Satoshi Or Not, Here He Comes

It may not matter if Craig Wright created Bitcoin. The real question is whether the nearly 4,000 patents he controls or has pending will force computer programmers around the world to stop using open-source software as they now door pay up.

InIn the fall of 2012, long before most of the world had heard of Craig Wright, the Australian computer scientist quietly submitted his first patent pertaining to the newly created bitcoin, then worth $10. The following year, a nearly unknown exchange called Coinbase raised $5 million to make Bitcoin easy to use for the average consumer. The year after that, in 2014, the co-founder of Bitcoin Magazine, Vitalik Buterin, published a paper describing a new kind of blockchain, called Ethereum, crediting bitcoins pseudonymous creator, Satoshi Nakamoto, for his breakthroughs in cryptography.

While the nascent crypto industry looked only as far as the permissive license appended to bitcoins computer code, which effectively let anybody use the software under copyright law, Wright was seeking patent protection for new ways to exploit the technology. By the time he was identified by two news organizations as a candidate for actually being Satoshi Nakamoto in December 2015, Wright had personally applied for two patents and was the chief scientist of a Switzerland-based company called nChain that had filed for three more.

Until recently, a passionate debate has been focused on whether or not Wright, 52, is Nakamoto, whose bitcoin wallets contain $33 billion worth of the cryptocurrency at its current price of about $30,000 and whose blockchain inventionwhich lets anyone in the world send anyone else digital money, no bank neededhas helped entrepreneurs raise $89 billion, according to data site Pitchbook. Next year Wright will go before the U.K. High Court of Justice to prove his claim to have invented the first cryptocurrency.

I created bitcoin, he tells Forbes, speaking from his office in London.

But the focus of that debate could soon be changing. Regardless of whether or not Wright can prove his claim to have invented the currency, if he can wield his trove of 800 granted and 3,000 pending patents in 46 jurisdictions the way he wants to, he could soon start charging for the right to build a wide variety of blockchain applications. That would affect everything from the $1 trillion cryptocurrency market to corporate implementations built by some of the largest companies in the world. More ominously, Wright is employing legal tactics that could set precedents for software issued under permissive copyright rules known as open source, including Metas widely used open source Javascript framework known as React, Microsofts Visual Studio for editing code and Linus Torvalds Linux operating system, which powers an estimated 40% of the internet.

I don’t like Silicon Valley. Theyre a cancer in this world, says Wright. Theyre a bunch of Communists who believe they can steal whatever they want. After pausing, seemingly to reconsider his words, he adds: Theyre a cancerous hemorrhoid on the ass of the world.

DrCraig Steven Wright was born in 1970 in Brisbane, Australia, to a mother who entered data onto punch cards for early computers and a Vietnam-veteran father. By most standards, Wright is a polymath, with more than 20 degrees listed on his site ranging from a masters in statistics and forensic psychology to a diploma in art appreciation. Over the years, intellectual property he has worked on that includes a wide range of ways to use blockchain technology has been moved around in what amounts to a shell game of trusts and companies.

In 1997, he says, he set up an Australian trust called Craig Wright R&D. It owned Blacknet, which he describes as a precursor to bitcoin. In 2002, he says, he moved that research to another trust, Ridges Estate.

While working on a postgraduate degree in international trade and commerce law in the mid-2000s, he befriended American security specialist Dave Kleiman in online forums. Though Wright says he and Kleimanwho died in 2013 only met once in person for drinks, the two worked together on a number of projects, including a 2007 book on investigating computer hacks co-written by Wright and edited by Kleiman. A purported copy of an email provided to Gizmodo in 2015 by someone who told the publication he hacked Nakamoto, appears to show Wright asking Kleiman for help editing a paper describing bitcoin. Wright refused to say whether the email was genuine, though he claims the Gizmodo article is based on forged documents provided by the Kleiman estate and insists he created bitcoin by himself. Boies Schiller Flexner, the law firm representing the Kleiman estate, has not responded to a request for comment.

I don’t like Silicon Valley. Theyre a cancer in this world.

On October 31, 2008, a group, duo, or individual using the pseudonym Satoshi Nakamoto published a white paper describing bitcoin as a peer-to-peer version of electronic cash that would allow online payments to be sent directly from one party to another without going through a financial institution. When the bitcoin code was released onto the Sourceforge software repository in January 2009, Nakamoto included a note allowing anybody to use it with few restrictions under the terms of a license developed at the Massachusetts Institute of Technology. It was designated Copyright (c) 2009 Satoshi Nakamoto.

Wright says the MIT license is very friendly to intellectual property. He divided his bitcoin-related intellectual property among four Australian companies he controlled, he says, each with different specialties. Information Defense received intellectual property pertaining to the bitcoin database; Integyrs received his cryptographic research; Greyfog received IP related to what we now call the Internet of Things, and Strassen received information pertaining to what is called a sharded network, which splits large networks into more digestible pieces, he wrote in an email.

Though audit documents from 2010 show no patent had yet been lodged, Wright says he started working to change that the same year. His first bitcoin-related patent, a method by which multiple users could split the access code to blockchain registries for things like estates and corporate records, was granted by U.S. Patent and Trademark Office in 2017. In December 2010 Nakamoto wrote his final public post, starting with the words: Theres still more work to do

Whether or not he is Nakamoto, Wright says that in early 2011 he; his first wife, Lynn; and Kleiman founded W&K Info Defense to develop blockchain-related intellectual property. He also changed the name of Craig Wright R&D to Tulip Trust, which would go on to play an important role in his business strategy. Though the actual makeup of the Tulip Trust remains a mystery, Wright says it owns companies. This is the only asset it holds.

On December 13, 2010, the bitcoin creator logged in for what would be one of his last acts using the pseudonym, seemingly changing the license from Copyright (c) 2009-2010 Satoshi Nakamoto to Copyright (c) 2009-2010 Bitcoin Developers. A few days later, Andresen posted the message: With Satoshi’s blessing, and with great reluctance, I’m going to start doing more active project management for bitcoin.

The following spring, Satoshi Nakamoto sent what is widely believed to be a final private message, and then vanished, or so the story goes. I’ve moved on to other things, he wrote in an email to former bitcoin core developer, Mike Hearn. It’s in good hands with [bitcoin core developer] Gavin [Andresen] and everyone. Hearn, says the email is genuine.

A colorful legend emerged: In order for bitcoin to be truly decentralized it couldnt have a single point of vulnerability, so Nakamoto wrote himself out of the code as a gift to the world, entrusting a motley crew of open-source developers to shepherd its growth into a global currency not dependent on banks or governments. Nine months later, Gavin Andresen appears to have moved the codebase to Github, a competing repository.

Contrary to what the email to Hearn seems to indicate and what the Sourceforge trail appears to show, Wright claims he did not agree to the transfer of power. He says a new crop of Bitcoin developers, including Wladimir van der Laan, the former lead maintainer of the code repository, circumvented the administrator controls Wright used to manage the codebase when they moved the software to Github and then changed the license there. Essentially, Wright claims, bitcoin was stolen. What I didn’t expect was people to redo everything like that to bypass my administrator control, he says. So they set up completely new sites, and moved me out. In an email to Forbes, van der Laan denied moving the codebase. He also denied changing the license. This was done by Satoshi, he wrote.

Through it all, Wrights intellectual property work continued.

In April 2013, Kleiman died, leaving his brother, Ira, as the representative of his estate. Through the W&K business, that estate owned intellectual property related to bitcoin and perhaps 1.1 million bitcoins, currently worth $33 billion, obtained by mining the cryptocurrencythough no one has shown they have Nakamotos private key, which would be needed to move those assets.

In 2015 Wright founded Sydney-based DeMorgan Group, a company described in a statement as an alternative currency research and development firm focused on next-generation banking. He transferred ownership of much of his work on bitcoin to DeMorgan and announced it had qualified for up to a $54 million cash rebate designed by the Australian Tax Office to stimulate innovation. This rebate will strengthen the groups cash position, he said in a statement at the time. And is an important source of funds for our development activities.

As the business grew that summer, Wright signed a deal with former gambling entrepreneur Stefan Matthewswho claims to have received a copy of the bitcoin white paper from Wright before it was publishedto buy DeMorgans intellectual property for AUD $1.5 million and move it to a U.K. company now known as nChain. The arrangement for a total of nearly AUD $15 million also included a AUD $3.5 million service agreement with Wright doled out over five years and gave a 37% stake in the new enterprise to Wright and his second wife, Ramona, without identifying the majority owner. The deal with Matthews also moved control of what Wright estimates is about 90% of the intellectual property he created to nChain. Later, the majority owner was revealed to be Robert MacGregor, the founder of Canadian payments firm nTrust. Forbes attempted to contact MacGregor at two email addresses with which he has been associated, both of which bounced back as undeliverable.

On December 8, 2015, Wright became a controversial public figure in the crypto world after Wired and Gizmodo published separate reports based on anonymous leaks, alleging there was a very good chance he was Satoshi Nakamoto oras Wired put ita brilliant hoaxer who very badly wants us to believe. Wright says the Wired and Gizmodo articles are based on information from Ira Kleiman. In order to fabricate a story about his brother that never occurred, Ira forged documents, made false statements and used multiple emails to contact the journalists pretending to be multiple people. He did this in order to gain money he was not entitled to.

Wrights newfound fame changed the tone at nChain, according to Matthews, who is the companys chairman. Matthews says that while his vision for the company was always as a long-term software and intellectual-property developer, MacGregor saw in Wright a Steve Jobs-type figure he could put on stage to drive up the value of the company before selling it. He wanted to sell everything to Silicon Valley, Wright concurs. And didn’t bother to get my opinion on what I think of Silicon Valley before he did it.

Begrudgingly, Wright spoke at multiple events, including a panel with another Nakamoto suspect, Nick Szabo, projecting his best impression of a tech-entrepreneur persona, and both he and Matthews claim a number of blog posts where Wright was identified as the author were actually written by MacGregor. The strategy was to culminate with a number of proof sessions that would once and for all convince the world that Wright was Satoshi Nakamoto. In April 2016, entrepreneur Jon Matonis and software developer Andresen witnessed demonstrations they say appeared to show Wright signing a message to the bitcoin blockchain with an encrypted signature associated with Satoshi Nakamoto; both then publicly stated they believed his claim.

Even though Wright appeared to sign with the Nakamoto signature, doubts about the authenticity of his proofs quickly surfaced. A Vice report showed what appears to be multiple ways the signature could have been faked. A written explanation Wright published the following month drew a rebuttal from security researcher Dan Kaminsky, who said the messages could have been sent without knowledge of Nakamotos private key, a kind of password.

In an apology on his website, Wright appeared to acknowledge the proof wasnt satisfactory, but he stood by his claim to be Nakamoto. As the events of this week unfolded and I prepared to publish the proof of access to the earliest keys, I broke. I do not have the courage. I cannot, he wrote. When the rumors began, my qualifications and character were attacked. When those allegations were proven false, new allegations have already begun. I know now that I am not strong enough for this.

Wright has not repeated his proof to this day, nor has he moved any bitcoin from Nakamotos account, which would irrefutably prove that he has knowledge of the bitcoin creators private key. One method or the other is likely to be required in the upcoming U.K. court hearings. Matonis article declaring his belief in Wright is still available on his Medium site, but this year, Andresen appended a note to his original May 2016 declaration saying it was a mistake to trust Craig Wright as much as I did, although he did not retract his statement that Wright was Satoshi Nakamoto.

Over the next few months of 2016, Matthews says, Wright mostly stayed home, sending him occasional ideas for inventions. The enmity between Wright and MacGregor escalated. I had to act as referee between some unbelievable altercations between the two of them, says Matthews. He said to me that he wanted nothing more to do with Craig Wright or nChain. Matthews says he put together a Maltese private equity fund to buy out MacGregor, and by November 2016 MacGregor had left the company.

Matthews started looking for new money.

It didnt take him long to find former billionaire Calvin Ayre, who was briefly on the U.S. Immigration and Customs Enforcement’s Most Wanted list for operating a gambling business, Bodog, alleged to be illegal in the State of Maryland. We considered ourselves completely legal, Ayre says. And at one point, it was one of the largest online gaming companies in the world. In July 2017 he pleaded guilty to a lesser charge, leaving the company, and reinventing himself as a private investor. Matthews, who was running Ayres venture capital work, says he met Wright in the mid-2000s when the inventor helped perform a security audit of his gambling employer Centrebet. Matthews thought the two would hit it off. He brought Craig in, says Ayre, telling me there’s a guy that I’ve known since 2006. I know for a fact that he’s Satoshi. So we’d like to come talk to you because he needs some help.

Matthews flew from his home in Manila and Wright from Australia to meet Ayre in person on the rooftop of his Vancouver penthouse. The trio spent two days drinking red wine, getting to know each other, and generally having fun. Calvin and Craig, from the moment they laid eyes on each other when I introduced them, there was something magnetic there, says Matthews. The meeting resulted in Ayre investing in nChain. Stefan and I pulled him out, says Ayre, put some infrastructure around him and created a whole ecosystem.

If nChain was the foundation of the ecosystem, they next set about installing the studs and beams. In August 2017 Ayre bought crypto-news site CoinGeek. It is written by authors who use a mix of their real names and undisclosed pseudonyms to counter the misinformation they say was being spread about the origins of bitcoin. In 2018 Wright, Ayre and Matthews launched Bitcoin Satoshi Vision (BSV), a crypto token based on a version of bitcoin from before 2017 that didnt include changes that made the currency more private, which Wright disagrees with. You can mix, you can move and now there’s no record, he says, of transactions under the revised system. It’s the Platonic ideal of the Ring of Gyges. Basically, pure secrecy and hope that the world goes okay.

BSV has met with modest success, having reached a market value of $767 million, according to CoinGecko, No. 54 on the list of cryptocurrencies by size; market leader bitcoin is worth $594 billion. Wright says he owns a little BSV, Ayre says he owns some, but not massive amounts, Matthews did not respond to a query about his BSV ownership.

In April 2019, Wright registered two copyrights with the U.S. Copyright Officeone for the bitcoin white paper, the other for the softwaretriggering a string of apparent copycats making similar claims. The next month, the agency published a statement saying that the Copyright Office does not investigate the truth of any statement madeIn the case of the two registrations issued to Mr. Wright, during the examination process, the Office took note of the well-known pseudonym Satoshi Nakamoto, and asked the applicant to confirm that Craig Steven Wright was the author and claimant of the works being registered. Mr. Wright made that confirmation.

If Wright is ever to convert that IP into cash, it will likely be through nChain, run from London, where Wright lives, but officially incorporated in crypto-friendly Zug, Switzerland. Nchain essentially makes money from the royalties it gets on licenses it has granted and consulting fees. Though largely funded by Ayre, Wright says a private equity fund based in Liechtenstein is also an investor and that his wife is a trustee. When asked to clarify if nChain has trustees, or if he was actually talking about the Tulip Trust, which she helps run, Wright says the trust is linked to nChain. To say that Wright comes across as cagey during interviews is understatement.

I purposely don’t have any visibility or insight, says Wright of the trusts inner-workings , with a laugh. As soon as I know something, I have people wanting me to tell it to court, so I make sure I don’t know it. After a long pause he adds: Im intentionally not-knowing. Documents in a suit against Wright brought by the Kleiman estate indicate the existence of at least three Tulip Trusts.

Even with a staff of 260, Wright claims this will be the first year nChain is profitable. Chief Intellectual Property Officer, Robert Alizon, says the company has five individual licensees and he expects 20 by the end of the year. His main goal, he says, is to help entrepreneurs building on the BSV blockchain to create profitable businesses, but nChain is also setting the stage to charge developers who are creating projects using other applications of blockchain. We want to essentially be supportive of the ecosystem who are choosing BSV, says Alizon. And obviously, if people are competing without paying their dues, we also need to start policing that. Both if you operate in BSV or outside of BSV, you would be both entitled and required to take a license from nChain. David Pearce, a Birmingham, England-based lawyer who has tracked 440 nChain patents in Europe alone, says that a lot of these patents are, for better or worse, valid. Though hes filed objections to three nChain patents on behalf of bitcoin consultant Arthur van Pelt, he believes most of the others have been validly granted by the European Patent Office, which is generally considered one of the toughest in the world.

Theres a catch there though. In spite of nChain having 765 patents covering topics including tokenization, identity management and micropayments, in jurisdictions including the United States, Europe and China, Forbes could only find one company that is paying for BSV licenses: Oslo-based supply chain firm Unisot, which paid a one-time license fee. Among the other licensees, e-Livestock, which is creating software to let people in developing nations use farm animals as collateral, says it didnt pay for its multi-year license. Ted Rivera, of blockchain-based movie studio MyMovies, says Wright gave him the rights to use streaming and encryption patents, though Wright told Forbes that was not the case. The Provincial Government of Bataan in the Philippines signed a memorandum of understanding with nChain in December, and if it moves to a formal agreement could co-develop patents jointly owned with the company.

Bryan Daugherty, chairman of New Hampshire-based Smart Ledger, which is building on BSV, says he doesnt have a license, and doesnt believe his company needs one for its work, but feels sheltered by nChain. Theyre protecting us, he says, hopefully, in the sense of creating a good, friendly atmosphere for the emergence of this technology beyond the crypto casino that we’ve seen today.

Behind the scenes, as Wrights team is building out its BSV business, a complex labyrinth of legal battles that could impact the future of the industry rage. In February 2018 the estate of Dave Kleiman sued Wright in the U.S. court for the Southern District of Florida, alleging he perpetrated a scheme against Daves estate to seize Daves bitcoins and his rights to certain intellectual property associated with the Bitcoin technology. Specifically that owned by W&K.

As that lawsuit dragged on, in January 2021, Wrights team sent a cease-and-desist letter to the crypto subsidiary of payment company Block, asking it to remove a copy of the bitcoin white paper from its site. Lawyers for patent trade group, the Crypto Open Patent Alliance (COPA), responded with a letter asking Wright to prove he wrote the white paper, followed by a lawsuit against him in the U.K. High Court of Justice, requesting that it rule on the inventors claim to be the author.

A lot of these patents are, for better or worse, valid.

Back in Florida, in December 2021, the jury in the Kleiman estate case dismissed nearly all the claims against Wright except conversion, or pretending he owned intellectual property that wasnt his. W&Knot the estatewas awarded $100 million in damages and $43 million in interest. Wright says The IP in W&K was unrelated to Dave in any way other than my gifting him shares. Along with the cash, Wright may have lost some credibility. The judge in the case wrote that she found that he had forged documents, and she is not convinced that there really is a Tulip Trust: The totality of the evidence in the record does not substantiate that the Tulip Trust exists.

But Wright may still get the last laugh. His second wife, Ramona Ang, and his ex-wife have filed documents claiming that not only does Ira Kleiman not hold a controlling stake in W&K, but they are part owners, opening the distinct possibility that the judgment could accrue in part to Wrights own family. Though a federal judge in Florida declined to weigh in on the dispute, Wright says hes working on intellectual property owned by W&K. The only intellectual property held in the company exists in my head, he wrote in an email to Forbes. All of the documentation, he adds, was with Dave Kleiman and he has obviously not kept them in a way that people can access.

In February, Wright again went on the offensive. Tulip Trading, a company he says is owned by the Tulip Trust, sued 16 bitcoin developers in the U.K. Royal Courts of Justice, including van der Laan, claiming they have a fiduciary responsibility to make changes to the bitcoin code he believes would return $3 billion worth of the cryptocurrency that he says was stolen from himseparate from the $33 billion worth of bitcoin allegedly owned by W&K. Pearce, the patent lawyer, says that if a judge in the U.K. findswe’re looking at fractions of a percent, a snowball’s-chance-in-hell type of oddsthat there is some sort of fiduciary duty, it would obviously be a big issue for the U.S. in particular.

Then in June, the U.K. High Court of Justice said the COPA case, the bitcoin developers case, and two others would jointly be tried, starting in January 2024. Specifically, theyll be looking at what the court calls the identity issue common to each case. None of these cases get anywhere until Craig Wright proves that he’s Satoshi Nakamoto, says Pearce. They’re all sort of IP-related stuff. But they all depend on Craig Wright being Satoshi Nakamoto. And he’s not.

Jess Jonas, the chief legal officer of the Bitcoin Legal Defense Fund, which represents developers working on projects related to the cryptocurrency, is less sanguine.People can’t just bury their head in the sand and say, Well, you know, he’s not Satoshi, so the court will figure it out and it’ll go away. She adds, The developers and other industry participants are being put to significant expense of having to respond to these claims, and they must because what’s at issue in this case, is one of the most important open-source licenses out there. And if that protection doesn’t exist, then why would people put themselves at risk and develop free and open source software for the public to use?

When asked if he was concerned about the impact his patents could have on bitcoin and other open-source developers, Wright responded: Theyre public. Its not my fault if people dont check these things. Though Wright says theres a plan to more broadly enforce his intellectual-property rights, hes currently focused on the current cases and on getting licensing fees from those willing to pay. One possible future defendant is Apple, whose distribution of the bitcoin white paper on some devices Wright has claimed is a violation of copyright.

As Wright prepares for the January High Court hearings, he says much of his legal strategy will hinge on the movement of the bitcoin codebase to Github, and the alleged circumvention of his administrator control. He describes it as a breach of the U.K Computer Misuse Act of 1990. Says Wright, It’s a criminal offense.


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