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The Australian man who claimed to have invented cryptocurrency bitcoin has been ordered to hand over half of his alleged bitcoin holdings, reported to be worth up to $5bn.

The IT security consultant Craig Wright, 49, was sued by the estate of David Kleiman, a programmer who died in 2013, for a share of Wright’s bitcoin haul over the pair’s involvement in the inception of the cryptocurrency from 2009 to 2013.

Kleiman’s estate alleges Wright and Kleiman were partners, and therefore his family is entitled to a share of the bitcoin that was mined by the pair in that time. Wright denies there was a partnership.

A US district court in Florida on Tuesday ruled that half of the bitcoin mined and half of the intellectual property held by Wright from that time belongs to Kleiman.

One issue is it is not known exactly how much bitcoin Wright holds. It has been claimed that the Kleiman estate could get anywhere between 410,000 and 500,000 bitcoin, putting the value at between A$6.1bn and A$7.4bn as of Wednesday.

Wright claimed to the court that he couldn’t access the bitcoin because he doesn’t have a list of the public addresses of that bitcoin. He claimed in 2011, after seeing the cryptocurrency had begun to be associated with drug dealers and human traffickers, he put the bitcoin he mined in 2009 and 2010 into an encrypted file and into a blind trust. The encrypted key was divided into multiple key slices, and the key slices were given to Kleiman who distributed them to people through the trust.

Wright said this meant he could not decrypt the file until he gets access to the key from a bonded courier who will arrive in January 2020 – a claim Wright has made before in claiming to be Satoshi Nakamoto, the pseudonymous creator of bitcoin.

In the judgment, Judge Bruce Reinhart said Wright had not proved he could not comply and obtain the bitcoin. He said Wright made inconsistent statements and the whole story was “inconceivable” that he’d had a Dr Frankenstein-like revelation when his creation “turned to evil”.

“During his testimony, Dr. Wright’s demeanor did not impress me as someone who was telling the truth. When it was favorable to him, Dr. Wright appeared to have an excellent memory and a scrupulous attention to detail. Otherwise, Dr. Wright was belligerent and evasive,” Reinhart said.

In 2015, Wright was investigated by the Australian Taxation Office over his involvement with bitcoin with his Sydney home raided by the Australian federal police, leading to speculation he might be Nakamoto.

In 2016, Wright claimed he was Nakamoto, but experts questioned the evidencehe provided. He promised to provide further proof, but backed down days later, saying he was “sorry” and did “not have the courage”.

Reinhart said at the start of his ruling the court “is not required to decide, and does not decide” whether Wright is Nakamoto, and the court was not required to decide and did not decide how much bitcoin Wright controls today.

IMAGINE that the paternity of a particularly brilliant child is in doubt, and someone steps forward to claim he is the father. In the real world a DNA test would sort the matter out quickly. In the confusing world of bitcoin, a cryptocurrency, things are not that simple. From the start bitcoin has rested on a mystery: the identity of Satoshi Nakamoto, the pseudonym of the author of the academic “white paper” published in October 2008 which first outlined the technology behind the digital money. This mystery may finally be solved: Craig Steven Wright—a 45-year-old Australian computer scientist and inventor who was outed against his will and with dubious evidence as Mr Nakamoto in December last year—now claims he is the real Satoshi. On May 2nd he published a blog post offering what he says is cryptographic proof that he is indeed the creator of bitcoin.

The Economist—along with the BBC and GQ Magazine—had access to Mr Wright before the publication of his post (see footnote). We interviewed him, reviewed the documents he has provided and talked to bitcoin insiders who have communicated with Mr Nakamoto in the past and who had access to the same information. Our conclusion is that Mr Wright could well be Mr Nakamoto, but that important questions remain. Indeed, it may never be possible to establish beyond reasonable doubt who really created bitcoin.

Bitcoin has become much bigger than Mr Nakamoto; he stopped participating in the project a few years ago, and his successors have written far more code than he ever did. Whether Mr Wright’s claim is believed, especially by bitcoin cognoscenti, matters nonetheless. The bitcoin project has been riven for months by what some call a “civil war” between two competing camps of developers and bitcoin companies (although the rhetoric has recently become less strident). One side wants to keep bitcoin smallish and pure; the other is pushing for it to grow rapidly, even if this means turning it into something more like a conventional payment system. The bone of contention is the size of a “block”, the name given to the batches into which bitcoin transactions are assembled before they are validated. The intervention of a resurrected Satoshi would certainly change the dynamics of this debate. First, however, Mr Wright has to persuade people of his claim.

Mystery man
Nobody, not even his closest collaborators, ever met Mr Nakamato in person. They only communicated with him electronically. He not only wrote the white paper, but also the first version of the software that powers the system and then worked with other developers to improve it. But a couple of years into the project, he stopped participating. “I have moved on to other things,” he wrote in April 2011. Except for a few messages, most of which are believed to be hoaxes, he has not been heard from since.

That suggests a huge desire to remain private—and extraordinary willpower. Thus far, at least, the person behind the pseudonym has forgone fame and kudos. Despite its shady side (for instance as an anonymous means of payment for drug dealers) the system has proven very resilient: its exchange rate has recovered after a steep fall last year (see chart). The invention that underlies it, called the “blockchain”, is widely considered downright brilliant. Nor does Mr Nakamoto seem to be motivated by fortune: all bitcoin in circulation are now worth about $7 billion, more than the basic monetary supply (cash and deposits) of many small countries. According to some estimates, Mr Nakamoto holds 1m bitcoin, worth about $450m at current rates, but they have never been touched.

The ‘creator’ of Bitcoin, Satoshi Nakamoto, is the world’s most elusive billionaire. Very few people outside of the Department of Homeland Security know Satoshi’s real name. In fact, DHS will not publicly confirm that even THEY know the billionaire’s identity. Satoshi has taken great care to keep his identity secret employing the latest encryption and obfuscation methods in his communications. Despite these efforts (according to my source at the DHS) Satoshi Nakamoto gave investigators the only tool they needed to find him — his own words.

 

Using stylometry one is able to compare texts to determine authorship of a particular work. Throughout the years Satoshi wrote thousands of posts and emails and most of which are publicly available. According to my source, the NSA was able to the use the ‘writer invariant’ method of stylometry to compare Satoshi’s ‘known’ writings with trillions of writing samples from people across the globe. By taking Satoshi’s texts and finding the 50 most common words, the NSA was able to break down his text into 5,000 word chunks and analyse each to find the frequency of those 50 words. This would result in a unique 50-number identifier for each chunk. The NSA then placed each of these numbers into a 50-dimensional space and flatten them into a plane using principal components analysis. The result is a ‘fingerprint’ for anything written by Satoshi that could easily be compared to any other writing.