Despite having spent a lot of time and energy claiming to be Bitcoin creator Satoshi Nakamoto recently, Craig Wright claimed in a federal court Friday that he was ashamed of the first blockchain cryptocurrency.
In an emotional hearing in which Wright at one point cried about how “his” creation had been abused by criminals and at another was threatened with handcuffs for throwing a document, the Bitcoin billionaire claimed that more than $10 billion worth of the first cryptocurrency may be lost, according to Bloomberg.
Wright was in court to explain why he had not complied with Judge Bruce Reinhart’s order to produce a list of the public keys of all bitcoin he possessed before December 31, 2013. Wright faces the possibility of a fine for civil contempt or even jail for criminal contempt. The “show cause” hearing was part of an ongoing lawsuit by the brother of Wright’s late partner Dave Kleiman. The Kleiman estate believes it is entitled to half of a cache of 1.1 million bitcoins mined after the first cryptocurrency was launched in 2009.
Wright told the court that those bitcoins are locked up in the Tulip Trust, which he cannot access. The trust is locked until 2020 by an encryption scheme that requires at least eight of 15 passwords held by several different people, Wright said, according to Law360. Both he and Kleiman held some of the passwords, a number of which were supposed to be given to bonded couriers to be returned to Wright in 2020, he told the court. He added that he does not know who these couriers are or even if Kleiman actually turned those passwords over to couriers. If he did not, Wright said, the cache of bitcoin is permanently inaccessible.
The Tulip Trust is believed to hold coins mined by Nakamoto shortly after its blockchain went live. Making even a small transfer from that cache would go a long way towards silencing people in the cryptocurrency community who have called Wright’s claim to be Nakamoto a lie.
Despite having spent the last year suing people who have denied he is the pseudonymous Nakamoto, the nChain founder and Bitcoin Satoshi Version (BSV) cryptocurrency backer testified that he went to a great deal of trouble to keep his name off Bitcoin after it was corrupted by criminals using it to sell drugs, guns, and child pornography on the dark web.
Wright said he first got Kleiman involved with Bitcoin because “he was a forensic expert, and I wanted to wipe everything I had to do with Bitcoin from the public record.” He added that Kleiman talked him out of “put[ting] a hammer through the hard drive that held those” 1.1 million bitcoin, Wright told the court.
Saying that he is rich enough already, Wright tacked on that he intends to give the contents of the Tulip Trust to charity.
A stormy hearing
The first part of a hearing was held in a courtroom closed to the public at Wright’s request. He was scheduled to call three witnesses, including nChain CTO Steve Shadders and a pair of cryptography experts, presumably to back up his claim about the Tulip Trust’s inaccessibility. Wright was also scheduled to testify himself.
It was during the second part of the hearing, focusing on whether Wright had disobeyed the court, that Judge Reinhart of the Southern District of Florida court threatened Wright with handcuffs.
At issue was an email submitted to the court by Wright’s lawyers that Ira Kleiman, representing his late brother’s estate, said was forged. It is allegedly from Dave Kleiman, and dealt with the appointment of a woman named Uyen Nguyen as a director of Wright and Kleiman’s firm W&K Info Defense Research LLC. The problem is that the email—which was encrypted with PGP—has a creation date after Kleiman’s death.
Wright, for his part, said the email was faked and came from a server that had been hacked. He also accused Kleiman’s attorney of perjury over the email.
It was during this confrontation that Wright threw a document and was told, “[y]ou throw another document in my courtroom, you will be in handcuffs so fast your head will spin,” by Reinhart. Wright apologized. He later apologized again for using an obscenity.
The core issue in Kleiman’s lawsuit is his allegation that Wright forged documents turning over Dave Kleiman’s share of W&K’s mined bitcoins and intellectual property in the creation of Bitcoin following Kleiman’s death in 2013. Wright has called the suit a “shakedown,” according to Law360, while Kleiman has accused Wright of lying repeatedly.
Blockchain and cryptocurrency lawyer Stephen Palley, who has been following the case closely, pointed out on Twitter that the current hearing isn’t about whether Wright’s or Kleiman’s claim is correct, but simply whether Wright was lying when he said he could not produce the list of Bitcoin public keys.
In that regard, “[t]hings are going Kleiman’s way,” he tweeted on June 29. “Now, we may not know what the court thinks until after the continued hearing which I believe will be in August. And it could change. Either way, this appears to be a smart judge, and one who will reach the right conclusion.”