Why Satoshi Nakamoto’s gigantic Bitcoin stash is probably lost forever
Jurors in the Ira Kleiman v. Craig Wright trial heard evidence this week regarding what’s implied to be Satoshi Nakamoto’s Bitcoin stash (1.1 million BTC worth $64 billion), which is likely irrecoverable.
That evidence includes five hard drives and nine thumb drives from the earliest days of Bitcoin that were purportedly reformatted or encrypted in a way that makes their data nearly impossible to access.
Bitcoin has a maximum supply of 21 million. Estimates for the total number of permanently irrecoverable BTC ranges from from a few hundred thousand to over 3.7 million.
Wright claims that he is Bitcoin’s pseudonymous inventor Nakamoto. However, Wright has repeatedly failed to prove that he has access to private keys tied to the earliest Bitcoin mined by Nakamoto.
The plaintiff, Ira Kleiman, claims that his deceased brother, Dave Kleiman, was once Wright’s business partner. Ira alleges Wright schemed to defraud Dave of BTC that is now worth tens of billions of dollars.
Wright says that Ira should have known not to reformat or encrypt devices that may have contained valuable evidence in this case. Wright also denies that any business relationship with Ira existed.
Over the course of the case, Wright has been accused of witness intimidation over online comments implying that he would sue witnesses.
Wright has also contradicted — and apparently even perjured — himself during court testimony.
- Wright said he had Dave review the Bitcoin white paper and offered to hire Ira in a director’s role at one of his businesses — all despite prior denials of having any business dealings with the Kleiman family.
- According to US Magistrate Judge Bruce Reinhart, “[Wright] has produced forged documents in this litigation… I have previously found that [Wright] gave perjured testimony in my presence.”
- The judge continued elsewhere, “[Wright] has taken directly conflicting factual positions at different times during this litigation. The record is replete with instances in which [Wright] has proffered conflicting sworn testimony before this Court.”
Ira filed this lawsuit against Wright in a Florida district court in February 2018. It is the case with the largest headline figure of any crypto lawsuit history: $64 billion at current Bitcoin prices.
Wright could sustain a financially devastating judgment if the case goes against him. He has already filed a motion for an early judgment, indicating that he may just want to resolve the matter.
Wright repeatedly fails to sign Nakamoto transactions
Wright could easily prove he has access to Nakamoto’s BTC by signing a transaction from one of Nakamoto’s known Bitcoin addresses.
The owner of a private key can establish ownership of funds by signing a unique Bitcoin message. Any third party can confirm the legitimacy of such a message using the public key, without ever needing access to Nakamoto’s private key.
Wright initially claimed to be Satoshi Nakamoto in 2016. On May 3 of that year, he told media outlets that he would provide proof “in the coming days.”
Read more: [What is Bitcoin?]
Despite little proof as to his identity, Bitcoin Foundation chief scientist and longtime Bitcoin lead developer Gavin Andresen soon proclaimed to believe in Wright.
Andresen is one of the few people who sustained direct contact with Nakamoto. When Nakamoto departed the Bitcoin project, they passed the mantle to Andresen as Bitcoin’s Lead Maintainer.
This role is now served by Wladimir van der Laan, although he’s expressed intent to gradually step back.
Gavin Andresen: ‘I may have been fooled’
Andresen once claimed to witness Wright signing a Nakamoto transaction in one private, face-to-face meeting.
At a subsequent press event in 2016, at which Andresen and Bitcoin Foundation founding director John Matonis were in attendance, Wright said he would (but never actually did) prove his claim by signing a Nakamoto message of Andresen’s choosing.
Andresen claimed that Wright signed a message containing the text, “Craig’s favorite number eleven,” using the address associated with the first Bitcoin block ever mined.
However, Andresen also claimed that Wright kept the laptop that was used in that test, making it impossible for third-party observers to validate the exercise’s authenticity.
Many prominent figures, including even Ethereum’s Vitalik Buterin, expressed doubts about that event. Buterin said that Wright had chosen a suspiciously “noisy” way to spread his claims.
- ShapeShift founder Erik Voorhees also expressed skepticism: “I generally trust [Anresen’s] opinions so I want to believe this, but I’m not convinced yet.”
- Wright claimed to have signed a message containing a passage from the philosopher Sartre using an early address known to belong to Nakamoto.
- However, cryptography expert Ryan Castellucci posted a technical analysis on GitHub that concludes that Wright never signed that Sartre passage.
During sworn testimony related to the Kleiman v. Wright case in June 2020, Andresen withdrew his support of Craig Wright’s claim, saying that he “may have been fooled.”
Nakamoto’s Bitcoin dormant until they return
Unwilling to give up even after his innumerable failures to prove his claim of being Nakamoto, Wright went on to claim copyright to Bitcoin’s white paper.
He used this claim to file a lawsuit against Bitcoin.org to force its pseudonymous operator, known only as Cøbra, to take it down.
Wright won a default judgment against Bitcoin.org because Cøbra was unwilling to give up his anonymity to defend themselves.
However, an organization that counts major entities like Square, Coinbase, and Kraken known as Cryptocurrency Open Patent Alliance (COPA) is continuing the legal fight against Wright’s tactics.
Read more: [Craig Wright says he’ll sue over the Bitcoin white paper — these 108 sites don’t care]
Bitcoin’s white paper is also publicized on numerous authoritative repositories, including .gov top-level domain web servers, so it matters little whether the domain Bitcoin.org hosts the document anymore.
But if Wright can’t move Nakamoto’s 1.1 million BTC, they may be dormant for good — unless Nakamoto returns to set the record straight on Wright’s claims once and for all.
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