Comments on Kleiman v. Wright verdict

After almost 7 days of deliberation, the jury verdict of Kleiman v. Wright case came down on December 6, 2021, with a resounding victory for the Defendant, Dr. Craig S. Wright, the inventor of Bitcoin.

The jury was asked to decide about seven accusations against Wright after several weeks of trial hearing numerous testimonies under oath and legal arguments:

1. Breach of partnership with David Kleiman
2. Breach of fiduciary duty to David Kleiman
3. Conversion (unauthorized exercising of control) of W&K property
4. Civil Theft of property
5. Unjust Enrichment from services provided by David Kleiman
6. Fraud committed against David Kleiman, Ira Kleiman, or W&K
7. Constructive Fraud against David Kleiman, Ira Kleiman, or W&K (fraud in effect without proving intent)

Altogether, the Plaintiff asked for over $100 billion in damages.

On all accounts except for Conversion, the jury found “No”, in favor of the Defendant.

On the Conversion, the jury found for the Plaintiff and decided the Defendant owes W&K Info Defense Research LLC (but not estate of David Kleiman) $100 million, but no punitive damages.

This is a resounding victory for the Defendant Dr. Craig Wright. A verdict awarding less than 0.1% of what the plaintiff asked is a way for the jury to express sympathy to David Kleiman, not really a verdict against Craig Wright. Besides, most of the $100 million may end up being given to Lynn Wright, Craig Wright’s ex-wife, and Craig has openly said that he would be glad to give that much money to Lynn because he felt Lynn and their marriage were victims of his years of excessive devotion to a highly risky and hard-to-understand project, namely inventing Bitcoin.

(Note: The membership in W&K is the subject of a different case. Lynn Wright asked a state court in Florida to determine the membership interests of W&K. The case was stayed for the final disposition of the federal case Kleiman v. Wright. Lynn also sued Ira Kleiman for breaching his duty to W&K. It appears that Lynn was an original member of W&K, and had also subsequently received, as a divorce settlement, all the membership interest of W&K held by a company controlled by Craig Wright, together making her the majority shareholder of W&K. As a result of these legal proceedings, most of the $100 million paid to W&K might go to Lynn rather than Ira.)

This jury wins my respect. They are a generation of Americans who have proved to be more fact-based and less easily carried away by inflammatory imaginations.

Reactions to the verdict

Despite a marked increase of the mainstream attention (including the Wall Street Journal) to the case, the world largely misses the significant implications of this case:

Dr. Wright is Satoshi Nakamoto, the inventor of Bitcoin.

Due to the overwhelming rejection of Dr. Wright being Satoshi by the “crypto lords” and the controlled or influenced media, people do not easily put these puzzles together on their own.

People continue to see headlines such as:

“Self-claimed inventor of bitcoin was ordered to pay $100 million in damages.”

“The estate of David Kleiman wins large reward against self-proclaimed inventor of Bitcoin Craig Wright.”

“Jury found Craig Wright did not invent Bitcoin by forming a partnership with David Kleiman.”

Beyond the misleading headlines, you also see the anti-Wright propaganda working hard distorting the history and some of the court arguments that Craig Wright’s defense team did not win.

Even a 2019 judge’s opinion on Craig Wright’s motion to dismiss the lawsuit was dug out and spun in a perverted way in order to confuse. The basic facts are ignored, including that it was a pretrial ruling, the judge ruled against a motion for summary judgment, meaning that she thought it was not a clean case for the defendant, and the controversy warranted a trial.

And a trial we just had.

In a lawsuit, a lot of arguments fail, for both sides, the winning or losing. What is important is the jury verdict.

As to the facts, the jury has the final say.

No fraud

It’s important to remember that Craig Wright wasn’t just sued for money. He was sued for fraud. And the jury found no fraud.

The only part the jury found against Craig Wright was conversion of W&K property.

Conversion in general is an act of changing one form of property to another. It is true that in a lawsuit, conversion always means unauthorized conversion, but it doesn’t have “fraud” as an element. If it does, it would be specified as “fraudulent conversion”, or theft, embezzlement if it is such.

As a matter of fact, in this case, fraud and theft were specifically charged on different accounts separate from conversion. Mixing them together in a post-trial analysis is wrong and dishonest.

In addition, even with the conversion, the jury did not award any punitive damages against Wright. The $100 million was jury’s straight estimate of the value of the IP that belonged to W&K. This is a clear indication that jury did not find any fraudulent or outrageous behavior in Wright’s handling of the W&K property. The jury just found the conversion of the property was unauthorized.

Now, a simple verdict of no fraud might end right there, and may speak nothing of what exactly Wright and Kleiman did in relation to the invention of Bitcoin. And that’s exactly how certain people are spinning the verdict.

But anyone who has such a conclusion or an impression of the verdict is either missing or intentionally twisting the key point of the case.

A key in this case is that the Plaintiff opted to allege fraud against Dr. Wright because they had no other way to prove that David Kleiman had a partner interest in the invention of Bitcoin. In other words, the case did not rise from Plaintiff’s discovery that Dr. Wright had committed fraud, but rather was entirely motivated by money in a partnership interest. The fraud was only alleged by the Plaintiff as a tactic necessity for its case because there was no other way to prove partnership.

Ordinarily, a partnership dispute does not rely on proving fraud. In most cases, it is just a matter of deciding the nature of the relationship itself based on what agreements they entered into and what actual work relationship they maintained.

But in the case of Kleiman v. Wright, the Plaintiff had a big problem: there is absolutely zero direct evidence for partnership.

Therefore, the Plaintiff came up with this theory: the reason why there was no evidence for partnership is because the two men agreed to work on it secretly.

But problem is that, if the very fact of no evidence could be spun as evidence for a secret partnership, a partnership could be found between any two good friends on any business one of them did, especially when there is no showing of partnership agreement.

That would be absurd.

The Plaintiff clearly understood the absurdity of both their argument and the situation, and knew they needed to come up with a strategy to escape the “evidence void” and lead the jury into an imaginary and emotional space in which they could find the needed partnership.

That strategy rests on alleging Dr. Wright being a fraudulent man. The Plaintiff charges the jury that, seeing Wright committing such fraud, it would be wrong to allow him to keep all Bitcoin goodies.

To prove the fraud, the plaintiff banked heavily on the fact that Dr. Wright was a complex figure, and that people who come across him as a stranger tend to find him not likable nor believable — Not likable because he talks in a manner that often strikes as arrogant and offensive; not believable because he often talks things that others don’t understand.

After all, the above strategy has worked highly effectively in the “court” of the public opinion guided by social engineering since 2015, it might also work in the real courtroom with the jury led by a skillful trial lawyer.

One of the most notorious examples is Wright’s disastrous interview with BBC in 2016. In the BBC interview, the Asperger’s patient Dr. Wright behaved in such a way that he, unbeknownst to himself, effectively self-portraited himself as a scammer in the eyes of regular viewers who didn’t have a real grasp of the facts and nor any understanding of the context.

The sad truth is, people tend to fall for smooth and believable scammers, but perceive awkward truth-tellers as scammers.

The Defendant’s team on the other hand was very much aware of the Plaintiff’s strategy.

Concerning Dr. Wright’s “unlikableness”, it has to do with him being an Asperger’s patient, and the Defense made a huge effort in presenting this fact to the jury through the testimony by Dr. Ami Klin, the world’s foremost expert on Asperger’s.

Concerning Dr. Wright’s “unbelievableness”, it is due to him being an ultra-high-IQ genius in real sense, and the Defense also made a good effort in presenting this part to the jury.

The jury found Dr. Wright not fraudulent.

No partnership

However, due to the particular way the Plaintiff’s arguments were structured, merely proving there was no fraud was not enough to prove there was no partnership.

Remember, the Plaintiff argued that the partnership was secret.

To that, in the trial, the Defendant provided a lot of evidence to show what Craig Wright did to invent Bitcoin.

The logic is quite simple: whether or not the partnership was secret at the time, now that it’s contested in a public trial, let each party demonstrate the actual work they had done in relation to inventing Bitcoin — Proof-of-Work (PoW), so to speak.

In showing PoW, Wright had a lot, while Kleiman had zero.

It was on those bases that the jury found no partnership between Craig Wright and David Kleiman.

It is incredible that some people are spinning this finding to mean that jury found neither Craig Wright nor David Kleiman worked on Bitcoin!

They are blind to the simple facts:

(1) the Plaintiff (not the Defendant) alleged partnership, and the jury found No;

(2) the Plaintiff alleged fraud, and the jury found no;

(3) and more importantly, in this particular case, the only way to prove David had no partnership interest was by proving Craig had made 100% contributions, which could not have been accomplished without presenting credible evidence to the jury, especially when the jurors probably did not emotionally side with Craig Wright in the first place.

The jury verdict of no partnership therefore could only be a result of the jury accepting the case made by Craig Wright to prove that he devoted his life to inventing Bitcoin. The Defendant didn’t merely focus on the fact that David didn’t do much and wasn’t even capable of doing much, but focused more on what Craig was able to do and what he actually did to invent Bitcoin.

Craig Wright is Satoshi

With a verdict that Craig Wright did not commit a fraud, and he alone is the person who invented Bitcoin, the jury’s decision on the Satoshi identity is completely clear, even though the case barely even mentions the name Satoshi due to its lack of relevance to the pleadings.

Put yourself in the shoes of the jury. After seeing and hearing weeks of evidence from Craig Wright himself and other witnesses saying that the Craig Wright has devoted his life to inventing Bitcoin since 1990s, years before Bitcoin was released, you were asked to make a decision based on the evidence. Now, if you the jury did not believe the case made by the Defendant on how Dr. Wright alone invented Bitcoin, how could you have explicitly voted “No” on the question of fraud?

The claim that Craig Wright devoted his life to inventing Bitcoin wasn’t a side story. It was the whole case of Craig Wright made during the trial.

Furthermore, any jury, if finding Craig Wright lying about inventing Bitcoin, or just not believing what he said, would not only vote “Yes” on the question of fraud, but would have in fact also gladly awarded half of the Defendant’s Bitcoin value to the Plaintiff. This is because such a verdict is absolutely the most effective way, if not the only way, to factually prove that Craig Wright is a fraud.

Put another way, if the jury had found Craig Wright was not the Bitcoin inventor and had been lying to the court and the jury, they would recognize the following very simple fact:

Awarding a hundred billion dollars to the Plaintiff would be the ultimate judgment against the fraudulent Defendant, because not only would voting “yes” to the Wright’s fraud verdict be justified, but more importantly, they’d have also made Wright eat his own words. This is because, if he is only pretending to be the inventor of Bitcoin, a $100 billion verdict would certainly put him beyond bankruptcy. After having played a fake Satoshi, he would certainly end up having to admit that he is not Satoshi and does not actually own the Satoshi coins in order to null the court order and escape the absolutely unaffordable judgment.

Yet the jury unanimously did the opposite.

If you conclude that the jury’s verdict means that they didn’t find Craig Wright was indeed the inventor of Bitcoin, it would not only be violating the basic logic, but in fact insulting the court and the jury.

The relevant evidence

Some people have been pushing the following narrative: the trial has nothing to do with the identity of Satoshi, because what is “undisputed” is not “proven”.

Yes, there’s a distinction between “undisputed” and “proven”. But the key is RELEVANCE.

If it’s irrelevant, it isn’t considered proven even if undisputed. But if it’s relevant, consider it proven (or admitted), unless rebutted. And if it’s not only relevant but also foundational (forming a basis of a legal conclusion), it then must be taken as proven facts.

To understand exactly what evidence has been presented in the trial, one has to study the entire case and court records carefully. But for a discussion of the available evidence and their implications, you may at least read: A mathematical proof that Craig S. Wright is Satoshi Nakamoto.

A gist of the proven facts in this case includes two major aspects: (1) Wright worked for years on inventing Bitcoin prior to it became public; and (2) he has all the necessary background, the skill set, the time and the opportunity to invent Bitcoin.

One part of the evidence highly contested in the trial is the fact that Wright reported his Bitcoin assets in his year 2009 tax return with Australian Taxation Office (ATO), and subsequently got into a very messy legal fight with ATO. What people unfamiliar with the case do not understand is that the dispute during the trial about ATO events was not about those very facts, but about a certain statement allegedly made by the ATO attacking the integrity of Wright in the tax dispute. The Plaintiff wanted to use it to impeach Wright, while the Defendant provided evidence to prove that the statement was not a verified official statement from ATO, and more important, Wright subsequently challenged ATO’s tax findings against him and won the case in an Australian court (a fact).

Now if you move your eyes away from the disputes between the Plaintiff and the Defendant in this case, you should see the inescapable implication: ATO knew Craig Wright was the inventor of Bitcoin. They have known it since as early as 2009. Anyone at ATO who knows about the Wright’s tax case is probably laughing at any allegations denying Wright’s Satoshi identity.

There is a saying that the whole Australia knows that Craig Wright is Satoshi. The saying may be an exaggeration but is not without its basis in reality.

The above facts were not only relevant to the case pleadings, but in fact foundational, without which any legal conclusion of the case would have had no basis, and would have been a total waste of the court’s time and resources. No serious judge and jury would have allowed that.

The point is NOT that the court has officially decided on Satoshi identity, but that it has established the relevant facts to prove Satoshi identity. As an observer, it’s up to you to infer from the evidence, established facts and the jury verdict whether Craig Wright is Satoshi. No one forces a conclusion on you one way or another.

If you wish to learn something from an expensive legal proceeding, please bring some humility and honesty. You should still be critical, but don’t assume a mocking tune with a predetermined conclusion.

It’s kind of a test. It’s up to you. And if you have any real interest in the blockchain technology and the broader next-generation Internet, whether you pass the test or not will be consequential.

On the other hand, if you are like me, you’ll be less concerned of whether Wright is Satoshi (because he clearly is, and no one else comes even remotely close), but more of whether and how the coins are going to move.

Does the Trust exist?

In 2019, the judge in Kleiman v. Wright case wrote in her opinion denying Craig Wright’s motion for summary judgment that “the evidence does not sustain the existence of a trust.”

This has provided much ammunition for Craig-haters to attack, alleging that the Trust itself is a fiction, Craig Wright has been lying about everything, and he didn’t in fact own the Satoshi coins.

But the allegations are based on misconstruing what the judge wrote. The judge’s opinion in denying summary judgment was not to say that the judge decided that there was no Trust. If that were the case, the entire case would have been dismissed, because proceeding with nonexistent property would be a total waste of the court’s time. A motion for summary judgment is to ask for a direct verdict without a trial on the basis that there is no controversy in the alleged facts. And accordingly, the judge’s denying a summary judgment is to say that there is a controversy in the alleged facts, and it needs to be decided by the jury, not by the judge.

What is factually even more important is that the 2019 opinion is outdated because Craig Wright has subsequently complied with the court orders in providing evidence for assets contained in the Tulip Trusts.

During the trial, no new evidence for the existence of these coins and the Trust was presented, because the fact was not contested during the trial. This fact is also mis-presented to the public, to the effective of leaving an absurd impression that somehow the court forgot or neglected to put the very existence of the Trust in question in order to be contested and proven. Anyone who has any amount of such an impression should review the case history, in which the existence of the Trust was in fact a focus by the previous judge in the case before the trial, who demanded the Defendant to produce evidence of the existence of the assets in the Trust. The then judger even wrote an opinion about it. The only reason why the issue did not come up again in the final trial was because the court’s order on this matter had been subsequently complied by the Defendant.

The Trust exists. Everyone waits for the next question: Will the Satoshi coins move?

Will the coins move?

Craig Wright himself has said that they will. But it is unclear how it is going to happen.

He’s now being ordered by the court to pay $100 million to W&K. But theoretically, the payment can be made in US dollars without moving any coins.

Therefore, it is really up to Craig Wright to decide. Before the trial, he was constrained by a pending case from moving his bitcoin assets. But now he’s free. He’s free to move at least some of coins to pay for the verdict. And to the world, it really does not matter how many coins he moves, as long as any coin in a Satoshi address moves.

Does he have the keys though? Wright was a victim of the actions by Ira Kleiman because Ira reformatted David Kleiman’s hard drives and USB drives; he was also a victim of thievery when his office was hacked in 2020. Some people thus assume that Craig Wright has lost all the keys to the coins. However, whatever lost in those incidents were only part of the Wright’s bitcoin. The subject of the 2020 hacking, for example, related to 111K coins that were purchased by Wright from someone else and had nothing to do with the Satoshi coins that were mined by Wright from the earliest Bitcoin blocks. As to the lost drives of David, although there has not been a clear accounting, it is certain that Wright did not transfer the keys of all his coins to David. Rather, the most if not all Satoshi coins were placed in the elaborately designed Tulip Trusts. Therefore, it is certain that at least some of the Satoshi coins are in full control by the Trusts, which should now have the freedom to facilitate Wright’s need for moving the coins.

However, it should be pointed out that there exists a conflict between Craig Wright’s own interest and that of BSV community. Although their interests are quite well aligned, they are not perfectly aligned. Regardless of what Wright claims, the fact is that moving the Satoshi coins is against his financial interests, because such a move is going to negatively impact the price of BTC. Over 90% of Wright’s wealth is in BTC.

One suggestion is that Craig Wright may convert much of his BTC coins into BSV coins and then strategically spend the BSV coins to promote the BSV blockchain by on-boarding billions of people. That sounds great, but it would be hard to execute such a plan without crashing the BTC price. Sure, the conversion will cause the BSV price to rise to offset some of the losses on BTC, but given the vast difference (400:1) between the current market caps of the two coins, it is mathematically impossible to have a value-preserving conversion if done all at once. If it were done that way, the BSV price would suddenly go up dramatically (when Craig buys) but would subsequently lose much of the gain quickly (after Craig has done buying), and Craig would end up losing most value of his assets. It seems that the only way to mitigate the loss is to execute a conversion plan in very small steps over a long period of time, and also do it as stealthily as possible.

A very complex and tricky situation to watch.

But I do believe Dr. Craig Wright has a sound long-term plan to advance the real Bitcoin (BSV).



Writings about bitcoin and blockchain technology, seeking and spreading the truth

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