“I’m Satoshi Nakamoto!”

“Really? Because Satoshi Nakamoto owes me five billion dollars.”

“Yep! I totally am Satoshi.” — HopeFox

A court order was signed yesterday in Kleiman v. Wright. Craig Wright has to show up in person in Florida on 28 June 2019 — to explain why he shouldn’t be found “in civil and/or criminal contempt” for his obstructive behaviour in deposition.

He also has to produce a list of all the bitcoins he mined prior to 31 December 2013. And he’s already been ordered to show up on June 18 for attempted mediation.

There are things you don’t do when someone’s suing you for billions of dollars, and one of those things is to piss off the judge.

Kleiman v. Wright

Craig Wright has maintained since late 2015 that he invented Bitcoin — in association with Dave Kleiman, a computer security expert of slight renown, who died in 2013.

“Satoshi Nakamoto” mined approximately one million bitcoins in 2009, just as Bitcoin was starting out. These coins haven’t moved since they were mined.

Wright says the Satoshi coins are locked in a trust, inaccessible to him. Which is why Wright isn’t living on an island somewhere, surrounded by piles of gold.

In February 2018, Dave Kleiman’s brother Ira, the executor of Dave’s estate, sued Wright — demanding the estate’s share of the million bitcoins from the Satoshi stash.

Wright has said in deposition that the coins exist — but he can’t release them, as they are cryptographically locked by a key made of parts held by multiple individuals.

Wright also says he can’t release the names of these individuals — despite being asked to in deposition. He has also refused to answer any deposition questions concerning his ex-wife, Lynn.

Was Dave Kleiman part of “Satoshi Nakamoto”?

A few people think that Wright’s claim of involvement in the creation of Bitcoin is plausible — if you assume that Kleiman did all the technical work, then died, leaving Wright to say he was the surviving inventor of Bitcoin … even though Wright’s technical knowledge appeared deficient and unconvincing, and he famously failed to cryptographically sign a message as Satoshi.

But — when I was researching for the Craig Wright section in chapter 6 of Attack of the 50 Foot Blockchain, I could find literally zero evidence dating from Kleiman’s lifetime that he had even been interested in cryptocurrencies at all.

All claims of Kleiman’s involvement in Bitcoin came via Wright himself or via the late 2015 documents concerning Wright that were sent to Wired and Gizmodo — plus one mention from his ex-wife Lynn in The Satoshi Affair (archive) by Andrew O’Hagan: “I knew Dave Kleiman and he were working together, and I remember them saying that digital money was the way of the future.” Lynn told how she and Craig had gone to Florida and met Dave.

Wright may have known Kleiman — he wrote material for a computer security book, The Official CHFI Study Guide (2007; US, UK), that Kleiman was the primary author of.

But there was nothing before 2016 linking Kleiman to Bitcoin, from anyone not connected to Wright.

In the present lawsuit, Ira Kleiman claims Dave was involved in Bitcoin — but that claim comes years after Wright’s claims had been widely circulated.

Wright’s claim of being Satoshi is widely regarded as a possible hoax — but Ira Kleiman is functionally calling Wright’s bluff: if these coins exist, they’re half Dave’s. Where are they?

The price of not complying with discovery

I asked Brad Patrick, a litigator in Florida, who ran me through the completely standard Federal Court 101 that Wright is dicing with.

“Federal judges or magistrates get quite feisty when intransigent parties flout their orders,” says Patrick.

“Wright devised a scheme which the court now seeks to have unwound to comply with discovery. Clearly, Wright can. If he does not, he can be held in contempt and jailed. He can’t argue ‘my scheme is so clever you can’t make me.’

“Logically, Wright has to have access to the trust, via his scheme. The cause for the unlocking is irrelevant to the court. His power to do so is. The court is not compelling third parties and invoking jurisdiction and so forth. The court has jurisdiction over him. He controls the trust.”

Patrick explains the escalation process toward a finding of contempt of court. First, a party fails to comply with discovery. Then the other party moves to compel discovery. If this is granted, an order to compel is issued. If this is not followed, the court orders the first party to show why contempt should not be found.

If contempt is found, sanctions will be issued — usually financial sanctions — with new orders to comply. If these are not complied with, the court sanctions the noncompliant party’s lawyers. The final stage is a default judgment against the noncompliant party, as a result of striking the defendant’s pleadings.

“To clarify, the civil penalty of the contempt he would risk is a default judgment being entered against him after his legal defenses are struck,” says Patrick. “Here’s a five billion dollars plus triple punitive damages judgment for your troubles! That’s a problem for anyone.”

What if Wright doesn’t show up in Florida?

One of Wright’s fans, @oudekaas3, supposedly quotes Wright from the BitcoinSV Slack chat server:

I shall not be going to the US nor dealing with these criminals other than to instigate fraud charges. Ira Kleiman has aided criminals who hacked servers of companies I used to run.

If Wright really said this, and meant it, and doesn’t show up … then a default judgment would likely be issued against him.

“If you decide not to show, eventually you will lose utterly,” says Patrick. “Then you are just delaying the inevitable.”

Wright lives in the UK. US default judgments can be enforced in the UK, but it’s not automatic — there are procedures to go through. You need to bring a case in the UK for payment of the debt. You need to show the UK court that the US judgment is final.

If a default judgment is rendered by the US courts because Wright behaves badly, it is unlikely to go well for him in the UK.

“UK courts are generally loath to say US courts are facially unfair, and vice versa,” says Patrick. “He won’t have a leg to stand on if defaulted by his own recalcitrant behavior.

“Nothing in UK law permits you to join the battle, fight the claims with an army of lawyers, turn tail and run, and complain about justice after you gave them the finger later. UK judges will look down their noses at Wright claiming it was all unfair.”

Wright’s UK defamation claims

Wright has sent lawyers’ letters threatening defamation proceedings against people who have claimed that Wright is not Satoshi Nakamoto, and have called him a fraud. The letters also demand that the recipients apologise and declare that Wright is Satoshi.

The US case is not about who Satoshi Nakamoto is. It’s about the ownership of property — an extremely large pile of bitcoins that Wright has repeatedly claimed he controlled.

Thus, defaulting in the Kleiman case probably wouldn’t directly wreck a UK defamation case — though bad behaviour in the present case would almost certainly be brought up in later cases.