Craig Wright’s Hidden Treasures: Court Order to Unlock the Tulip Trust

Craig Wright’s Hidden Treasures: Court Order to Unlock the Tulip Trust

A U.S. judge ruled that Craig Wright must give up half of what he and Dave Kleiman mined together — but how much is that?

Since early 2018, Craig Wright, a controversial Australian computer scientist and tech entrepreneur, has been the defendant in a lawsuit filed on behalf of the estate of Dave Kleiman, Wright’s late business partner. The claim alleged that following Kleiman’s death in 2013, Wright unlawfully appropriated more than a million Bitcoin (BTC) that the duo had mined jointly in the early years of the cryptocurrency, as well as some related intellectual property. After a recent resolution, the case seems to be decided — although many important questions remain unanswered.

Missing keys and bonded couriers

In late August, after months of litigation, Magistrate Judge Bruce E. Reinhart of the Southern District of Florida ruled in favor of the Kleiman estate, which is represented by Dave’s brother Ira. In his decision, Reinhart reproached Wright, saying that “Dr. Wright’s demeanor did not impress me as someone who was telling the truth,” and also admonished the defendant for engaging in a “willful and bad faith pattern of obstructive behavior, including submitting incomplete or deceptive pleadings, filing a false declaration, knowingly producing a fraudulent trust document, and giving perjurious testimony at the evidentiary hearing.”

The judge didn’t buy Wright’s version of the story. The Australian claimed that the partnership between Dave Kleiman and himself, acting under the alias Satoshi Nakamoto, was the entity responsible for inventing Bitcoin. Having realized at some point that digital currency had come to be used predominantly for funding illicit activity, Wright decided to distance himself from the project. Wright maintains that he and Kleiman put some 1 million BTC they’d mined together into what they called the “Tulip Trust,” a storage unit secured by the two men’s cryptographic signatures.

Although Wright lost access to the funds when Kleiman died, the self-proclaimed Satoshi Nakamoto says that the missing keys needed to unlock the trust will be somehow delivered to him by a bonded courier. The distrustful judge responded with a literary allusion: “Apparently, dead men tell no tales, but they (perhaps) send bonded couriers.”

Related: Bitcoin Creator and Superagent: What You Should Know About Craig Wright

Wright and his counsels pledged to challenge the order, although they had to request a two-week extension of the time afforded to file the motion. At the same time, Wright argued that, should Ira end up with half of the Tulip Trust, he will need to sell a huge chunk of it in order to be able to pay a 40% estate tax, which would inevitably tank the Bitcoin market.

The markets, however, didn’t seem particularly intimidated, as no major price movements occurred in the days following Wright’s statement. Ryan Selkis, CEO of crypto research firm Messari, told Bloomberg he was not concerned about Wright transferring BTC to Ira Kleiman because he didn’t think Wright had any to transfer. RT host Max Keiser even predicted that the realization of Wright lacking the money he is ordered to pay would drive BTC price steeply upward.

On Sept. 17, both sides filed a joint motion to extend all discovery and case deadlines by 30 more days to facilitate “good faith settlement discussions” in which they have stated to be engaged. The parties claim in the document that they are currently finalizing “all relevant terms,” and that pushing back all the deadlines — including the trial — would help them reach a final, binding settlement agreement. 

Strategic narratives

Some crypto and tech publications were quick to report that the court ordered Wright to pay over $5 billion worth of Bitcoin to Keliman’s estate, which is, in fact, not exactly what Reinhart had ruled. Indeed, Reinhart’s order establishes that all Bitcoin mined by the Kleiman-Wright partnership between 2009 and 2013 — as well as whatever Bitcoin-related intellectual property the duo had produced throughout the same period — belongs to Wright and Kleiman’s heirs in equal parts. 

However, the judge never produced a definitive determination on how much Bitcoin is to be divvied up or what specific intellectual property the ruling applies to. This does not come across as surprising, given that the court has been unable to establish these details to date.

There are two reasons why the “$5 billion” language has gained so much traction in the cryptosphere. One is that the original claim filed with the U.S. District Court mentioned “hundreds of thousands of bitcoin,” the ownership of which was contested. When the claim was filed in 2018, the valuation of Kleiman’s half of the alleged Tulip Trust exceeded $5 billion, which remains its value today. What helped to further engrave the figure in the crypto community’s collective mind is Wright’s interview to Modern Consensus.

In a conversation with an overly sympathetic interviewer, Wright stated: “The judge ordered me to send just under 500,000 BTC over to Ira. Let’s see what it does to the market. I wouldn’t have tanked the market. I’m nice.” He mentioned the figure “5 billion” several times, even complaining how the newfound knowledge of their family’s enormous wealth would ruin his children’s lives. 

Granted, it is extremely unlikely that any litigation of this kind would passingly establish the true identity of Satoshi Nakamoto. The judge in the present case explicitly stated: “First, the Court is not required to decide, and does not decide, whether Defendant Dr. Craig Wright is Satoshi Nakamoto, the inventor of the Bitcoin cybercurrency.” Yet, Wright seems to be leveraging the case to promote his “I am Satoshi” narrative.

Related: Kleiman Files — Craig Wright Controversy Gets Complicated

It is a widespread belief that the massive pool of Bitcoin that was mined in 2009 and 2010 and has since remained dormant belongs to the founding father of cryptocurrency. The amount of digital currency stored in the Tulip Trust (1.1 million BTC) coupled with Wright’s description of the timeline of its emergence loosely correspond with the semi-mythical story of the original whale stash. According to crypto researcher Sergio Lerner, some 980,000 of the first Bitcoins to be mined can be traced back to a single mining entity, and they have never been moved.

The court’s success in linking Wright’s identity to the original trove of more than a million digital coins would effectively validate him as the inventor of Bitcoin. It would also mean that Wright has to pay some $5 billion to Ira Kleiman — who, in turn, would have to flood the market with a significant share of the Bitcoin obtained in order to pay a 40% estate tax. 

Wright’s alleged, temporary lack of access to the so-called “Satoshi funds” is his excuse for why he still hasn‘t shown the world this solid evidence to support his claims and why he has yet been unable to comply with the court order. It is shaky ground indeed, and Wright can’t stay there forever.

What comes next

It looks like the case has been effectively decided on its merits: Wright will owe Dave Kleiman’s estate half of what they jointly produced. Even though Wright’s side has pledged to appeal the latest ruling, it seems all but impossible that any judge would ever overturn it without shocking new evidence. As blockchain lawyer Stephen Palley shared with the Financial Times: “I view this case as being over. When you have two federal judges that have said you’re a ducking [sic] liar, you’re not going to win,” although he added that the case may still linger for six months to a year.

Many intriguing side developments, however, are likely to emerge in the coming months. A lot hinges on how much of Wright’s Bitcoin (if any at all) officials will be able to discover. At this point, since the defendant failed to produce any BTC addresses (save for a few unverified ones that were produced under a protective order), the court does not possess much information on his assets.

As the civil process ensues, there will likely be more discovery requests — and even if Wright’s counsels manage to buy some time appealing the decision, the funds locked up in the Tulip Trust should finally become available in early 2020, according to Wright himself.

Once the Bitcoin jointly mined by Wright and Kleiman is located, the Australian will have to give up half of it to his late business partner’s estate. If he refuses to honor the court order, Wright may face some tangible consequences, as Layla Tabatabaie, senior consultant at the blockchain PR firm Wachsman, stated to Cointelegraph:

“Wright would be found in contempt of court, and the court may impose imprisonment or monetary fines in fiat currency against him. Being held in civil contempt of court could actually be worse than being held in criminal contempt, because you aren’t afforded the same constitutional rights as a criminal defendant. Barring any egregious actions by Wright, it is far more likely that the punishment would begin with mounting monetary fines.”

In other words, failing to produce the Bitcoin addresses in which his and Kleiman’s funds are stored will, at some point, become costly for Wright.

Another consequential detail that makes this case interesting to follow and could render it a landmark case for the crypto industry is how exactly the court will go about calculating the amount of money to be paid to the plaintiff and whether repayment will be in coin or fiat. 

One way to look for directions on what could happen is to examine the comparable cases that involve digital securities. The Securities and Exchange Commission has, on several occasions, ordered rescission to wronged crypto investors as part of a securities settlement. However, according to Dror Futter, a partner at law firm Rimon P.C., the regulator has not addressed this question. 

So, as there is no guidance as to how such payouts are to be executed — whether in fiat or crypto, and if in crypto, at what exchange rate — the next few months should bring more certainty to the many undefined variables in this equation.

Craig Wright Asks for 30-Day Extension to Delay 500K Bitcoin Payout

Craig Wright Asks for 30-Day Extension to Delay 500K Bitcoin Payout

Self-proclaimed Bitcoin creator Craig Wright has entered extensive settlement negotiations with Dave Kleiman’s estate.

Craig Wright, a self-proclaimed inventor of Bitcoin (BTC), has asked for another extension of a deadline to settle his case involving his late partner Dave Kleiman.

Wright entered negotiations

On Sept. 17, Wright’s attorneys filed a new 30-day extension for all discovery and case deadlines, citing the need to facilitate the ongoing discussions with Dave Kleiman’s estate as the parties have entered “extensive settlement negotiations.”

According to the document, Wright’s lawyers and Kleiman’s estate have reached a non-binding agreement to settle the matter and are continuing to negotiate and finalize all relevant terms. 

Citing a number of upcoming case deadlines such as Wright’s opposition to Judge Reinhart’s sanctions order that is due on Sept. 24, and plaintiffs’ motion for attorneys’ fees due on Sep. 20, the defendant party claimed that reaching a final binding settlement is the “best interests of both parties” and this requires the extension period.

30 more days after a two-week extension

Following the court’s order on Aug. 26 requiring Wright to hand over 50% of the roughly 1 million Bitcoin Wright allegedly mined with Kleiman, Wright’s attorney Andres Rivero first filed for a 14-day extension on Aug. 30. 

In the filing, Wright’s party also intended to challenge Reinhart’s order in favor of Dave Kleiman’s estate, which required him to pay 500,000 Bitcoins, arguing that Wright did not concede that the judge had the power to enter the order.

In late August, Wright suggested that Dave Kleiman’s estate could experience tax issues with Bitcoins that they won from him in the court case.

Apple Hint, XRP Dump, Mystery $1 Billion Transfer: Hodler’s Digest, Sept. 2–8

Apple Hint, XRP Dump, Mystery $1 Billion Transfer: Hodler’s Digest, Sept. 2–8

Ripple users are left infuriated after the company’s latest XRP dump, Craig Wright challenges 500,000 BTC payout, and Apple says it is watching crypto closely.

Coming every Sunday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Ripple transfers 500 million XRP from its escrow wallet

Ripple turned heads this week when data from Whale Alert suggested the fintech startup has transferred 500 million XRP tokens from its escrow wallet — funds worth $130 million. This isn’t the first time that the California-based company has executed such an enormous transaction, and some factions of the XRP community are angry. Concerned that prices are crashing, Twitter user Crypto Bitlord started a Change.org petition urging the fintech startup to stop dumping, adding: “It’s amazing this sort of behavior is widely accepted in the crypto world.” Thursday saw yet another petition adopt a more sarcastic tone, urging Ripple to increase the dumping of XRP and “unleash the utility!” The company says it is selling XRP to invest in firms that could help its ecosystem grow and to fund its operations.

Craig Wright challenges court order requiring him to pay 500,000 BTC

After last week’s bombshell court ruling that Craig Wright needs to pay 500,000 BTC to the estate of a former colleague — an eye-watering sum worth more than $5.2 billion — the self-proclaimed Bitcoin creator isn’t going down without a fight. The entrepreneur’s attorney has filed documents requesting a 14-day extension so he could file a motion challenging Judge Bruce Reinhart’s order. The document questioned the judge’s authority, and even misspelled his name. Wright’s Florida-based legal team originally had until Sept. 10 to challenge the order but say they need extra time because they were distracted by the impending arrival of Hurricane Dorian.

Apple exec says cryptocurrency “interesting” — has long-term potential

We’ve had the iMac, iPod, iPhone and iPad… could an iCoin be in the cards? Jennifer Bailey, the vice president of Apple Pay, has dropped a hint that the tech giant is keeping a close eye on developments in the crypto industry. She told a CNN journalist at an event in San Francisco: “We’re watching cryptocurrency. […] We think it’s interesting. We think it has interesting long-term potential.” There’s little doubt that Apple’s interest would have been piqued further by Facebook’s white paper for Libra, which was released back in June. Although analysts have said a similar project from Apple “would be a major shot in the arm for crypto,” there would likely be intense scrutiny from U.S. politicians — and it’s unclear whether the company has the stomach for such a fight.

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Burger King starts accepting Bitcoin for online orders in Germany

Big news for German burger fans this week: Burger King has started accepting BTC for online orders. The option of paying in crypto was discreetly added to its delivery website and mobile application in Germany, but it’s unclear whether the payment method is being accepted in the hundreds of physical restaurants it has across the land. This isn’t the first time that the fast-food chain has embraced crypto, either. Burger King Russia began accepting BTC payments in the summer of 2017 — and even introduced the Whoppercoin, its own digital currency.

Someone moved $1 billion for a $700 fee, overpaying 20 times 

There was a lot of head scratching going on this week when someone moved 94,504 BTC — worth a billion dollars — and spent a whopping $700 on fees. Given the sender could have settled the transaction in 10 minutes for a fee of about $35, the crypto community was left baffled as to why they ended up paying 20 times more. The recipient wallet of the astronomical sum is now presumed to be the richest address that isn’t linked to an exchange. Analysis suggests that a substantial amount of the funds originated from the Huobi exchange, and there’s also speculation that the transfer could be tied to the launch of the Bakkt institutional trading platform.

Winners and Losers

At the end of the week, Bitcoin is at $10.436.38, Ether at $180.54 and XRP at $0.26. The total market cap is at $267,239,222,785.

The top three altcoin gainers of the week are Alpha Token, Credit Tag Chain and WomenCoin. The top three altcoin losers of the week are Custody Token, SuperCoin and BigUp.

 

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For more info on crypto prices, make sure to read Cointelegraph’s market analysis

Most Memorable Quotations

“It’s not functional as a currency. The peaks and troughs are like an investment asset and are equivalent to gold. What we need to do is make it more usable and accessible as a currency, but it’s not there yet.”

Jack Dorsey, Twitter and Square CEO

“Satoshi should win the Nobel Peace Prize. We finally have a currency that can assume global reserve status without anyone having to engage in violence.”

Anthony Pompliano, co-founder of Morgan Creek Digital Assets

“Alts never coming back… Sorry.”

Max Keiser, RT host and ex-Wall Street trader

“Ethereum, as many of you know, confounds me. It has shown the way to so many important things. […] But it remains hard to build on, scaling issues abound, and many developers are looking elsewhere.”

Fred Wilson, co-founder of Union Square Ventures

“We’re watching cryptocurrency. […] We think it’s interesting. We think it has interesting long-term potential.”

Jennifer Bailey, vice president, Apple Pay

“I sincerely hope that the people of Europe will not be tempted to leave behind the safety and soundness of established payment solutions and channels in favor of the beguiling but treacherous promises of Facebook’s siren call.”

Yves Mersch, European Central Bank legal official

“You’re such a meme. I feel sorry for Tron investors.”

Josh Ragen, crypto commentator, to Tron CEO Justin Sun

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FUD of the Week

Tron CEO Justin Sun accused of buying 5,000 Twitter followers per day

Crypto cat fight! Tron’s embattled CEO, Justin Sun, was accused this week of buying up to 6,000 Twitter followers a day — likely in an attempt to make his profile seem more popular than it actually is. Figures from SocialBlade show an average of 5,001 accounts started following the Sun on a daily basis from Aug. 20 to Sept. 2. This sparked a withering putdown from crypto commentator Josh Rager, who told Sun: “You’re such a meme. I feel sorry for Tron investors.” Crypto Twitter subsequently reacted with a mix of derision and defensiveness, with one user telling Rager: “He is a meme yes. But that doesn’t mean the product is crap. So far it works quite good.”

Square and Twitter CEO Jack Dorsey: Bitcoin not functional as currency yet

Jack Dorsey gave a candid interview to the Australian media this week, admitting that Bitcoin currently isn’t functional as a currency. But, striking an upbeat tone, he said BTC has potential to get there if it becomes more usable and accessible. The entrepreneur said Square will shift its focus to services that add value, rather than enable money to be moved around, once crypto reaches the magical milestone of becoming the currency of the internet. Dorsey was Down Under for the launch of the Square Terminal, an all-in-one credit and debit card machine.

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Police seize $15,000 crypto thief after he mistakenly disclosed identity

And now, friends, a tale in how not to commit a crime. A man swiped someone’s cell phone and allegedly stole crypto worth $15,472 from a Coinbase account on the device — transferring it to his PayPal account. Perhaps feeling guilty for what he had done, Darren Carter then decided to send an email to the victim to apologize, but instead ended up sending the message to the detective investigating the case. Police went to arrest the suspect but discovered he was already in jail in Connecticut on unrelated charges. Thankfully, the stolen funds have now been returned to their rightful owner. 

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Best Cointelegraph Features

Big Four and blockchain: Are auditing giants adopting yet?

How far have the Big Four companies — Deloitte, PwC, EY and KPMG — come in exploring distributed ledger technology? And can blockchain offer any particular perks? Cointelegraph’s Stephen O’Neal examines their continued expansion into the field.

IRS expands penalties: Which tax mistakes are better not to commit 

The United States Internal Revenue Service says it is digging hard when it comes to crypto — investing tax evasion and poor compliance. Here, Robert W. Wood explores the distinction between willful and non-willful tax flubs in an Expert Take for Cointelegraph.

Crypto, cash and drugs: Crypto use grows as drug trade digitizes

The online drug trade is on the rise. Henry Linver delves into Bitcoin’s involvement in this murky space and asks whether it could completely replace cash in the near future.

Craig Wright Challenges Court Order Requiring Him to Pay 500K Bitcoin

Craig Wright Challenges Court Order Requiring Him to Pay 500K Bitcoin

Craig Wright asked for a 14-day extension to challenge an order requiring him to pay 500,000 Bitcoins to the Kleiman estate.

Self-proclaimed creator of Bitcoin (BTC) Craig Wright is questioning a recent court order requiring him to pay 500,000 BTC to the estate of a former colleague.

Wright questions judge’s power

On Aug. 30, Wright’s attorney Andres Rivero filed a document with the United States District Court for the Southern District of Florida — asking for a 14-day extension to file a motion challenging Magistrate Bruce Reinhart’s order in favor of Dave Kleiman’s estate.

Spelling the judge’s name wrong in the document, Rivero stated that Wright “does not concede that Magistrate Reinhardt had the power to enter the order that he did” — adding that entrepreneur’s legal team will need an additional 14 days to address the legal validity of the order.

Request for extra time

Originally, any motion challenging the order would be due on Sept. 10, 2019 — but Wright’s new request moves it to Sept. 24, Rivero noted in the document.

Wright’s legal team cited a major hurricane threatening Central and South Florida as justification for the extra time. The document reads:

“Central and South Florida are currently threatened by a major hurricane. Hurricane Dorian is expected to make landfall in Florida early next week and counsel for Dr. Wright have been expending significant time preparing for the hurricane, which has limited their ability to work on this matter.”

Concluding the request, Rivero wrote that the motion was “brought in good faith” rather than for the “purposes of delay.”

Cryptocurrency podcaster Peter McCormack, who was previously sued by Wright for accusing him of fraud and falsely claiming to be the real inventor of Bitcoin, questioned Wright’s ability to pay 500,000 BTC at all. In a tweet on Aug. 28, McCormack bet $10,000 that Wright does not have access to that amount of Bitcoin.

The new twist in the ongoing case dates back to a lawsuit filed by the estate of Dave Kleiman in February 2018. It was alleged that Wright stole hundreds of thousands of BTC, worth more than $5 billion dollars at the time of filing, from the late computer scientist’s estate.

Following the judge’s ruling, Wright warned that the payout could bring fresh volatility to crypto markets, as the Kleimans may have to sell a large amount of BTC in order to pay the estate tax.

500,000 BTC Payout, Sudden Slump: Hodler’s Digest, Aug. 26–Sept. 1

500,000 BTC Payout, Sudden Slump: Hodler’s Digest, Aug. 26–Sept. 1

Bitcoin loses support for five figures, Craig Wright ordered to pay 500,000 BTC, and China’s digital currency may be further away than first thought.

Coming every Sunday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Sudden slump sees Bitcoin lose support for five figures

After managing to maintain support above $10,000, Bitcoin (BTC) finally succumbed to bearish pressure this week — shedding $500 in a matter of minutes on Wednesday to stabilize at about $9,500. Altcoins weren’t immune to the sell-off either. Some, including Ether (ETH) and Binance Coin (BNB), actually fared far worse in comparison. Analysts have warned that monthly charts are also looking “ugly,” but optimists claim conditions in the Bitcoin market at present are not too dissimilar to the middle of 2016, when momentum was about to start taking the world’s biggest cryptocurrency to its record high of $20,000. It’s fair to say that other predictions haven’t aged all that well. Nigel Green, the CEO and founder of financial consultancy firm deVere Group, said he believed $10,000 was the new normal bottom price for Bitcoin — a support level that was wiped out a day later.

Craig Wright must forfeit 50% of Bitcoin in court case

The long-running case between Australian entrepreneur Craig Wright and the family of his late business partner Dave Kleiman looked like it was reaching its grand finale this week. A judge has ordered Wright to pay Kleiman’s brother Ira a whopping 500,000 BTC — approximately half of the sum that the self-proclaimed Satoshi Nakamoto allegedly stole. In an interview after the bombshell ruling, Wright suggested that the payout — worth approximately $5 billion — could inspire fresh volatility in the market, as the Kleimans may have to offload a substantial amount of BTC in order to pay federal estate tax at a rate of 40%. With many of Wright’s supporters falling silent, Bitcoin SV (BSV) proponent Calvin Ayre seemed to be a lone voice speaking out in his favor — and even then, Ayre erroneously claimed that a court had declared that Wright invented Bitcoin.

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Chinese central bank ‘crypto’ not launching in November — state media

Confusion has been swirling around the People’s Bank of China’s plans to launch a form of digital legal tender — namely when it will become publicly available, and how it will work. There had been murmurings that the cryptocurrency could appear as soon as in November, but a Chinese state-backed newspaper has since claimed such reports are inaccurate. Beijing is widely regarded to be in a race with Facebook (and by extension the U.S.) to launch the first digital currency on this scale. Earlier in the week, another report had suggested that the online retail giant Alibaba and internet behemoth Tencent would be among eight organizations given access to the mystery China’s crypto first.

Facebook hires lobbying firm to ease regulatory pressure on Libra

In other Libra developments, Facebook hired a Washington-based lobbying firm this week as it attempts to assuage concerns about the stablecoin. The FS Vector consultancy firm is going to deliver support on “issues related to blockchain policy,” according to the lobbying registration documents that were filed with the United States Congress this week. It seems John Collins, the FS Vector executive who is heading up the account, will have his work cut out for him. With Facebook choosing to register its Libra Association in Switzerland, American politicians met with the nation’s financial authorities to learn more about how they work. Alas, representative Maxine Waters said she was still concerned about “allowing a large tech company to create a privately controlled, alternative global currency.”

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Bitcoin returns have dwarfed every tech IPO since 2010, new data shows

338,433,233% is an astronomical number. And, according to a new analysis of Crypto Godfather, that’s how Bitcoin has performed since 2010 — comfortably outstripping the returns offered by mainstream investments in internet firms. The earliest price data shows BTC was worth just $0.003 in March 2010, compared with a price point of $10,100 at the time Crypto Godfather’s data was shared. By comparison, the most lucrative investment in an internet firm since its public listing — in online advertising platform The Trade Desk — sealed a profit of 1,317% over the same period. Although such gains aren’t to be sniffed at, the difference is eye watering.

Winners and Losers

At the end of the week, Bitcoin is at $9,598.26, Ether at $170.25 and XRP at $0.25. The total market cap is at $248,483,939,869.

The top three altcoin gainers of the week are ZoZoCoin, Supercoin and Bitball. The top three altcoin losers of the week are Credit Tag Chain, HashNet BitEco and Soarcoin.

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For more info on crypto prices, make sure to read Cointelegraph’s market analysis

Most Memorable Quotations

“While I appreciate the time that the Swiss government officials took to meet with us, my concerns remain with allowing a large tech company to create a privately controlled, alternative global currency.”

U.S. Rep. Maxine Waters

“Shares similar characteristics to gold in that there will only ever be a finite amount in existence (21 million), it’s decentralised, its price is not affected by inflation and it has the added benefit over gold of lower storage costs.”

Simon Peters, eToro UK analyst, about Bitcoin

“I’m thinking about forking $XRP so we don’t have to deal with the founders dumping. — This will be a community effort. Retweet if you’re in.”

Twitter user @CryptoBitlord

“Bitcoin has again failed the safe haven test. On Friday, as escalating trade tensions sent global stock markets plunging, investors sought refuge in monetary safe havens. The Japanese yen, Swiss franc, and especially gold all moved higher. Yet Bitcoin plunged by more than stocks!”

Peter Schiff, Euro Pacific Capital chairman, gold bug

“Roughly about 90% I would put into the category of investments slash speculations, so it could be people who have a long term view on it, people who like to trade it and about 10% would be transactions.”

Marcus Swanepoel, CEO of Luno 

“Bitcoin is a coiled spring about to explode higher.”

Max Keiser, Bitcoin bull

“The banks and the financial institutions are not going anywhere. They’re changing, but they’re not going away. So, we’re going to have to all play nice together.”

Jonathan Reichental, CEO of Human Future, professor at UC Berkeley, former chief information officer for the city of Palo Alto

“Theoretically, more indicators of BTC involvement in serious illicit activity could further the image of BTC as the “money of dark net operators and criminals,” which could reduce broader adoption — and in turn, the price.”

Jessy Spiro, Chainalysis’ global head of policy 

Prediction of the Week

Bitcoin price 93% unlikely to hit $20,000 by end of 2019, data claims

Hopeful that Bitcoin will surpass its all-time high of $20,000 this year? I wouldn’t hold your breath, if I were you. New analysis suggests the odds are lengthening for investors betting on records being broken in 2019. There is now a 93% chance that this milestone will not be reached — nonetheless, October is being billed as “the most interesting month” for Bitcoin because of how the U.S. Securities and Exchange Commission is set to approve two Bitcoin exchange-traded funds (ETFs) — a review that could deliver a “watershed moment.” Not all forecasts are pessimistic, and according to LedgerX’s Oracle, there is a 31% chance of BTC/USD hitting $15,000 by Dec. 28.

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FUD of the Week

French police shut down 850,000 computer botnet used for cryptojacking

Police in France have shut down a massive botnet that was used for Monero (XMR) cryptojacking. It’s believed the botnet was distributed by sending virus-laden emails that promised victims erotic pictures or an easy way to make cash, and further propogated through infected USB drives. French officials added that the botnet had “massive firepower, enough to bring down all the (civilian) websites on the planet.” The unknown hackers installed a program to mine XMR without a user’s permission or knowledge — and bad actors also managed to extort money via ransomware, as well as to steal data from Israeli hospitals. The botnet’s server was located in Paris, and hundreds of thousands of affected computers has now been disinfected.

Report: Cryptojacking campaigns up by 29%, ransomware attacks up 118%

McAfee Labs says there was a substantial rise in cryptojacking campaigns and ransomware attacks in the first quarter of 2019. Instances of cryptojacking — where mining software is installed and operated without a user’s permission — have leapt up by almost a third. New malware families have also been detected for users of Windows and Apple devices. Meanwhile, ransomware campaigns have more than doubled — with one of them affecting a U.S. media company’s ability to print newspapers.

Senior UN official: Cryptocurrency makes criminals harder to catch

Chief of the United Nations Office on Drugs and Crime Global Cybercrime Program has claimed that cryptocurrencies are making it difficult for the authorities to combat money laundering. Neil Wals claimed that cybercrime and terrorism financing are also becoming harder to detect — and he suggested that crypto assets are being used by global child sexual exploitation networks. His warning came after U.S. Treasury Secretary Steven Mnuchin vowed that government agencies will be doing everything they can to prevent BTC and other cryptocurrencies from becoming an “equivalent of Swiss-numbered bank accounts.”

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Crypto custody market overview — who are the biggest players?

With custody providers exploding in popularity, Cointelegraph’s Shiraz Jagati examines which companies are dominating this fledgling industry — and explores why they are gaining traction.

Paranoia and love: What pushes tech? A discussion with Prof. Reichental

Jonathan Reichental is widely regarded as one of the most competent opinion leaders in the innovation field of our time. He even counts former U.S. president Barack Obama among his followers on Twitter. Take a look at Cointelegraph’s head of features Kristina Lucrezia Cornèr’s in-depth interview with the professor.

Is Bitcoin protected as speech under the First Amendment? Experts answer

A long-held concept in the crypto world states that Bitcoin is code and code is speech — with speech protected under the First Amendment. We asked legal experts in digital rights, crypto and constitutional law to give their take on whether this is true.

Kleiman Files — Craig Wright Controversy Gets Complicated

Kleiman Files — Craig Wright Controversy Gets Complicated

Craig Wright has been ordered by a U.S. court to hand over more that 500K of his Bitcoin holdings to David Kleiman’s estate. Will the market survive?

With each passing day, Craig S. Wright’s reputation continues to take a bigger beating. This time around, a Florida court has found the self-proclaimed inventor of Bitcoin (BTC) to be guilty of not only submitting false documents as part of an earlier testimony but also lying about a legal dispute (related to the estate of his former partner, David Kleiman) to the United States justice system.

Related: Bitcoin Creator and Superagent: What You Should Know About Craig Wright

The presiding judge, Bruce Reinhart, concluded the latest hearing by ordering Wright to surrender more than $4 billion worth of cryptocurrency in favor of Kleiman’s estate. The assets in question comprise of a whopping 500K BTC as well as half of all the intellectual property that has ever been created by Wright. Moreover, Wright has been ordered by Judge Reinhart to turn over documents in which it is claimed that he had unlawfully seized digital assets from Kleiman.

It now remains to be seen whether Wright is able to comply with the order and actually deliver the BTC to Kleiman’s estate. There is a doubt that arises here because Wright has stated in his latest testimony that he is not aware of where the crypto in question is being stored, nor is he absolutely sure if he even has access to any of these external digital storage entities.

Satoshi identity still a mystery?

Wright has been claiming for a long time that he is, in fact, Satoshi Nakamoto — the pseudonymous author of Bitcoin’s source code and its white paper, a document that lays out the core design for the currency’s digital ecosystem. 

In recent times, when called a fraud, Wright has resorted to suing all those who disagree with the notion that he is the mastermind behind Bitcoin. And even though all of his lawsuits have amounted to almost nothing in the end, the people who have publicly showcased their support for Wright over the years seem to be disappearing rapidly. 

Related: Satoshi Posers — Why So Many Takers for the Bitcoin Crown?

In addition to this, a number of established crypto experts and enthusiasts seem to be of the opinion that Wright’s recent submission of false documents to the Florida court could be the final straw as far as his “I am Satoshi” claims go. Cointelegraph reached out to Craig Russo, a crypto investor and owner of Peer — a Boston-based startup behind the popular media outlet SludgeFeed, to get a better understanding of the matter. Russo believes that Wright needs to provide more tangible evidence in order to support his outlandish claims, saying:

“The false documents definitely do not help his credibility. I think the mystery of who exactly made up “Satoshi” will continue to unravel into the future.”

Similarly, Christopher Inks, the founder and CEO of TexasWest Capital — a crypto research trading firm — also believes that, while there is a slim possibility that Wright might be Satoshi, he is making his claims harder to believe — especially with all of the recent stories that have emerged in relation to him. Inks added in a statement to Cointelegraph:

“There is no doubt that he is a polarizing individual and that may simply be the result of his intelligence. Many highly intelligent people have difficulty interacting in a positive way with everyone else. But should people believe him just because he says so?”

Will the drama hurt the market?

Wright is of the belief that in the wake of the aforementioned court ruling, the crypto market could soon be flooded with billions of dollars worth of Bitcoin. However, as mentioned earlier, it appears as though Wright might not have access to the private keys associated with the various digital wallets containing the BTC. 

In this regard, it is worth recalling that in an earlier testimony, Wright had said that he had passed on a key piece of information to Kleiman before his demise back in 2013. As a result of his death, Wright thinks it will be extremely hard for him (or anyone else for that matter) to track down the storage entities holding the crypto. With that being said, the self-proclaimed inventor of Bitcoin did concede the following in a recent email to his spokesperson, Ed Pownall:

“The courts ruled that Ira (Kleiman, brother of Dave Kleiman) inherited those billions. Now he has to pay estate tax on that if he wants it.”

As a result of these recent developments, the market at large is now replete with FUD related to an impending market crash that might happen because of BTC being liquidated or moved around.

Cointelegraph has reached out to CryptoYoda, an independent crypto analyst and trader, with over 200K followers on Twitter. In regard to the matter, he stated that he is highly doubtful that Wright really has access to the legacy coins, so all of the lingering concerns regarding a potential sell-off can be set aside for the time being. 

However, he did add that the situation will need to be immediately reevaluated if Wright or any other third-party enters the private key associated with the legacy wallet. This, in CryptoYoda’s opinion, will most likely not be the case anytime in the near future. He added:

“As long as no coins are being moved, there is no reason to speculate about a potential selloff imho. Should coins from the legacy wallet move eventually, then we at least have proper grounds for discussion.”

However, since Judge Reinhart passed his verdict a few days back, Bitcoin’s price has witnessed some serious negative action (particularly on Aug. 29). 

Chart

Source: Coin360.com

Over the course of the past 24 hours, the price of a single BTC has slid from $10,251 to briefly dipping under $9,400 — with the market sentiment at large appearing to be bearish. Providing his insights on the issue, Russo pointed out:

“I think anytime that a whale investor needs to unload Bitcoin in the open market, for whatever reason, it adds a downward pressure on price. However, I think the risk is relatively low that Wright actually has access to those coins but savvy investors should definitely monitor the situation.”

Additionally, Cointelegraph also got in touch with Daniel Kelman — a New York-based lawyer, creditor of Mt. Gox. In his opinion, only Bitcoin SV (BSV) — a digital currency that has Wright as its most vociferous proponent — will be affected by these recent developments, with traders most likely dumping the asset in the near future. 

“I don’t see a reason for it to affect the rest of the market, possibly sell orders of BSV into other cryptos push other prices higher. Wright doesn’t have a stack of BTC to sell off, which the market now knows for sure.”

Looking ahead… what happens now?

While there seems to be a lot of drama surrounding the Kleiman-Wright case right now, it appears as though a lot of this talk is confined primarily to the realm of social media. In this regard, the upcoming events (such as the launch of Bakkt’s Bitcoin futures products as well as other institutional investment offerings) are more likely to have a bigger impact on the cryptosphere. 

In fact, Russo sees the market continuing its consolidation period for the foreseeable future, despite many people calling for Bitcoin to fill the CME futures gap at around $8,500. According to Russo, “My guess is that the number either gets front-ran or we fall rapidly through it to find support below.”

On the subject of Wright’s future obligations and what happens to him next (from a legal standpoint), Kelman stated unequivocally that there absolutely exists a possibility of the Australian national going to jail for his actions. In his opinion, even though Judge Reinhart did not find Wright’s conduct being at the level of criminal contempt, he ended his order by stating:

“Dr. Wright intentionally submitted fraudulent documents to the Court, obstructed a judicial proceeding, and gave perjurious testimony.”

In layman’s terms, Reinhart basically called Wright a fraud. It now remains to be seen whether he refers the matter to the U.S. attorney’s office, which would see a new case being initiated against the maligned computer scientist. Expounding his thoughts on the matter, Kelman added:

“Reinhart may now refer the matter to the US Attorney’s office and a case can be brought against Wright from there. Federal judges choose their words carefully. Using words like ‘perjurious testimony’ and ‘intentionally submitting fraudulent documents’ indicates how serious this is, those are felonies. I’d be surprised if this isn’t followed up on by prosecutors.“

It now remains to be seen how retail trader fears of a rumored $2 billion crypto dump (i.e., because of a potential 40% tax on the 500K BTC in question) could play out. On top of that, it will also be interesting to see how Kleiman’s estate seeks to limit their incoming tax hit if indeed it gets hold of the Bitcoins. In this regard, one option could be that the tax be paid out in installments — which would be extremely advantageous for the estate from an economic standpoint — especially if Bitcoin’s value were to continue surging over the next few years.

Hisashi Oki also contributed to this article.

Calvin Ayre Falsely Claims Court Ruled Craig Wright Invented Bitcoin

Calvin Ayre Falsely Claims Court Ruled Craig Wright Invented Bitcoin

The media mogul tweets Wright’s identity as Satoshi Nakamoto is legally decided, directly contradicting the official court judgment.

Bitcoin SV (BSV) proponent Calvin Ayre has come under fire once again after erroneously claiming that a court ruled Craig Wright created Bitcoin (BTC).

Ayre: Judge just ruled Wright created Bitcoin

In a tweet on Aug. 28, Ayre said the judge presiding over Wright’s recent court case decided he was Bitcoin’s creator, Satoshi Nakamoto

“Its nice timing to be out at the same time as Craig gets the Satoshi coins out of tulip trust. Also good timing with Judge just ruling Craig is Satoshi,” the tweet stated.

Wright was in court over alleged theft of $10 billion worth of BTC. The case concluded this week, with Wright now obliged to pay the plaintiff, the estate of former business partner Dave Kleiman, half of the fortune. 

Both Wright and Ayre tout BSV as the true version of Bitcoin, and have tirelessly promoted the cryptocurrency, which has faced multiple technical and publicity difficulties in its 10-month history.

No basis in official judgment

Following Wright’s downfall, Ayre remained an increasingly lone voice supporting him, but his latest claims were met by immediate pushback.

Twitter users referenced the text of the court judgment, which emphatically denies making a ruling over whether Wright is or is not Nakamoto. The text reads:

“First, the Court is not required to decide, and does not decide, whether Defendant Dr. Craig Wright is Satoshi Nakamoto, the inventor of the Bitcoin cybercurrency. ” 

It is thus unclear how Ayre arrived at his claim, which he made while advertising an upcoming book about Wright’s recent difficulties.

As Cointelegraph reported, questions now focus on how markets will cope with a $2 billion tax bill for Wright’s penalty. 

Separate speculation focuses on Wright’s ability to pay at all, and if he has access to the private keys to the 500,000 BTC stash. The court has accepted Wright’s claim that he had access to the coins, with the document noting:

“The Court also is not required to decide, and does not decide, how much bitcoin, if any, Dr. Wright controls today. […] the Court accepts Dr. Wright’s representation that he controlled (directly or indirectly) some bitcoin on December 31, 2013, and that he continues to control some today.”

Craig Wright: Kleiman Estate Will Now Dump $2 Billion in Bitcoin

Craig Wright: Kleiman Estate Will Now Dump $2 Billion in Bitcoin

The self-proclaimed inventor of Bitcoin must hand over half his cryptocurrency wealth after a judge threw out his claims.

Disclaimer: The original Modern Consensus interview on which much of this article was based has been found to contain several inaccuracies and inconsistencies. Please be advised that the numbers — particularly the threat of a $2 billion BTC dump — are not necessarily factual.

Bitcoin (BTC) prices could face fresh volatility after Craig Wright was ordered to pay 500,000 BTC to the brother of Dave Kleiman, his late business partner.

The payout — worth more than $5 billion at the time of writing — could attract an estate tax rate of 40%, which Kleiman’s estate would have to pay.

There are now fears that 200,000 coins could be dumped on the market in order to settle $2 billion bill, potentially causing a crash.

In an interview with fintech magazine Modern Consensus, Wright said he would comply with the court order, which follows allegations that he stole hundreds of thousands of BTC from Dave Kleiman.

Based on thin Ayre?

The ruling brings to a head a debacle which has dragged on for years and involved an increasing number of third parties far removed from Wright and his entourage. 

In the face of multiple claims of fraud on social media, Wright even began suing those who disagreed with his alleged proof that he created Bitcoin. Those lawsuits came to nothing, while this week, those publicly supporting Wright’s original statements evaporated.

Only Calvin Ayre, a major supporter of Wright’s favored altcoin Bitcoin SV (BSV), continued to argue he was Nakamoto. 

“The judge ruled Craig and Dave are Satoshi. This is not accurate but its enough to have Craig accurately be referred to as Satoshi as he is saying and this will likely be appealed,” he wrote on Twitter. 

Large numbers of responses then immediately dismissed the comments. United Kingdom-based entrepreneur Alistair Milne described Ayre’s words as flat-out lies.

“The US court *did NOT* rule that Wright/Kleiman were Satoshi Nakamoto. Anyone telling you otherwise is either insane or a liar,” he tweeted. 

In what will be a source of personal satisfaction to Wright’s previous legal victims, meanwhile, one person present at the hearing concluded it was now not libellous to label him a fraud.

Citing testimony from Kleiman, Katie Ananina wrote in a digest of the proceedings:

“I now know the way to say #craigwrightisafraud and don’t get in trouble. It’s been said in a Federal Court.”

Ananina noted the judge also threw out Wright’s claim he would be able to prove he had access to the private keys bolstering his Nakamoto claim by January 2020.

Read the follow-up to this story here.

Report: Craig Wright Must Forfeit 50% of Bitcoin in Court Case

Report: Craig Wright Must Forfeit 50% of Bitcoin in Court Case

A judge has reportedly recommended that Craig Wright hand over thousands of bitcoins and intellectual property rights to the Kleiman estate.

The protracted legal battle involving self-proclaimed Bitcoin (BTC) inventor Craig Wright and the estate of computer scientist David Kleiman could go in Keiman’s favor.

According to a court audience member on Aug. 26, Judge Bruce Reinhart rejected Wright’s testimony, stating that he had perjured himself by providing the court with falsified documents and recommended that he hand over 50% of the over 1 million bitcoins Kleiman mined with Wright, as well as intellectual property rights associated with Bitcoin’s software.

The case began in February 2018 when lawyers filed the case against Wright, accusing him of stealing hundreds of thousands of Bitcoin — at press time valued at over $5 billion — after Kleiman’s death in April 2013.

While documents are currently not available regarding the ruling, an evidentiary hearing for the case was scheduled for today regarding the plaintiffs’ motion for sanctions/contempt on order compelling discovery.

This story is developing and will be updated as more details are forthcoming.