News & Awards

Bitcoin ‘Inventor’ Struggles To Explain Conflicting Evidence

August 16, 2022

Law360, Miami (November 8, 2021, 9:01 PM EST) — Attorneys for deceased computer programmer Dave Kleiman on Monday hammered self-professed bitcoin inventor Craig Wright with documents in which he described Kleiman as his business partner despite his claims in multibillion-dollar litigation that the two were just friends.

Wright took the stand in Miami federal court and tried to explain and rebut — or outright deny — the affidavits, transcripts, emails and statements put forth by Vel Freedman, who represents Kleiman’s brother Ira Kleiman.

Ira Kleiman, the executor of Dave Kleiman’s estate, claims Wright bilked the estate out of billions of dollars’ worth of bitcoins.

At one point, when presented with a transcript of an interview by the Australian Taxation Office in August 2014, Wright called the document an “invalid piece of paper” and said the interview never happened at the ATO office as stated in the transcript.

“This document is not an accurate transcript,” Wright said. “It was rejected by the lawyers. The tax office never sent another one.”

Ira Kleiman claims that after his brother’s death in 2013, Wright told him Dave Kleiman had been a key part of the creation of bitcoin. The Australian-born Wright, who is the chief scientist at blockchain company nChain, claims to be Satoshi Nakamoto, the pseudonymous author of the white paper released in October 2008 that described a “peer-to-peer version of electronic cash” that would later become bitcoin.

Ira Kleiman also maintains that Wright and his brother mined bitcoins together through a Florida-based company they created in 2011 called W&K Info Defense Research LLC.

At trial on Monday, Freedman showed Wright a declaration he made in 2018 in the current litigation stating that he had “never been a director, member, shareholder, officer, employee or representative of W&K or of any Florida business.”

But Freedman then presented Wright with a sworn affidavit filed in an Australian court — where Wright had filed two suits against W&K seeking $56 million — stating that he and Dave Kleiman each owned 50% of W&K.

Wright told the jury that when he filed those affidavits, he was acting on behalf of his ex-wife Lynn Wright, who was the shareholder in the company.

“I was standing in the shoes of Lynn Wright, who was standing in the shoes of W&K,” he said.

He later told the Australian court registrar that he was the sole director for the company. Wright eventually got consent judgments that transferred the intellectual property owned by W&K to his entities in Australia.

Freedman also showed the jury a short video of Wright’s deposition, in which he vehemently denied ever partnering with anyone.

“[Dave Kleiman] was never my partner. He was just a friend,” Wright said in the deposition. “I have never formed a partnership. I will never form a partnership. I hate the whole concept of partnership. I will never be a partner. The only partner I have is my wife.”

But jurors then saw text messages in which Wright referred to Dave Kleiman as his business partner, as well as a statement to the New South Wales police in which he referred to “my business partner David Kleiman.”

In the 2014 ATO transcript Wright rejects, he states, “I had an agreement with Dave.”

When presented with an email in which he told Ira Kleiman that he and Dave Kleiman had been partners, he looked to Ira Kleiman in the courtroom.

“I got catfished by that man over there and I didn’t respond very well,” Wright said.

Earlier in the day, jurors heard from Scottish journalist and novelist Andrew O’Hagan, the author of a longform piece titled “The Satoshi Affair” published in the London Review of Books in June 2016, in which he wrote about Wright’s claim that he is the inventor of bitcoin. O’Hagan testified about his reporting for the piece, which included statements that Wright told him Dave Kleiman was the man who helped him do Satoshi Nakamoto’s work.

The plaintiffs’ team also read from the transcript of the deposition of Wright’s wife, Ramona Watts. A lawyer read Watts’ responses into the record as another attorney repeated the questions she had been asked in the deposition.

Watts testified that Wright has Asperger’s syndrome, which often makes it difficult for others to understand him.

“I have trouble with him all the time,” she said. “It has taken 10 years for him to look me in the eye when he talks to me.”

She said Dave Kleiman did some editing for Wright, but she never heard Wright refer to his friend as a business partner.

“Craig has used the term partner very, very loosely,” she said. “I think he would consider his best friend a partner.”

Watts testified that her husband had meant for Dave Kleiman to be director of Coin-Exch Pty. Ltd., through which Wright planned to offer exchanges and trades between bitcoins and Australian dollars, as well as other currencies. Wright had offered Dave Kleiman shares in Coin-Exch in exchange for some work for the new company, but he died before finishing the work, according to Watts.

Watts said Wright offered Ira Kleiman shares in the company after his brother’s death, but he did not want shares. He wanted to cash out, and he wanted to do so while avoiding paying taxes, she said.

“He wanted the money, and he wanted it right away,” Watts said. “We made him an offer, he said it wasn’t enough, we made him another offer and it was not enough. I remember not having a very good impression of Ira.”

Ira Kleiman sued Wright in February 2018, claiming that after Dave Kleiman’s death, Wright schemed to steal 1.1 million bitcoins and intellectual property related to bitcoin software. The bitcoins were valued at more than $10 billion when the suit was filed but are worth six times that amount now.

Ira Kleiman argues that Wright breached an oral partnership agreement to mine bitcoins and develop bitcoin-related technology when he cut Dave Kleiman out of any assets from the partnership — a partnership that Wright maintains did not exist.

Wright will continue testifying on Tuesday.

Ira Kleiman is represented by Devin Freedman, Joseph M. Delich, Kyle Roche, Constantine Philip Economides and Stephen Lagos of Roche Freedman LLP, and Maxwell V. Pritt, Andrew Scott Brenner, Laselve Elijah Harrison and Stephen N. Zack of Boies Schiller Flexner LLP.

Craig Wright is represented by Andrés Rivero, Michael A. Fernández, Alan H. Rolnick, Amanda Marie McGovern, Daniela Tenjido Sierra, Schneur Zalman Kass and Zaharah R. Markoe of Rivero Mestre LLP, and Whitney Lohr of Kurzban Kurzban Tetzeli & Pratt PA.

The case is Kleiman v. Wright, case number 9:18-cv-80176, in the U.S. District Court for the Southern District of Florida.

–Editing by Robert Rudinger.