All wrong for Wright – Dr Wright found not to be Bitcoin inventor

Background

Dr Wright asserted that he was the creator of Bitcoin under the pseudonym “Satoshi Nakamoto”, and that he wrote and published the 2008 White Paper describing the system entitled Bitcoin: A Peer-to-Peer Electronic Cash System and wrote and released the original Bitcoin source code.  Dr Wright also claimed to be a person with a “unique intellect”, with numerous degrees and PhDs in a wide range of subjects, the unique combination of which led him (purportedly) to devise the Bitcoin system.

Crypto Open Patent Alliance is a not-for-profit entity launched to support a community of blockchain developers, supported by prominent technologists such as Twitter-founder Jack Dorsey.  In April 2021, COPA commenced proceedings against Dr Wright, seeking an order that he was not Satoshi Nakamoto – in part referring to litigation commenced in Norway, where it was determined, even at that early stage, that an evidentiary email had been forged by Dr Wright.

In turn, Dr Wright issued various proceedings, including:

• alleging breach of database rights in relation to the Bitcoin blockchain and breach of copyright in the Bitcoin White Paper and Bitcoin File Format;^[3]
• alleging passing-off over the use of the term “Bitcoin” in relation to certain cryptocurrencies, against Kraken and Coinbase – for which Kraken and Coinbase managed to obtain security as to costs in the sum of £400,000;^[4] and
• an action in defamation against Peter McCormack over a tweet stating that Dr Wright was not Satoshi Nakamoto, in which Mr McCormack dropped the defence of truth due to potential legal costs, but Dr Wright was only awarded nominal damages due to his dishonesty during the proceedings.^[5]

In the first two cases, the Satoshi Nakamoto identity issue was left to be determined by the COPA litigation, and we expect that those cases will now fall away, potentially with significant costs implications for Dr Wright. On 28 March 2024, Mr Justice Mellor granted a freezing order against Dr Wright in the sum of £6 million,^[6] an amount probably contributed to by the fact that “COPA undertook all the heavy lifting on the expert evidence from their side”.

Evaluation of evidence

Following the conclusion of the six-week COPA trial, Mellor J issued a lengthy judgment, in which he thoroughly outlined why Dr Wright’s assertions were found to be false – going into “considerable technical and other detail” to expose his fabrications, and going as far to say that he was “entirely satisfied” that, in both his written evidence and in days of oral evidence under cross-examination, Dr Wright lied to the court “extensively and repeatedly”.  By contrast, the judge was convinced by the extensive written closing submissions and oral closing arguments presented by COPA and the developers, and by their witnesses’ “entirely independent and unbiased evidence”.

Mellor J noted that his review of the evidence was “a highly iterative process”, with regard to “a very large number of pieces of evidence”, where each piece had to be evaluated on its merits, but also in the context of what other pieces of evidence appeared to show.  He noted that Dr Wright had been given the opportunity to explain everything and had the benefit of numerous procedural indulgences regarding disclosure and additional evidence.  The judge considered that the process had allowed him “to reflect on the totality of the evidence”, in the course of which he found it “essential to step back from all the detail”.

Likewise, this article stops short of delving into the considerable technical detail, which seems highly specific to the particular facts of the case, and perhaps the main point of general interest to note about such detail is the court’s approach to examining it, which was both granular and holistic. Yet in brief summary:

• The factors alleged to support Dr Wright’s claim included his allegedly unique combination of skills, knowledge, qualifications and interests in various concepts, which combined to result in the creation of Bitcoin, the largely circumstantial evidence from his business associates and family, evidence from “proof” sessions in 2016 and Dr Wright’s own witness statements.
• The factors against Dr Wright fell into two categories: (a) the attributes and behaviour which Satoshi Nakamoto would be expected to exhibit and prove, and which Dr Wright failed to prove (e.g. Bitcoin-related insight or knowledge unique to Satoshi Nakamoto, and the real creator’s apparently collaborative and non-confrontational nature); and, by contrast (b) the inconsistent attributes and behaviours which Dr Wright had exhibited, and which were proved to the judge’s satisfaction (e.g. significant personal and technical errors that the real Satoshi Nakamoto would never have made, a misplaced and uncharacteristic arrogance, and resorting needlessly to forgery).

Court’s conclusions

Mellor J observed that: “Many of Dr Wright’s lies contained a grain of truth (which is sometimes said to be the mark of an accomplished liar), but there were many which did not and were outright lies.  As soon as one lie was exposed, Dr Wright resorted to further lies and evasions.”  The judge also considered most of Dr Wright’s forgeries were “clumsy”, despite Dr Wright’s expertise in IT security.  He concluded that: “To the extent that it is said there is evidence supporting his claim, it is at best questionable or of very dubious relevance or entirely circumstantial and at worst, it is fabricated and/or based on documents I am satisfied have been forged on a grand scale by Dr Wright.”

Accordingly, Mellor J found that the evidence was “overwhelming” that Dr Wright is not Satoshi Nakamoto, describing his claim to be Satoshi Nakamoto as his “biggest lie” and a “mendacious campaign”.  He evidently took a dim view of Dr Wright’s testimony, stating: “Dr Wright presents himself as an extremely clever person.  However, in my judgment, he is not nearly as clever as he thinks he is.”

The near-300-page judgment goes on to say that Dr Wright engaged in “the deliberate production of false documents to support false claims” and used the courts in England and Wales, Norway and the USA as “a vehicle for fraud”.  In particular, Dr Wright’s attempts to prove that he is Satoshi Nakamoto represented a “most serious abuse” of the High Court’s process.  Mellor J also noted in his conclusion that: “Despite acknowledging in this Trial that a few documents were inauthentic (generally blamed on others), he steadfastly refused to acknowledge any of the forged documents.  Instead, he lied repeatedly and extensively in his attempts to deflect the allegations of forgery.”  

In view of the “extremely unpleasant threats” that Dr Wright had made in the past against some of the individual developers, the judge was minded to make those critical assessments to ensure that “Dr Wright would not have any possible basis on which to threaten them with copyrights or database rights stemming from the work done by Satoshi Nakamoto”.

In passing, the judge noted his personal view that “it is likely that a number of people contributed to the creation of Bitcoin, albeit that there may well have been one central individual”.

Relief

Accordingly, Mellor J granted declaratory relief, making declarations that Dr Wright:

• is not the author of the Bitcoin White Paper;
• is not the person who adopted or operated under the pseudonym Satoshi Nakamoto in the period between 2008 and 2011;
• is not the person who created the Bitcoin system; and
• is not the author of the initial versions of the Bitcoin Software.

Mellor J deferred the issues of further injunctive relief, which would probably aim to prevent Dr Wright from initiating further claims against Bitcoin developers, and that was due to be dealt with in a subsequent hearing on the form of the order.

Comment

Dr Wright has said that he intended to appeal, although he would first need to obtain permission to do so. Even if such permission were granted, given the High Court’s finding of “overwhelming evidence” and the judge’s meticulous assessments of the complex facts, a successful appeal seems unlikely, in which case this judgment will put an end to Dr Wright’s claims in the English courts based on his alleged identity as Satoshi Nakamoto.

The decision means that a series of cases brought by Dr Wright on the basis that he is the creator of Bitcoin are likely to fallaway. It also means the real Satoshi Nakamoto – the alias used by the Bitcoin creator – remains a mystery.  Hypothetically, the person(s) behind Satoshi Nakamoto would own the rights in the Bitcoin system and could bring proceedings to enforce such rights, in reliance on the underlying intellectual property rights in the various Bitcoin-related rights (such as copyright in the Bitcoin File Format and White Paper).

Yet, businesses using the Bitcoin system, including BTC Core, Kraken, and Coinbase, will take comfort in knowing that the litigious Dr Wright’s claims have been discredited in court, and that the actual person(s) behind Satoshi Nakamoto do not appear to be inclined to enforce those rights in the same manner as Dr Wright. Indeed, there appears to be little incentive for the real Satoshi Nakamoto to do so: wallets likely to be controlled by Satoshi Nakamoto reportedly hold between 600,000 and 1.1 million BTC,^[7] worth billions at today’s exchange rate.

For legal practitioners, the case provides a useful case study of evidential considerations, in particular around the use of forged documents, and shows Mellor J’s dim view of the “technobabble” delivered by Dr Wright in the witness box.  

More cathartically, the decision marks an end to the lengthy legal saga embarked on by Dr Wright – the trial link was provided, on individual request, to over 1,100 people worldwide by the court (a largen umber in the context) and demonstrates the global interest in the outcome.

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Article written for Entertainment Law Review.