Jury hits Bitcoin ‘inventor’ with $100M liability, but he gets to keep billions in crypto
A federal court jury in Miami has decided that a self-described Australian inventor of Bitcoin owed the estate of deceased Palm Beach County resident and computer forensics expert David Kleiman millions of dollars in compensation for the men’s business partnership between 2011 and 2013.
The jury, however, did not award Kleiman’s estate any of the original 1.1 million bitcoins, worth about $50 billion based on Monday’s value of the digital currency, the estate sought as part of its civil lawsuit. And the panel did not decide whether the Australian, Craig S. Wright, is in fact Bitcoin’s true creator.
Kleiman’s estate, represented by his brother, Ira, should be entitled to at least $33.3 million, based on the jury’s verdict. That’s a third of the $100 million worth of intellectual property rights the jury awarded to the entity David Kleiman and
Wright had formed a decade ago and based on the late South Florida man’s ownership stake.
Lawyers representing Kleiman’s family were satisfied with the verdict the jury rendered Monday.
“Many years ago, Craig Wright told the Kleiman family that he and Dave Kleiman developed revolutionary bitcoin-based intellectual property,” attorneys for Kleiman’s estate said in a statement. “Despite those admissions, Wright refused to give the Kleimans their fair share of what Dave helped create. We are immensely gratified.”
The weekslong trial hinged on the relationship between Kleiman and
Australian-British computer scientist Wright, who has claimed over the years he had invented the cryptocurrency, under the pseudonym Satoshi Nakamato. Since its creation in 2009, Bitcoin, now the world’s most prominent cryptocurrency by market value, has seen its value climb as high as almost $69,000 in November.
Crypto observers say that although there are key documents that suggest Wright is Satoshi, he has yet to move the 1.1 million Bitcoins out of Satoshi’s digital wallet, leaving doubts about the veracity of his claims.
Wright welcomed Monday’s verdict.
“This has been a remarkably good outcome, and I feel completely vindicated,” he said in a statement.
Peter Tragos, a Clearwater-based plaintiff’s attorney not affiliated with either party who was following the trial, said the jury’s verdict was narrowly cast around evidence regarding what amounted to unjust enrichment, or what is legally known as conversion.
The jury essentially found Wright and Kleiman had been legal partners in an entity called W&K Info Defense Research, that Wright owed this entity $100 million and that Kleiman’s estate is entitled to one-third of that amount but no bitcoins.
Kleiman, a former U.S. Army Soldier of the Year and former Palm Beach County Sheriff’s detective, died in 2013. Wheelchairbound since 1995, his career eventually took him into the world of computer forensics, and at some point he struck up a correspondence — and, later, a business partnership, with Wright.
However, the jury could not find evidence that a formal partnership existed between Kleiman and Wright during the creation of Bitcoin. While documents put Kleiman in discussions during the founding moments of the digital coins, Tragos said evidence presented during the trial indicated Kleiman lacked the coding skills necessary to have programmed the cryptocurrency. More importantly, no contract existed between Kleiman and Wright, or with anyone else indicating a formal partnership around bitcoin.
“Dave Kleiman seemed like someone Craig would involve for certain portions, or for wordsmithing, or to bounce ideas off of, but it was basically proven that (Kleiman) was not a coder — that couldn’t move hard drives, and especially so when he was in the hospital, that he wasn’t able to do that,” Tragos said. “That’s according to Dave’s friends and Craig.”
In an interview Monday, Ira Kleiman said he was disappointed in the damage amount handed down by the jury, and that his late brother deserves more credit as a Bitcoin creator based on Wright’s comments during the trial. He said he did not know whether he would appeal.
“[Wright] certainly made it sound like Dave was a key part of the invention of Bitcoin,” Kleiman said.
Attorney Tragos said the trial left key questions about Bitcoin’s origins unresolved.
“Even after this trial, the people who thought (Wright) was Satoshi will most likely still think he was, the people who don’t will most likely still think he wasn’t,” he said.