Craig Wright (by Brendan Sullivan for Modern Consensus).

Wright and Wrong: Bitcoin SV billionaire loses another round to Ira Kleiman

Conflicting statements and a fraudulent piece of evidence doom Craig Wright’s attempt to toss out a lawsuit that could cost him billions

When a judge denies your motion to throw out a lawsuit against you by quoting Sir Walter Scott’s famous line, “Oh! What a tangled web we weave when first we practice to deceive,” it’s not a good thing. Thus it’s fair to say, nChain founder Craig Wright, the Bitcoin SV (BSV) backer and self-proclaimed Satoshi Nakamoto, did not have a good day in court on August 15. Although, to be fair, he wasn’t threatened with handcuffs this time.

While the purpose of Ira Kleiman, et. al., v. Craig Wright is not to determine if Wright is actually the pseudonymous creator of Bitcoin, it has a fair likelihood of proving or disproving his claim.

It will determine if he owes the estate of his late business partner Dave Kleiman half or even all of a hoard of 1.1 million bitcoins (BTC) mined by W&K Info Defense Research and kept in the Tulip Trust. The Tulip Trust bitcoins are widely believed to have been mined by Satoshi Nakamoto in the early days of Bitcoin.

The ruling by U.S. District Court Judge Beth Bloom of the Southern District of Florida is fairly technical, going into two arguments made by Wright’s lawyers that the court didn’t have jurisdiction to hear the case. Both revolve around whether Dave Kleiman was or was not the sole owner of W&K.

While the name—W&K—seems to suggest that both Wright and Kleiman were partners in the company, Bloom noted that Wright’s answers keep changing. “This is not the first time that the Defendant has made certain representations regarding the membership of W&K,” she wrote. “Indeed, the Court notes that the Defendant has made several conflicting statements [Court’s emphasis] regarding even his own ownership of W&K.”

Bloom remarked that at various times in both Australian and U.S. courts, Wright claimed that he was not an owner of W&K, was a half owner of W&K, had never been an owner of W&K, and had “no idea” who owned W&K.

In this part of her ruling, Bloom addresses Wright’s “factual attack” on the court’s jurisdiction, claiming what is called “a lack of diversity.” Basically, this means that for a federal court to have jurisdiction, all the parties must be from different U.S. states.

Wright’s attorneys suggested three new parties may have been members of W&K: Vietnamese national Uyen Nguyen, Australian corporation Coin-Exch, and Wright’s wife Lynn.

In the case of Nguyen, Bloom noted that this was based in part on an email allegedly sent by Dave Kleiman via PGP encryption that Wright’s team withdrew after people following the case figured out that its PGP signature showed that it was sent a year after Kleiman’s death.

As for Coin-Exch, Bloom ruled that it was based on evidence too ambiguous to prove anything.

Pointing out that Wright’s suggestion that his wife might be a member of W&K was brand new, the judge found that it was based on an interpretation of an email sent by Kleiman to the couple that “even the Defendant’s counsel conceded… was ‘extremely speculative.’”

The second part of the ruling—the “facial attack”—is based on the citizenship of the members of W&K. Bloom tossed this argument on much the same grounds, that Wright had not proven any of the three were ever part of W&K.

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.