By Michael del Castillo
Compiled by: 0x11, Foresight News
In the fall of 2012, long before most of the world had heard of Craig Wright, the Australian computer scientist quietly filed his first patent related to the newly created Bitcoin, which was then worth only $10. The next year, an exchange called Coinbase raised $5 million to "make Bitcoin more accessible to the average consumer." A year later, in 2014, Bitcoin Magazine co-founder Vitalik Buterin published a paper describing a new blockchain called Ethereum and praising Bitcoin's pseudonymous creator, Satoshi Nakamoto, for breakthroughs in cryptography.
While the nascent crypto industry was focusing only on the license for the Bitcoin code, which allowed anyone to use the software under copyright law, Wright was already seeking patent protection for the new technology. In December 2015, when Wright was identified as a candidate for Satoshi Nakamoto by two news organizations, he had applied for two patents and was also the chief scientist of a Swiss company called nChain, which also applied for three patents.
Until recently, a fierce debate centered on whether Wright, 52, whose Bitcoin wallets hold $33 billion worth of the cryptocurrency (currently around $30,000), is Satoshi Nakamoto, whose blockchain invention allows anyone in the world to send cryptocurrency to anyone else without relying on banks. The digital currency has helped entrepreneurs raise $89 billion, according to data site Pitchbook. Next year, Wright will go to the U.K. High Court to prove that he is the inventor of Bitcoin.
“I created Bitcoin,” Wright told Forbes from his London office.
But the focus of the debate may soon change. Whether or not Wright can prove he invented Bitcoin, if he can use his 800 issued patents and 3,000 pending patents in 46 jurisdictions the way he wants, he could soon be cashing in on a wave of widespread blockchain applications that will affect everything from the $1 trillion cryptocurrency market to some of the world’s largest companies. More ominously, Wright is using his legal strategy to set a precedent for software released with lax copyright rules, including Meta’s widely used open source Javascript framework (React), Microsoft’s Visual Studio for editing code, and Linus Torvalds’ Linux operating system, which together power 40% of the entire internet.
“I don’t like Silicon Valley. They’re a cancer on the world,” Wright said. “They can steal anything they want.” He paused, as if reconsidering his words, and added: “They’re a cancerous hemorrhoid on the world’s ass.”
Dr. Craig Steven Wright was born in Brisbane, Australia, in 1970. His mother entered data on punch cards for early computers and his father fought in the Vietnam War. Wright is a polymath who lists more than 20 degrees on his personal website, from master's degrees in statistics and forensic psychology to a diploma in art appreciation. Over the years, the intellectual property he researched, including multiple ways to use blockchain technology, has been transferred in shell games between trusts and companies.
He said he set up an Australian trust in 1997 called Craig Wright R&D. That company originally owned Blacknet, which he described as a precursor to Bitcoin. In 2002, he moved the research to another trust, the Ridges Estate.
In the mid-2000s, while pursuing a graduate degree in international trade and commercial law, he met American security expert Dave Kleiman in an online forum. Although Wright said he and Kleiman, who died in 2013, met only once over drinks, the two collaborated on many projects, including a 2007 book on investigating computer hacking co-authored by Wright and edited by Kleiman. Copies of emails allegedly provided to Gizmodo in 2015 appear to show Wright asking Kleiman for help editing a paper describing Bitcoin. Wright declined to say whether the email was authentic, but he claimed that the Gizmodo article was based on forged documents provided by Kleiman's estate and insisted that he created Bitcoin himself. Boies Schiller Flexner, the law firm representing Kleiman's estate, has not yet responded to a request for comment.
On October 31, 2008, a group (or individual) with the pseudonym Satoshi Nakamoto published a white paper describing a "peer-to-peer electronic cash system" - Bitcoin, which allows online payments to be sent directly from one party to another without "going through a financial institution." When the Bitcoin code was released to the Sourceforge software repository in January 2009, Satoshi Nakamoto added a note allowing anyone to use it without any restrictions under the terms of the MIT license. Its copyright was designated as Copyright (c) 2009 Satoshi Nakamoto.
“The MIT license is very IP-friendly,” said Wright, who divided bitcoin-related intellectual property among four Australian companies he controls, each with a different business. Information Defense received IP related to the bitcoin database; Integyrs received his cryptography research; Greyfog received IP related to the Internet of Things, and Strassen received research related to so-called sharded networks, he wrote in an email.
Although audit documents from 2010 show no patents had been “filed,” Wright said he began working to change that that same year. His first Bitcoin-related patent was for a method by which multiple users could split access codes to a blockchain registry for things like estate and corporate records, which was granted by the U.S. Patent and Trademark Office in 2017. In December 2010, Nakamoto wrote his last public post, which began: “There’s more work to do…”
Wright said that in early 2011, his first wife Lynn and Kleiman founded W&K Info Defense to develop blockchain-related intellectual property. He also renamed Craig Wright R&D to the Tulip Trust, which would continue to play an important role in his business strategy. Although the actual composition of the Tulip Trust remains a mystery, Wright said Tulip "owns the company and only the company."
On December 13, 2010, the Bitcoin creator logged in using the pseudonym Satoshi Nakamoto, and in what would be one of his last public acts, changed the license from “Copyright (c) 2009-2010 Satoshi Nakamoto” to “Copyright (c) 2009-2010 Bitcoin Developers.” A few days later, Andresen posted a message: “With Satoshi Nakamoto’s blessing, I will begin more active project management of Bitcoin, albeit reluctantly.”
The following spring, Nakamoto sent what was thought to be his final private message and then disappeared. "I have moved on to other things," he wrote in an email to former Bitcoin Core developer Mike Hearn, "and it is a good choice to hand over to Bitcoin Core developer Gavin Andresen and others." Hearn said that there was indeed such an email.
A colorful legend emerged: In order for Bitcoin to be truly decentralized, it couldn’t have any vulnerabilities, so Satoshi Nakamoto wrote it in code as a gift to the world, then entrusted a group of open source developers to help it grow into a global currency that didn’t rely on banks or governments. Nine months later, Gavin Andresen moved the codebase to Github.
Contrary to what the email to Hearn and the Sourceforge thread show, Wright claims he disagreed with the transfer of power. He says a new group of Bitcoin developers, including the codebase's former lead maintainer Wladimir van der Laan, circumvented his codebase's management rights, moved the software to Github and changed the license. Essentially, Wright claims, the Bitcoins were stolen. "I didn't expect they would do something like this to bypass my admin controls." "They built a whole new site and kicked me out." In an email to Forbes, van der Laan denied moving the codebase, and he also denied changing the license. "This was done by Satoshi," he wrote.
All the while, Wright’s intellectual property work continued.
Kleiman died in April 2013, and his brother Ira inherited his estate. W&K owns intellectual property related to Bitcoin, as well as approximately 1.1 million Bitcoins (currently worth $33 billion) mined through mining — though there is no indication that they possess Satoshi’s private key, which would be needed to transfer the assets.
In 2015, Wright founded the Sydney-based DeMorgan Group, which claimed to be an "alternative currency" research and development company focused on the "next generation of banking." He transferred ownership of most of his Bitcoin-related work to DeMorgan and announced that the company was eligible for a subsidy of up to $54 million established by the Australian Taxation Office to stimulate innovation. "This subsidy will strengthen the company's cash position," he said in a statement at the time, "and is an important source of funding for our growth."
As business grew that summer, Wright signed a deal with former gambling entrepreneur Stefan Matthews to buy DeMorgan’s intellectual property for $1.5 million and transfer it to a British company now called nChain. The nearly $15 million package also included a five-year, $3.5 million services agreement with Wright and gave a 37% stake in the new enterprise to Wright and his second wife, Ramona. The deal with Matthews also transferred about 90% of Wright’s control of the intellectual property to nChain. Later, nChain’s majority shareholder was revealed to be Robert MacGregor, founder of Canadian payments company nTrust. Forbes attempted to contact MacGregor through two email addresses associated with him, but was unsuccessful.
On December 8, 2015, Wright became a controversial public figure in the crypto world after Wired and Gizmodo published separate reports about anonymous leaks, claiming that he was very likely Satoshi Nakamoto, or in the words of Wired, "a brilliant liar who very much wants us to believe." Wright claimed: "The articles in Wired and Gizmodo are based on information from Ira Kleiman. In order to fabricate a story about his brother that never happened, Ira forged documents, made false statements, and used multiple emails to contact reporters pretending to be multiple people. He did this to obtain money that did not belong to him."
Matthews, nChain’s chairman, said Wright’s newfound fame had changed nChain. While his vision for the company had always been to be a long-term software and intellectual property developer, MacGregor saw a Steve Jobs-like presence in Wright who he could put on the stage to increase the company’s value before selling it. “He wanted to sell everything to Silicon Valley,” Wright agreed, “and he didn’t bother to ask me what I thought of Silicon Valley before he did it.”
Wright has spoken at multiple events, including a panel discussion with another Satoshi "suspect" Nick Szabo, who, along with Matthews, has claimed that many of the blog posts Wright has been identified as the author of were actually written by MacGregor. The strategy is to convince the world once and for all that Wright is Satoshi through a series of "proof conferences." In April 2016, entrepreneur Jon Matonis and software developer Andresen claimed to have witnessed Wright sign a message to the Bitcoin blockchain using a cryptographic signature associated with Satoshi Nakamoto; the two subsequently publicly stated that they believed his claims.
Although Wright appeared to use Satoshi’s signature, doubts about its authenticity soon surfaced. A report from Vice showed that the signature could be forged in a number of ways. Wright’s subsequent written explanation drew a rebuttal from security researcher Dan Kaminsky, who said the messages could have been sent without knowing Satoshi’s private key (a password).
In an apology on his website, Wright seemed to acknowledge that the evidence was unconvincing, but he maintained that he was Satoshi. "As events unfolded this week, as I prepared to publish proof of access to the earliest keys, I collapsed. I didn't have the courage. I couldn't," he wrote. "As soon as the rumors began, my qualifications and character were attacked. When those allegations were proven false, new ones began."
Wright has not yet publicly proven, nor has he moved any bitcoins from Satoshi’s account. An upcoming UK court hearing may require one of these approaches. Matonis’s articles claiming to trust Wright can still be found on his Medium site, but this year Andresen attached a note to his original May 2016 statement saying “it was a mistake to trust Craig Wright as much as I did.”
Matthews said that over the next few months of 2016, Wright mostly stayed home, occasionally sending him invention ideas. The hostility between Wright and MacGregor continued to escalate. "I had to referee some incredible arguments between the two of them," Matthews said. "MacGregor said to me that he didn't want anything to do with Craig Wright or nChain anymore." Matthews said he formed a Maltese private equity fund to buy out MacGregor's shares, and by November 2016, MacGregor had left the company.
Matthews began looking for new funding.
It wasn’t long before he tracked down Calvin Ayre, a former billionaire who had briefly appeared on the U.S. Immigration and Customs Enforcement’s wanted list for running the Bodog gambling operation, which was accused of operating illegally in Maryland. “We considered ourselves completely legal,” Ayre said. “At one point, it was one of the largest online gaming companies in the world.” In July 2017, he pleaded guilty to a lesser charge and left the company to return to being a private investor. Matthews, who manages Ayre’s venture capital work, said he met Wright in mid-2000, when the inventor helped his gambling industry employer Centrebet with a security audit. Matthews thought the two would hit it off. “He brought Wright in,” Ayre said, “and told me there was a guy I’d known since 2006. I knew he was Satoshi. So we wanted to come talk to you because he needed some help.”
Matthews flew in from his home in Manila, and Wright flew in from Australia, to meet on the rooftop of Ayre’s Vancouver penthouse. The three spent two days drinking wine, getting to know each other, and having fun. “When I introduced Calvin and Craig, from the moment their eyes met, there was a fascination,” Matthews said. After this meeting, Ayre invested in nChain. “Stefan and I pulled him out,” Ayre said, “and built some infrastructure around him and created a whole ecosystem.”
If nChain was the foundation of the ecosystem, they then started installing studs and beams. In August 2017, Ayre acquired the cryptocurrency news site CoinGeek. In 2018, Wright, Ayre, and Matthews launched Bitcoin Satoshi Vision (BSV), a cryptocurrency based on the pre-2017 version of Bitcoin that does not include upgrades to make Bitcoin more private. "You can mix, you can transfer, there is no record," Wright said of transactions in BSV.
BSV has had some success, with a market cap of $767 million, ranking 54th on the cryptocurrency market cap chart, according to CoinGecko. Wright said he owns “a small amount” of BSV, Ayre said he owns some, “but not a lot,” and Matthews did not respond to questions about his BSV holdings.
In April 2019, Wright registered two copyrights with the U.S. Copyright Office—one for the Bitcoin white paper and the other for the Bitcoin software. The following month, the agency issued a statement saying, “With respect to the two registrations issued to Wright, the Copyright Office does not investigate the authenticity of any claims. During the review process, the Copyright Office noted the well-known pseudonym “Satoshi Nakamoto” and asked the applicant to confirm that Craig Steven Wright is the author and rights holder of the registered works. Wright confirmed this.”
If Wright wants to convert that IP into cash, it will likely be done through nChain. nChain is based in London, where Wright lives, but is officially incorporated in crypto-friendly Zug, Switzerland. Nchain’s main sources of revenue are royalties from licenses it grants and consulting fees. Although primarily funded by Ayre, Wright said a private equity fund based in Liechtenstein is also an investor and that his wife is a “trustee.” When asked to clarify whether nChain has a trustee or if he was actually talking about the Tulip Trust, which she helps run, Wright said the trust is “associated” with nChain.
“I purposely show no foresight or insight,” Wright said, laughing, of the inner workings of the trusts. “As soon as I know something, someone will want me to take it to court, so I make sure I don’t know it.” After a long pause, he added, “I purposely don’t know.” Documents from the Kleiman estate’s lawsuit against Wright show the existence of at least three Tulip Trusts.
Despite having 260 employees, Wright claims this will be nChain’s first year of profitability. Chief intellectual property officer Robert Alizon said the company has five individual licensees and he expects to have 20 by the end of the year. He said his main goal is to help entrepreneurs build profitable businesses on the BSV blockchain, but nChain is also laying the groundwork for charging developers who create projects using other applications for the blockchain. “We want to inherently support the ecosystem that chooses BSV,” Alizon said. “Obviously, if people are competing without paying fees, we need to start regulating that as well. Whether you’re operating in or outside of BSV, you have the right and must obtain a license from nChain.” David Pearce, a lawyer based in Birmingham, England, who has tracked 440 nChain patents in Europe alone, said “for better or worse, many of these patents are valid.” Although he has challenged three nChain patents on behalf of bitcoin consultant Arthur van Pelt, he believes most of the others are “validly granted by the European Patent Office, which is generally considered one of the most difficult patent offices in the world to file with.”
But there’s a catch. While nChain holds 765 patents in jurisdictions including the U.S., Europe and China, covering topics such as tokenization, identity management and micropayments, Forbes could only find one company that paid for a BSV license: Oslo-based supply chain company Unisot, which paid a one-time licensing fee. Among other licensees, e-Livestock, which is developing software that lets people in developing countries use farm animals as collateral, said it didn’t pay multi-year licensing fees. Ed Rivera of blockchain-based film studio MyMovies said Wright granted him the rights to use streaming and encryption patents, though Wright told Forbes that wasn’t the case. The government of the Philippines’ Bataan province signed a memorandum of understanding with nChain in December to jointly develop patents jointly owned with the company if a formal agreement is reached.
Bryan Daugherty, chairman of New Hampshire-based Smart Ledger, which builds on BSV, said he does not have a license and does not believe his company needs one to do its work but feels protected by nChain. “They are protecting us,” he said, “and hopefully creating a good, friendly atmosphere for this technology to emerge beyond the crypto casinos we see today.”
Behind the scenes as Wright’s team is building its BSV ecosystem, a complex legal battle is underway that could affect the future of the industry. In February 2018, Dave Kleiman’s estate sued Wright in the U.S. District Court for the Southern District of Florida, accusing him of “perpetrating a conspiracy against Dave’s estate to seize Dave’s Bitcoin and his rights to certain intellectual property related to Bitcoin technology.”
As the lawsuit was delayed, in January 2021, Wright’s team sent a cease-and-desist letter to the crypto subsidiary of payments company Block, demanding that it remove copies of the Bitcoin white paper from its website. Lawyers for patent trade group Crypto Open Patent Alliance (COPA) responded with a letter demanding that Wright prove he wrote the white paper, and subsequently filed a lawsuit against him in the UK High Court seeking a ruling on the inventor’s patent rights and proving his authorship.
Back in Florida, in December 2021, a jury in the Kleiman estate case dismissed nearly all of the claims against Wright. W&K, not the estate, was awarded $100 million in damages and $43 million in interest. “Except for my gift of shares to Dave, W&K’s intellectual property has nothing to do with Dave,” Wright said. In addition to the cash, Wright’s credibility may have been damaged. The judge in the case wrote that she found he had forged documents and that she did not believe the Tulip Trust actually existed: “The totality of the evidence in the record does not establish the existence of the Tulip Trust.”
But Wright may still have the last laugh. His second wife, Ramona Ang, and his ex-wife have filed documents claiming that Ira Kleiman did not hold a controlling stake in W&K and that they were partial owners, suggesting that the verdict may be partially blamed on Wright's own family. Although a federal judge in Florida declined to intervene in the dispute, Wright said he is looking into the intellectual property owned by W&K. "The only intellectual property owned by the company exists in my mind," he wrote in an email to Forbes. He added that all the documents are with Dave Kleiman, but he apparently did not save them in a way that people can access them."
In February, Wright went on the offensive again. He said Tulip Trading, a subsidiary of the Tulip Trust, sued 16 bitcoin developers, including van der Laan, in the British Royal Courts of Justice, claiming that they had a fiduciary duty to maintain the bitcoin code and had stolen $3 billion from him, not including the $33 billion worth of bitcoins that W&K claimed to own.
Then, in June, the UK High Court said the COPA case, the Bitcoin developer case, and two other cases would be heard jointly starting in January 2024. In particular, they will look at what the court said was the “identity question” that applies to each case. “None of these cases will go anywhere until Craig Wright proves he is Satoshi,” said Pearce, the patent lawyer. “They are all things related to intellectual property. But they all rely on the premise that Craig Wright is Satoshi. He is not.”
Jess Jonas, chief legal officer of the Bitcoin Legal Defense Fund, which represents developers working on cryptocurrency-related projects, is less optimistic. “People can’t just bury their heads in the sand and say, ‘Well, you know, he’s not Satoshi, so the courts will figure that out and it’ll be over.’” She added, “Developers and other industry participants are paying a huge price for having to respond to these claims, and they have to do so because this is about one of the most important open source licenses. If this protection doesn’t exist, then why would people put themselves at risk and develop free and open source software for public use?”
When asked if he was concerned about the impact his patents could have on Bitcoin and other open-source developers, Wright responded, "They're public. If people don't fact-check these things, it's not my fault." While Wright has said he has plans to enforce his intellectual property more broadly, his current focus is on the current case and extracting licensing fees from those willing to pay. One of the possible future defendants is Apple, which Wright claims violated copyright by distributing the Bitcoin white paper on certain devices.
As Wright prepared for the January High Court hearing, he said much of his legal strategy would hinge on the migration of the Bitcoin codebase to Github and the alleged circumvention of its administrators’ controls. He described it as a violation of the U.K. Computer Misuse Act 1990. “It’s a criminal offense,” Wright said.
