Craig Wright behind glass, not behind bars.
Bitcoin

Craig Wright unable to produce $5 billion to settle Bitcoin lawsuit

The self-proclaimed Satoshi Nakamoto broke off settlement talks with the estate of his late partner, who wants half of a 1.1 million bitcoin cache bitcoin’s creator should own

In the latest act of the Craig Wright Follies, the self-proclaimed Satoshi is claiming poverty.

Okay, maybe not poverty, exactly, but he has apparently backed out of a settlement deal to resolve the $10 billion lawsuit by the estate of his late partner, Dave Kleiman. According to Kleiman’s quite angry lawyers, he now says he can’t afford it.

If you haven’t been following the saga, nChain founder Wright claims he is Bitcoin creator Satoshi Nakamoto. This would put him in control of the Tulip Trust, which supposedly contains 1.1 million bitcoins mined soon after the first cryptocurrencies’ creation. His partner died, reportedly an equal partner in the Tulip Trust bitcoin. Kleiman’s brother Ira wants the half of that roughly $10 billion cache he inherited.

“In early September, the parties commenced what plaintiffs, at the time, believed to have been good faith settlement discussions,” Kleiman attorney Velvel (Devin) Freedman wrote in a filing made public on Nov. 3. 

“These discussions began at Craig’s request and due to the fact that Craig represented he had the means to finance a settlement,” Freedman continued. “On September 11, the parties reached a non-binding settlement in principle and then turned to drafting binding settlement papers.” 

On October 30, Freeman said, “without any advance notice, [we] were informed Craig could no longer finance the settlement and was ‘breaking’ the non-binding settlement agreement.”

The settlement discussion’s failure were made in a fairly innocuous filing made public on Nov. 3. Ira Kleiman’s attorney is asking the court to allow it to depose James Wilson, who was CFO of Wright’s companies in 2012-2013. Wilson is an Australian who will be in the U.S. on November 8, which would save the expense of setting up a video deposition from Australia. But, that doesn’t give Wright’s attorneys the required lead time, so a judge’s permission is required. 

One big question in this litigation is whether Wright is actually Nakamoto or has access to that bitcoin cache. A large chunk of the cryptocurrency industry doubts—quite loudly—that Wright is Nakamoto. The Bitcoin Satoshi Version (BSV) cryptocurrency Wright champions has been delisted from several major exchanges over Wright’s tendency to sue people who deny he is Nakamoto.

So far, Wright has made a number of claims about why he can’t get into the Tulip Trust, mostly revolving around a complex encryption scheme. A federal judge overseeing the case has flat out called him a liar. Kleiman’s chances of winning are therefore quite high, as Wright told Modern Consensus in an exclusive interview.

As for the Tulip Trust, Wright “alleges he sold Dave interest in his companies in exchange for a fortune of Bitcoin,” during that time frame, said Freedman.

Whether it was really a fortune depends on when Kleiman allegedly bought into Wright’s companies.

The price of Bitcoin started 2012 at about $5, making 550,000 bitcoins worth roughly $2.75 million. At the end of the year it was about $15 ($8.25 million). At the end of 2013, the price of Bitcoin spiked, breaking $1,000 ($550 million).

Leo Jakobson, Modern Consensus senior editor, is a New York-based journalist who has traveled the world writing about meeting and incentive travel, as well as the consumer and employee loyalty business. He also covered the East Coast side of the Internet boom and bust, small businesses, and New York City crime, nightlife, and politics. Disclosure: Jakobson owns no cryptocurrencies.

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