deal and the other $4.5 million “after the R&D money is approved.”

It should be noted that this could really be its own story, but these emails from Kleiman change the narrative about “who is Satoshi Nakamoto.” The current narrative is that Craig Wright is this showboat Australian who wants to hog all the credit. We base this on the idea that he leaked personal documents—that only he could have access to—to Wired and Gizmodo in 2015. That’s not the other option, which is the idea that Kleiman wanted to force his hand on the issue at a time when he still didn’t want to be outed as Satoshi Nakamoto and sent the documents to Wired and Gizmodo the last time negotiations broke down.

[Nerds: I know, I know. I have heard you argue about “Faketoshi” Craig Wright. Just shut up and let me find out the truth. If someone is lying I will find out.]

Back then Craig was only known as a Sydney tech bro who wanted to start a Bitcoin bank in 2014.

The reference to research and development (“R&D”) money possibly has to do with Wright’s tax problems at the time. Hours after a Gizmodo and Wired report outed him as “Satoshi Nakamoto”—the pen name used in the Bitcoin whitepaper—his home in Australia was raided by tax authorities.

If this conjures up a SWAT scenario in your mind, you’re probably American. While this sounds quite exciting, the Guardian has a video of the “raid” that just shows four sweaty middle-aged men going through Wright’s files and inspecting his sick home gym in the garage. They look more like a couple of contractors coming over to give an estimate.

We can’t figure out where Kleiman came up with the $6 million figure. Currently, he is arguing about 1 million BTC worth roughly $10 billion. We derive that dollar-figure from how much a million bitcoins were worth the last time the judge ruled. ($10,000 x 1 million). For reference, one bitcoin was only worth about $240 when Wright and Kleiman first began trading emails about his dead brother in 2015. So even then, $240 million was the figure to go after.

Ira Kleiman’s email about “R&D money” raises an interesting angle. Nikcub, a user of Y-Combinator’s “Hacker News” message board—who is familiar with both the Sydney tech world and Bitcoin—claims that Wright’s problem with the tax authority stemmed from an R&D loophole. It’s a generous tax-break from the government for spending money in Australia. (Here is a research paper on how the temporary incentive became permanent, if you’re that much of an Australian tax-dweeb).

“He is currently being pursued in Australia by tax authorities,” a 2016 post by Nikcub claims. “Not because, as was commonly reported, not paying taxes on the Satoshi coins (you don’t pay tax in Australia until gains are realized) but because he was one of the largest claimants of R&D tax concessions in Australia—larger than Google and Atlassian—and this is a common area of fraud (create a fake company, say you employ 50 people, claim that ‘R&D spend’ back – similar to sales tax fraud).”

Which makes the deposition with a former CFO pretty exciting! If this person knows of any criminal misdeeds—or some early start up “move fast and break things” type problems—then either Kleiman or Wright may want to settle. If Wilson somehow knows for certain that Craig Wright is “Satoshi Nakamoto” then I can sell my “Who Is Satoshi Nakamoto” book proposal and buy a beach house. And that will probably end the subpoena that Kleiman’s attorney slapped me with earlier this fall.

P.S. For those of you following the subpoena against me in this case, I ran all of this by the law firm. You know, the one suing me for all of my hard drives going back to 2006. How? I got one of the partner’s cell phone number and rang him up. It went well. We’re both Brooklyn dudes in our thirties, if I had to guess. There’s a tinge of camaraderie between people who probably deal with the same frustrations on any given day: the subway, the weather, alumni fundraising emails…. 

I said, feel free to blind drop anything to me. I don’t have a big understanding of your side of the story. In fact, if you really want to have some fun, you can set me up with an interview with Dave Kleiman’s brother Ira Kleiman. We had a lovely chat. Anyone who has trash-talked during a game and later found out that their opponent was also a human being will know how that goes. 

But they refused to make any further comment.

Brendan Sullivan is a writer, producer, and author of the memoir Rivington Was Ours: Lady Gaga, the Lower East Side, and the Prime of Our Lives. Disclosure: he owns cryptocurrencies. Follow him on Twitter.

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