Wright Must Turn Over Half of His Bitcoin Holdings, Judge Rules

Judge Bruce Reinhart ruled that Craig Wright has to let go of 50% of his bitcoin assets and intellectual property to Ira Kleiman. According to the ruling, Wright is also obliged to pay the lawyer’s expenses.

At the beginning of 2018, David Kleiman’s brother took legal action against Craig Wright, blaming him for stealing a huge number of bitcoins, which were at that time worth more than $5 billion, shortly after Kleiman’s death in 2013. The judge found that Craig Wright, who calls himself the inventor of bitcoin, committed perjury and argued in bad faith.

The magistrate ruled that half of Wright’s bitcoin assets mined prior to December 31, 2013, be surrendered to the Kleiman possession. The case also states that Wright holds a number of bitcoin-focused funds, one of which is the notorious Tulip Trust, which allegedly controls nearly a million bitcoins mined by Nakamoto.

“Dr Wright and David Kleiman entered into a 50/50 partnership to develop Bitcoin intellectual property and to mine bitcoin; (2) any Bitcoin-related intellectual property developed by Dr Wright prior to David Kleiman’s death was the property of the partnership, (3) all bitcoin mined by Dr Wright prior to David Kleiman’s death (“the partnership’s bitcoin”) was the property of the partnership when mined; and (4) Plaintiffs presently retain an ownership interest in the partnership’s bitcoin, and any assets traceable to them,” said the judge Reinhart.

As a response, Wright claimed that the bitcoin is out of reach because of David Kleiman’s death and a complex encryption system. The judge found this argument to be in bad faith. One of the sources familiar with the matter said that Judge Reinhart did not find Wright to be credible nor did he determine whether Wright was Satoshi Nakamoto, the inventor of BTC.

“I find without hesitation that sanctions are not warranted against Dr Wright’s counsel,” Reinhart wrote. “Counsel has zealously and ethically advocated for their client. Counsel has unfailingly been candid with this Court, even when Dr Wright’s conduct and conflicting statements have created awkward situations for counsel,” he added.

However, Craig Wright doesn’t plan on giving up easily. Wright has submitted a new document to the court, asking for more time to properly prepare and challenge the court’s ruling. In the document, Wright says that Hurricane Dorian is the reason he needs more time to make the preparations. 

“Dr Wright does not concede that Magistrate Reinhardt had the power to enter the order that he did. However, the time frame that arguably could apply to addressing the legal validity of the purported order would be the 14-day time frame set forth in Rule 72 of the Federal Rules of Civil Procedure.“ Wright said in his document.

Before it becomes the final ruling, the judge’s decision must be accepted by the District Judge, Beth Bloom, assuming that Wright’s lawyers do not have any objections.