Mystery of Bitcoin Heads to Court

"A seemingly run-of-the-mill trial playing out in Florida may uncover one of the biggest secrets in finance: Just who is the creator of bitcoin?

The family of a deceased man is suing his former business partner over control of their partnership's assets. The assets in question are a cache of about one million bitcoins, equivalent to around $64 billion today, belonging to bitcoin's creator, the pseudonymous Satoshi Nakamoto. The family of the dead man says he and his business partner together were Nakamoto, and thus the family is entitled to half of the fortune.

Who Satoshi Nakamoto is has been one of the financial world's enduring mysteries. Does the name refer to one person or several? And why has he or she or they not touched a penny of that fortune?

The answers to those questions are at the center of the Florida dispute and of bitcoin itself. Bitcoin has become a trillion-dollar market. It has challenged governments trying to regulate it. The technology behind it is seen by some as a way to rewire the global financial system.

And that is before you get to who controls one of the largest private fortunes in the world.

That is what a Florida jury will try to tackle. The family of David Kleiman is suing his former business partner, a 51-year-old Australian programmer living in London named Craig Wright. Mr. Wright has been arguing since 2016 that he created bitcoin, a claim dismissed by most in the bitcoin community. Mr. Kleiman's family argues the two worked on and mined bitcoin together, entitling Mr. Kleiman's family to half a million bitcoins.

"We believe the evidence will show there was a partnership to create and mine over one million bitcoin," said Vel Freedman, a lawyer for the Kleiman family.

The plaintiffs plan to produce evidence showing that the two were involved in bitcoin since its inception.

"It is about two friends who had a partnership, and about how one of them tried to take everything for himself after the other died," said Tibor Nagy, a lawyer who has been observing the trial.

The defense said it has evidence that will show Mr. Wright is the creator of bitcoin and never included Mr. Kleiman. "We believe the court will find there's nothing to indicate or record that they were in a partnership," said Andres Rivero, a lawyer for Mr. Wright.

For bitcoiners, there is one piece of evidence that could conclusively prove the identity of Satoshi Nakamoto: the private key that controls the account where Nakamoto stored the one million bitcoins. Anyone claiming to be Satoshi Nakamoto could show that he or she has them by moving even a fraction of a coin out of it.

The mystery of Satoshi Nakamoto is one of the curiosities of bitcoin. On Oct. 31, 2008, somebody using that name sent a nine-page paper to a group of cryptographers explaining a system of "electronic cash" that allowed people to exchange value without the need for a bank or other party. A few months later, the bitcoin network went live, and Nakamoto collected one million bitcoins in its first year.

It was earlier in 2008 that the family of Mr. Kleiman claims his business partner Mr. Wright asked for Mr. Kleiman's help in what would become that paper. They collaborated on the white paper and launched bitcoin together, the suit alleges.

Bitcoin combined encryption, cryptography, distributed computing and game theory. With bitcoin, two people, anywhere in the world with an internet connection, could transact without a middleman in minutes.

For every single one of the more than 650 million bitcoin transactions, all publicly visible on a ledger called the "blockchain," there are two strings of numbers that control how the digital currency is moved: a public key and a private key. Anybody can send bitcoin to the public key, or the destination address, which is similar to a bank account. Only the person who controls the account will have the key and essentially own the bitcoin.

In bitcoin's early days, nobody cared much about Nakamoto's identity. Bitcoin had no tangible value and only a small group of backers. Nakamoto was active in its development for about two years. In December 2010, Nakamoto, who was known to use two email addresses and have one registered website, stopped posting publicly.

In 2011, Mr. Kleiman incorporated a company in Florida called W&K Info Defense Research. His family alleges it was a partnership and Mr. Wright later tried to claim outright ownership. The defense says there was no partnership.

Mr. Kleiman died on April 26, 2013. The next year, Newsweek reported that a man with the same last name as Satoshi -- Dorian Nakamoto -- was bitcoin's creator. He denied the claim, and on a message board, a one-sentence post from an account known to have been used by Satoshi Nakamoto agreed: "I am not Dorian Nakamoto."

In May 2016, Mr. Wright claimed he was bitcoin's founder. He met with several bitcoin pioneers, gave interviews to three media outlets and filled a website with papers he had written about cryptography and bitcoin. Three days later, facing criticism, he dropped the claim. He pulled everything off the website and replaced it with a four-paragraph apology. He since renewed his insistence that he created bitcoin.

Mr. Wright "has been hacking, bamboozling and fooling people," said Arthur van Pelt, a bitcoin investor who is one of Mr. Wright's most vocal critics. "There is no genuine, independent, credible proof whatsoever."

Mr. Kleiman's computing expertise was known to be extensive. It is possible that Mr. Kleiman created bitcoin, Emin Gun Sirer, founder of Ava Labs, said, but there isn't enough information to be sure. "It's an open question," he said." [1]

1. Mystery of Bitcoin Heads to Court
Vigna, Paul.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 15 Nov 2021: B.1.