From the origins to the latest judgment, the story of the man who claims to be Satoshi Nakamoto in order to monetize his work through the sale of intellectual property. Craig Steven Wright, alias Faketoshi.
“Granath had sufficient factual grounds to assert that Wright had lied and deceived in his attempt to prove he was Satoshi Nakamoto.”
These are the words written by Norwegian judge Helen Engebrigtsen in the judgment issued on October 20, 2022, concerning the trial that pitted Magnus Granath – known on Twitter by the pseudonym Hodlonaut – against Craig Steven Wright. As reported by the Oslo District Court, in 2019 Hodlonaut had labeled Wright on Twitter as a “pathetic scammer,” “cringe,” and “clearly mentally ill.” The court determined that these terms were not defamatory, especially since the evidence presented by Wright to support his claim – that he is the real Satoshi Nakamoto – was not convincing.
The trial between Hodlonaut and CSW – as Wright is often abbreviated – is a chapter in a story that has now spanned eight years. The story of Faketoshi, a term used to address Wright, now also by one of his most longstanding supporters who has since retracted, Christen Ager-Hanssen.
A mountain of debts.
In 2015, Craig Wright is a forty-five-year-old Australian computer scientist and entrepreneur living near Sydney. There are no great certainties about his education: among the two doctorates listed on his LinkedIn page, CSW mentions one in computer science from Charles Sturt University in Bathurst, Australia, but the institution denies having awarded him any such title. They did, however, grant him three master’s degrees in related fields: Networking and Systems Administration, Management (Information Technology), and Information Systems Security.
Business is not going well. Of the companies he manages, one is under controlled administration, and the others are on the brink of bankruptcy and need $200,000 a week to survive. Wright and his wife Ramona are forced to sell the family cars to cover legal expenses, with which they have a debt of $1,000,000. A way to get back on their feet is desperately needed. Fortunately for him – according to the words of his mother released to Andrew O’Hagan in The Satoshi Affair – Wright has always been a man full of imagination, accustomed to carefully framing small pieces of truth to make them appear more glittering.
‘When he was a teenager,’ she said, ‘he went into the back of a car on his bike. It threw him through the window of a parked car. That’s where his scar comes from. His sister accompanied him to the hospital and he’s telling the doctor that he’s had his nose broken twenty or so times, and the doctor is saying “You couldn’t possibly have had it broken.” And Craig says: “I sew myself up when I get injured.”’
Given his skills, what Wright needs to get back on his feet financially is a story to sell. A well-constructed story that can be very appealing and that relates to his computer skills.
Why not make people believe that he is the mysterious inventor behind Bitcoin? Why not tell the world, “I am Satoshi”?
The billion-dollar deal.
Stefan Matthews is an IT expert whom CSW has known since 2005, when they both worked for Centrebet, an online betting site. Wright tells Matthews that he is the main name behind the birth of Bitcoin. However, he was assisted by others, most notably Dave Kleiman, an American computer scientist, who passed away in 2013 and who had particularly helped him in drafting the white paper.
The Australian entrepreneur claims to have previously created a trust fund, the Tulip Trust, in which 1,100,111 bitcoins are deposited, which is presumably attributable to the public keys of Satoshi Nakamoto. According to his story, Wright had Kleiman sign an agreement – of which no evidence has ever been produced – stating that Kleiman himself would safeguard those bitcoins. In a subsequent separate pact, which has also never been made public, Kleiman would have come into possession of only 350,000 bitcoins that were to be returned to Craig Wright on January 1, 2020.
The two then formed a company, Plaintiff W&K Info Defense Research LLC, with the specific intent of mining bitcoin. The name of this company is important, as it will come back in one of CSW’s future lawsuits. However, the details of all this information are not clear from the beginning: how many and which were the administrators of the Tulip Trust? How were those bitcoins held? Vague and sometimes conflicting answers, but they are enough to convince Stefan Matthews to devise a project involving a third partner: Robert MacGregor.
MacGregor is the founder and CEO of nTrust, a money-transfer company based in Canada. Along with Matthews and Wright, he signs an agreement on June 29, 2015, for the establishment of nCrypt, a company wholly owned by nCrypt Holdings, which in turn is controlled by nTrust. The main objectives are three:
- Clear the debts that afflict Craig Wright and his companies by having them all acquired by nCrypt;
- Work with lawyers to secure the rights to Craig Wright’s story about Satoshi Nakamoto;
- Patent Satoshi Nakamoto’s work and transfer all intellectual properties to nCrypt, and then sell them to the highest bidder once Craig Wright’s true identity is revealed to the world.
Exactly: the idea is to take an open-source code, which is free, accessible, and usable by anyone, and privatize it, then sell it for a hefty price.
The plan is as follows: establish a research and development center in London where Wright can work with the support of 30 collaborators; complete the hundreds of patent applications for blockchain projects that Wright had been working on for some time; announce, with a carefully crafted public relations effort, who Satoshi Nakamoto is, and finally, sell his patents for an estimated price of $1,000,000,000. Overall budget: $15,000,000. In short, a good deal.
It’s not a minor detail that nCrypt Holdings is registered in Antigua, where Bodog is also based, a betting company owned by Canadian billionaire Calvin Ayre. A very shadowy figure, many believe Ayre has always been the puppet master behind the project and is still the financier for the legal cases that Craig Wright brings against those who accuse him of being a fraudster. He is also the founder, in 2017, of CoinGeek, an online information blog that has always supported Wright and his projects.
On December 9, 2015, under a warrant from the Australian Taxation Office, Craig Wright’s home is searched, but he and his wife manage to escape before the authorities arrive. Within a few days, Wright is in London in his new offices at Oxford Circus.
The big announcement.
The visit from the Australian Taxation Office did not come on just any day. The morning before, two newspapers published articles suggesting Wright as the possible man behind the pseudonym of Satoshi Nakamoto.
- Wired (article later modified): “Is Bitcoin’s Creator this Unknown Australian Genius?”
- Gizmodo: “An Australian claims to have invented Bitcoin together with a deceased friend.”
The articles were published following a series of documents received by both editorial teams that would show a strong link between Satoshi’s past and that of CSW. According to Wired, the material was sent “by an anonymous source close to Craig Wright” to Gwern Branwen, a pseudonymous analyst of the dark web. Branwen then provided these documents to the publication.
Several pieces of evidence initially shown by Wired and Gizmodo, however, appear to be fake: an example is Satoshi Nakamoto’s PGP key, which, as reported by Vice on December 9th, has a high likelihood of having been backdated.
Criticism pours in. Just three days after the initial piece, on December 11th, Wired changes its stance and publishes a new article titled: “New clues suggest that Craig Wright, the suspected creator of Bitcoin, might be a fraud.”
CSW is caught off guard and spends the following days cleaning up his online presence. The tactic works: after an initial media uproar, the waters calm down. Wright, along with Matthews and MacGregor, can start planning their work.
Weeks pass, and the Australian seems confident in the plan’s success. He even indulges in purchasing cars worth $180,000, particularly a customized BMW i8s. Not ideal for someone who shouldn’t be drawing attention for a few more weeks. MacGregor is not pleased, but the agreement is already signed, and he is already committing resources to discuss the sale of patents with highly significant interested buyers: Google, Uber, and major Swiss banks. They must press on.
On April 24th and 25th, 2016, several selected news outlets, including the BBC, visit the PR firm’s office hired by the trio, located on Tottenham Court Road. Journalists are there to witness the cryptographic signature that would prove Craig Wright possesses Satoshi Nakamoto’s private keys. However, they are unaware that behind this revelation lies a billion-dollar patent sale project. No one has informed them. They’re there because, in itself, the news is very juicy.
There are two ways in which Wright can use Satoshi’s private keys:
- Move some of the first bitcoins that are famously owned by Satoshi and have never been spent;
- Digitally sign a message.
The first transaction in Bitcoin’s history is the one where Satoshi sent 10 bitcoins to Hal Finney on January 11, 2009. The public key, by necessity, is known.
Apparently, Wright – using the private key associated with that public key – signs a message in front of the press citing the words of Jean-Paul Sartre that justified his refusal of the Nobel Prize for Literature in 1964: “I do not wish to be institutionalized.”
Craig Steven Wright’s message to the general public is therefore this:
“I don’t do it because it’s what I want, but because I cannot refuse. Because I have a team, I have a family. So I chose to sign Sartre because it’s not my choice, I didn’t choose to come out, it was imposed on me.”
The following is an excerpt from the BBC interview:
The media is convinced, signs an embargo agreement, and the news release date is set for May 2nd.
At precisely eight o’clock in the morning, the media begin to spread the scoop: BBC and Economist are the first to come out, along with a long post by Wright on his own website, explaining the procedure used to prove the authenticity of the signatures. The title is: “Jean-Paul Sartre, signature and meaning”.
However, the article that makes the most noise overall is another one. Titled “Satoshi“, it is published by Gavin Andresen, one of the most respected figures in the Bitcoin world up to this point. The man who, according to some, inherited the development leadership after Satoshi’s disappearance in 2011. Andresen writes that he believes “Craig Steven Wright is the person who invented Bitcoin.”
Yes, because just over two weeks before the media demonstration, on April 7th, Andresen was in London to meet Craig Wright. As he writes himself, the visit was dedicated to “careful cryptographic verification of messages, signed with keys that only Satoshi should possess.”
Gavin Andresen’s words are like an atomic bomb.
The reactions
Within a few hours, the online debate ignites, and experts from all over the world rush to analyze line by line the data provided by Wright in his post. Despite the media frenzy and Andresen’s endorsement, it doesn’t take long for the community to realize that things don’t add up.
- Patrick McKenzie, programmer: “Wright’s post is flimflam and hokum which stands up to a few minutes of cursory scrutiny, and demonstrates a competent sysadmin’s level of familiarity with cryptographic tools, but ultimately demonstrates no non-public information about Satoshi.”
- Jonathan Bier, excerpt from “The Blocksize War“: “The post seems to have been designed to create confusion or to deceive people who have no understanding or experience with cryptography, making them believe it is proof.”
- Peter Todd, Bitcoin developer: “It’s like photocopying someone else’s signature on a publicly available document and claiming it’s proof you are them. […] Because the proof provided is non-existent, and Craig has a history of scams, this could simply be part of a bigger scam.”
- Dan Kaminsky, researcher: “The procedure that’s supposed to prove Dr. Wright is Satoshi is aggressively, almost-but-not-quite maliciously resistant to actual validation. This is intentional scammery.”
The Reddit user /r/JoukeH discovers that there is indeed a signature in Wright’s post, but that “it is simply taken from one of the transactions that Satoshi had signed on the blockchain”. There’s no message stating that Craig is Satoshi. All Craig seems to have done is copy and paste a signature from the public blockchain and added it to a disjointed post.
Social media erupts, particularly Reddit, which has long been a reference point for Bitcoin discussions. The relationship between Matthews, MacGregor, and Wright starts to noticeably strain, and the latter is forced to provide a new cryptographic proof by making a transaction. Gavin Andresen offers to be the recipient, and May 4th is the set date for the new attempt. When it’s time to send the payment, Wright stands up and leaves the room.
Just days after the global embarrassment, Matthews and MacGregor realize they’ve potentially lost out on $1,000,000 and their relationship with Wright falls apart entirely. The nCrypt office in Oxford Circus is cleared out.
Beyond the failed signature, over time dozens of discrepancies between reality and the documents presented by Craig Wright will emerge. As developer Jameson Lopp will explain in Bitcoin Magazine in 2019, for instance, between 2014 and 2015, Wright allegedly modified an old 2008 post to make it appear he was working on a cryptocurrency precisely in that year.
From the Blocksize War to Bitcoin Satoshi’s Vision.
After the billion-dollar project fell through, Wright needs to find another way to make money. After all, his connection with Calvin Ayre is still strong. He will continue to be the standard-bearer for the battles of the one who online has now become known as “Faketoshi“. And the next battle, which takes place between 2015 and 2017, is called the Blocksize War. The term refers to the clash between those who want to increase the size of the blocks in the Bitcoin blockchain and those who instead want to keep it very limited. The battle, as is known, will be won by the latter.
Craig Wright is among the defeated, the so-called big blockers, that is, those who believe that Bitcoin can only be scalable by increasing the size of the blockchain. He sees it, in a nutshell, like Roger Ver: one of those who had not ruled out the possibility that Wright was Satoshi, as he himself declared on May 5, 2016.
I think there are enough pieces of evidence to believe that it’s more likely that he is, rather than the contrary.
After losing the battle with the small blockers on Bitcoin, initially, Wright supports the project championed by Ver: Bitcoin Cash. It’s a hard fork of Bitcoin with larger blocks. Calvin Ayre, with his CoinGeek, acts as the media arm, promoting BCash article after article, only to delete them all shortly after.
Yes, because on November 15, 2018, just over a year after the launch of BCash, Wright decides to assert his opinion: he had long wanted the block size limit to increase at an even faster pace than what was anticipated by the project supported by Roger Ver. So, a new hard fork happens, giving birth to Bitcoin Satoshi’s Vision, or BSV. From that moment on, the editorial line of CoinGeek drastically shifts in support of this new fork, which becomes, in all respects, the cryptocurrency of Craig Wright and Calvin Ayre. The comparison with the real Bitcoin, over the years, will be merciless.
The Fall of the Tulip Trust.
In 2018, to further complicate matters for Craig Wright, Ira Kleiman, the brother of the late Dave, arrives on the scene. Ira sues Wright, claiming he has rights to the 1.1 million bitcoin, which were also said to belong to Dave Kleiman according to the agreement that Wright has always said he made. The idea of the Tulip Trust and the bitcoins from Satoshi Nakamoto given in custody to Kleiman backfires on Faketoshi, who in court fails to even prove the actual existence of the trust fund.
During the trial, Wright claims that the keys to Satoshi Nakamoto are protected by a particular backup and are in the hands of third parties, and thus the funds cannot be moved. The refutation, first logical and then empirical, does not take long to arrive.
In a post dated February 27, 2018, the computer scientist Kim Nilsson shows that many of the addresses indicated as belonging to the trust can actually be attributed to other people. On May 4, 2019, the owner of an address will publish a signed message asserting that the bitcoins associated with the address are neither owned by Satoshi nor by Wright. The message reads as follows:
The address 16cou7Ht6WjTzuFyDBnht9hmvXytg6XdVT does not belong to Satoshi or Craig Wright. Craig is a liar and a fraudster.
After three and a half years from Ira Kleiman’s report, the verdict arrives on December 7, 2021. The judge, sentencing Wright to pay $100,000,000 to Plaintiff W&K Info Defense Research LLC, writes the following:
The case is full of instances where the defendant has provided conflicting sworn testimonies before this Court. In weighing the evidence, the Court simply does not find the defendant’s testimony credible. […] The entirety of the evidence on record does not demonstrate the existence of the Tulip Trust.
“On March 9, 2022, an amendment will be published. Ira Kleiman will also win the battle over prejudgment interest, and Wright will have to pay an additional $43,132,492.48.”
A New Failed Business Model: The Lawsuits
Failed in their attempt to privatize the intellectual property of an open-source code and to overpower the original Bitcoin with their own hard fork, Craig Wright and Calvin Ayre had one remaining weapon to try to restore their historically low reputation and scrape together some money. They decided to exploit the British legal system, which has historically been very strict towards defamation cases, to legally pursue those who online call Wright a “fraudster.”
In particular, they used Strategic Lawsuit Against Public Participation (SLAPP) suits, which are legal actions aimed at hindering public discourse. These suits are often used by wealthy individuals to silence critics, forcing them to spend substantial amounts defending themselves during legal proceedings. The alternative is to retract their statements and apologize even when they believe they are in the right.
On April 17, 2019, Wright sued well-known podcaster Peter McCormack for defamation for repeatedly calling him a “fraudster” on various occasions, both on Twitter and YouTube, as listed in the lawsuit. Wright’s lawyers specifically requested the aggravation of significant damage to his reputation. In the judgment issued on June 1, 2022, the judge ordered McCormack to pay symbolic damages of £1, stating the following:
The deliberately false claim of significant damage to Dr. Wright’s reputation made just days before the trial requires more than a simple reduction in damages. In my opinion, it is inconceivable that Dr. Wright should receive more than nominal damages.
We now come to the final chapter of the Faketoshi saga. In 2019, Hodlonaut tweeted claiming that Craig Wright is not Satoshi Nakamoto, referring to him as a “fraud.” Wright’s lawyers demanded that he retract his statement and publish the following apology message:
I was wrong to claim that Craig Wright fraudulently stated he is Satoshi. I accept that he is Satoshi. I apologize, Dr. Wright. I will not repeat this defamation.
Hodlonaut, in order to defend himself, was forced to reveal his identity, Marcus Granath, and spend approximately $2.4 million. As a Norwegian citizen, in 2019, he also sued Wright in his home country to successfully obtain the dismissal of the British proceedings due to a lack of jurisdiction. The hearings were held in Oslo, and on October 20, 2022, a historic judgment was delivered. In addition to condemning Wright to pay Granath 4,053,750 Norwegian kroner for legal expenses, which is equivalent to $383,000, for the first time, a court explicitly addressed the true identity of Satoshi Nakamoto:
Both parties sought to prove respectively that Wright is and is not Satoshi Nakamoto. The court emphasizes that the evidence presented in the case is not sufficient to change its prevailing opinion that Craig Wright is not Satoshi Nakamoto. Several documents were produced, which Wright claims to be initial versions of the White Paper and source code. Forensic analyses by KPMG (on behalf of Hodlonaut) and BDO (on behalf of Wright) found that these documents, at best, contain unexplained modifications that were likely made after the date when the documents were declared. Granath had sufficient factual basis to assert that Wright had lied and cheated in attempting to prove that he is Satoshi Nakamoto. Such statements are not illegal.
Among the many contradictions that emerged about Craig Steven Wright throughout the entire Faketoshi story, an especially curious one came up during the Oslo trial. The Tulip Trust, whose existence had already been questioned by the Kleiman judgment, seemed to no longer exist even in Wright’s thoughts. No co-signers, no third parties involved. The self-proclaimed Satoshi Nakamoto claimed to no longer possess the original keys after deliberately trashing the hard drive that contained them. “Otherwise,” he argued, “people will end up forcing me to do something I don’t want to do.”
