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Bitcoin Trial Jurors Mull Claims ‘Inventor’ Stole, Hid Assets

Law360, Miami (November 23, 2021, 9:03 PM EST) — Jurors began deliberating Tuesday in the multibillion-dollar dispute between self-professed bitcoin inventor Craig Wright and the estate of computer forensic expert Dave Kleiman over whether the two had a business partnership to mine bitcoin.

The Miami federal jury is tasked with determining whether Wright stole assets from the company he and Kleiman formed in 2011, called W&K Info Defense Research LLC, and hid them from Kleiman’s estate after his death in 2013.

In closing arguments Tuesday, Vel Freedman, who represents Dave Kleiman’s brother Ira Kleiman, took jurors through the emails and other documents they’d seen throughout the three-week trial to urge them to find for his client and award tens of billions of dollars in damages.

Freedman said Wright repeatedly referred to Dave Kleiman as a business partner after his death and told Ira Kleiman that his brother had been a key part in the creation of bitcoin, but Wright changed his story later once the lawsuit was filed and began saying Dave Kleiman had been no more than a good friend.

“The defense has made a big deal about the fact that there is no written agreement, but the law doesn’t require that,” Freedman said. “They wrote nothing down except when they hired employees. So it’s no surprise these best friends didn’t have a written partnership.”

The Australian-born Wright, who is the chief scientist at blockchain company nChain, claims to be Satoshi Nakamoto, the pseudonymous author of the white paper released in October 2008 that described what would later become bitcoin.

At issue in the case are the 1.1 million bitcoins that were mined by Satoshi Nakamoto, as well as intellectual property related to bitcoin software.

Freedman says the evidence shows those bitcoins were mined by Wright and Dave Kleiman and held in a joint trust, and asked the jurors to award his client money damages equivalent to 555,055 bitcoins. That would be between $33 billion and $35.7 billion, depending on the price of bitcoin used. The jury was instructed to use the peak price of bitcoin for the conversion and civil theft counts, the current price for the breach of partnership count and the price at the time of the alleged fraud for the fraud count.

The plaintiffs also asked for $126 billion in damages for half of the intellectual property that was owned by W&K, which was moved to Wright’s control through a pair of civil suits in Australia that Wright filed after Dave Kleiman’s death. The $126 billion figure is half of the $252 billion that Wright said was the overall value of the IP involved in the case in a Slack message posted just two days before the trial began.

Freedman also suggested to the jury that they award $17 billion in punitive damages.

“He could’ve done the right thing by his best friend, could have made sure his share of the partnership assets made their way into the estate,” Freedman said. “Dr. Wright chose not to, and now you all get to choose whether he gets away with it.”

In his closing arguments, Wright’s attorney Andrés Rivero said the plaintiffs’ case just doesn’t make sense. It relies heavily on statements made by Wright, but at the same time, Ira Kleiman paints Wright as a liar who constantly contradicted himself and a forgerer who repeatedly submits manipulated documents, the attorney said.

You can’t call someone a liar and then build your case around that person’s statements, Rivero said.

“What they talked to you about was the statements of Craig Wright and about the forgeries of Craig Wright,” he said. “That’s the only thing they put in front of you. That’s how they bake the cherry pie. But if a person is a liar, you discard it, you don’t use that information.”

The statements Ira Kleiman relies on to make his case are all statements Wright made after Dave Kleiman’s death, but there are no communications between the two while Dave Kleiman was still alive that would indicate they were mining bitcoins together, Rivero said. With other business partners, Dave Kleiman put together written operating agreements and discussed business details over email, the attorney said. But not so with Wright.

In his rebuttal, Freedman pointed to evidence showing the partners kept their bitcoin project secret, noting that Wright didn’t even share any of it with his then-wife Lynn Wright, who testified that she first heard of Satoshi Nakamoto in 2012 when her sister-in-law shared an article with her.

Freedman also played clips of Wright’s deposition testimony in 2019, when he said that he communicated with Dave Kleiman through digital chats, video chats and other online communications that were private and left no record. He also testified that when he was outed in December 2015 as Satoshi Nakamoto, he did his best to wipe out any evidence of his work on bitcoin.

The jurors deliberated for just over two hours before stopping for the day at 5 p.m. They will continue their deliberations after the Thanksgiving holiday, on Monday morning.

Ira Kleiman is represented by Devin Freedman, Joseph M. Delich, Kyle Roche, Constantine Philip Economides and Stephen Lagos of Roche Freedman LLP, and Maxwell V. Pritt, Andrew Scott Brenner, Laselve Elijah Harrison and Stephen N. Zack of Boies Schiller Flexner LLP.

Wright is represented by Andrés Rivero, Jorge A. Mestre, Michael A. Fernández, Alan H. Rolnick, Amanda Marie McGovern, Daniela Tenjido Sierra, Schneur Zalman Kass and Zaharah R. Markoe of Rivero Mestre LLP.

The case is Kleiman v. Wright, case number 9:18-cv-80176, in the U.S. District Court for the Southern District of Florida.

–Editing by Marygrace Anderson.

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