Kleiman v. Wright: Craig Wright Takes Stand Again in Final Day of Testimony

On cross-examination, plaintiffs’ lawyers showed that some of Wright’s testimony Monday contradicted what he’d said last week.

AccessTimeIconNov 23, 2021 at 3:57 a.m. UTC
Updated Nov 23, 2021 at 3:22 p.m. UTC

Deirdra Funcheon is a freelance journalist based in Miami.

MIAMI – Testimony wrapped up Monday in the federal trial of Kleiman v. Wright, with Craig Wright – who has claimed to be the creator of Bitcoin and the person behind the name “Satoshi Nakamoto” – taking the witness stand a second time since the trial began three and a half weeks ago.

His attorney, Andres Rivero, opened his line of questioning by asking, “Dr. Wright, did you form a business partnership with David Kleiman to invent and mine bitcoin?”

“No,” Wright said bluntly.

The trial pits Wright against the estate of his now-deceased friend Dave Kleiman. Kleiman’s surviving brother Ira claims that Dave helped Wright invent and mine bitcoin, that the two men had a business partnership and thus the estate is entitled to a portion of the bitcoin and intellectual property that allegedly resulted from that partnership. Testimony and evidence introduced during the trial focused on whether their relationship did or did not amount to a partnership.

While Wright has claimed to be the pseudonymous inventor of Bitcoin since 2015, his claim has been met by skepticism by much of the Bitcoin community. Thus far, he has never been able to prove that he has control over the bitcoin keys or addresses associated with Satoshi Nakamoto. The potential ownership of those coins is at the center of the plaintiff’s civil suit against Wright.

Monday morning’s proceedings concluded the testimony of autism expert Dr. Ami Klin, who had begun testifying Friday. He said that Wright functions in social situations worse than 99% of the population and that “he gets very focused on the precise definition of words.”

‘Electronic poker chip’

Wright then took the stand, with Rivero leading him though an overview of his childhood and education. Wright said his parents split when he was five and he did not see his father after age 10. He was close to his maternal grandfather, who had been in the Australian air force and would build ham radios. He said his grandfather had a lot of Japanese memorabilia.

Wright said he began coding computers when he was eight years old in 1979 and learned several coding languages. He said he earned multiple undergraduate and master’s degrees. He developed video games and did work for retailer Kmart and the Australian air force, then for gambling-related clients including MGM Grand and Lasseters Online Casino.

In 2005, the U.S. government cracked down on the use of credit cards, checks and bank transfers to pay debts from illegal online gambling. Wright said he began developing the idea of a token system for online gaming that would get around problems with international money transfers.

“A token is like an electronic poker chip,” Wright said.

Lasseters’ online gambling operation closed in 2007. In the meantime, Wright said, he had been working with botnets, with the file-sharing service Limewire and with peer-to-peer networks. He wanted to share just how resilient such networks could be.

“Rather than a single system, this was a distributed system so there were multiple nodes,” he said. It was more sustainable. If one company went broke, others could take over. “If one node goes down, it’s more profit for others. More profit attracts people,” he said.

Wright said he started to formulate this idea in 2006 and it coalesced in 2007.

Wright said he approached his then-boss at consulting firm BDO, Allan Granger, about collaborating on this. His legal team showed the court a document – notes from the meeting with Granger – with handwriting indicating that Wright would deliver a “doc” by October 2008. Satoshi Nakamoto posted the Bitcoin white paper on Oct. 31, 2008.

Wright said people including Hal Finney, Wei Dai, and Gavin Andresen helped refine his project by giving him fragments of code and helping him de-bug his project.

“Did you invite Dave Kleiman prior to 2007 to assist with the coding of bitcoin?” his attorney asked.

“No, he couldn’t code,” Wright said.

Conflicting dates

By March 2008, Wright testified, he had a handwritten version of what would become the Bitcoin white paper. He reduced that to a 40-page typed version, then a 20-page version, then a 10-page version, which is what he sent Dave Kleiman, he said.

On cross-examination, plaintiffs’ counsel showed that Wright’s testimony Monday contradicted what he’d said last week — when he testified he’d sent Dave Kleiman a version of the white paper that was “horrendously long.” They also contended his notes from his meeting from Granger couldn’t be verified with metadata, as they were handwritten.

Plaintiffs’ counsel also showed another contradiction: One of Wright’s email addresses was tied to the domain rcjbr.org. On Monday, Wright testified he’d created that domain, which combines the first letters of his wife’s name, his name and his kids’ names – on Oct. 27, 2011. He did not meet his wife until 2010. This detail implied he could not have written an email dated in 2008 from the rcjbr.org address to Dave Kleiman saying, “I need your help editing a paper … bitcash, bitcoin.”

In a 2020 video deposition of Wright played for the jury, Wright was asked about the same document: “Is this a real email?” He said he’d sent something similar around that time.

“Did you say/send these exact words?” he was asked in the video.

“It looks like … yes,” he answered.

Another apparent contradiction emerged Monday: Wright testified that he had mined bitcoin with computers in several locations in Australia and had additional servers in Tokyo and Malaysia. The plaintiffs then played a clip from a 2019 video deposition in which he testified he only mined in one Australian location, Bagnoo.

Wright’s motion denied

Also on Monday, federal Judge Beth Bloom issued an order denying a motion by Wright’s legal team to essentially pre-empt the jury on seven counts.

On Nov. 16, Wright’s legal team filed a Motion for Judgment of Law, arguing that the plaintiffs had rested their case without providing the jury with enough of an evidentiary basis to find in the plaintiffs’ favor.

As the judge’s order explains, if “the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue, the court may resolve the issue against the party.”

Wright’s team claimed (among other points) that the plaintiffs hadn’t provided enough evidence for the jury to appropriately value the bitcoins and intellectual property that are at issue in the case.

Judge Bloom, however, wrote, “The Court is satisfied that the evidence presented at trial affords a sufficient basis for estimating the amount of damages with reasonable certainty. Specifically, the amount of [b]itcoin and its market price provide an adequate basis for the jury to calculate damages.”

Similarly, regarding the valuation of intellectual property at issue, the judge’s order pointed out that Wright himself had told the Australian Tax Office that the intellectual property that he acquired after David Kleiman’s death was worth $56 million, and had circulated a report estimating the market price for W&K’s software at $303,895,458. W&K Info Defense Research is one of the business ventures in which the plaintiffs allege Dave Kleiman and Wright were partners.

The parties will make closing arguments Tuesday.

Catch up on the trial thus far:

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Deirdra Funcheon is a freelance journalist based in Miami.

CoinDesk - Unknown

Deirdra Funcheon is a freelance journalist based in Miami.