The real question is whether the nearly 4,000 patents he controls or is applying for will force programmers around the world to stop using open source software.
Author: Michael del Castillo
Translation: 0×11, Foresight News
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In the autumn of 2012, long before most people had heard of Craig Wright, the Australian computer scientist quietly submitted his first patent related to the newly created Bitcoin, when the value of one Bitcoin was only $10. The following year, Coinbase, an exchange, raised $5 million to “make Bitcoin easier for ordinary consumers to use.” Another year later, in 2014, Vitalik Buterin, co-founder of Bitcoin Magazine, published a paper describing a new type of blockchain called Ethereum and praised the breakthroughs in cryptography by Bitcoin’s pseudonymous creator, Satoshi Nakamoto.
While the nascent cryptocurrency industry focused on the licensing of the Bitcoin code (which allowed anyone to use the software under copyright law), Wright was seeking patent protection for this new technology. In December 2015, when Wright was identified as a candidate for Satoshi Nakamoto by two news organizations, he had already applied for two patents and was the chief scientist of a Swiss company called nChain, which had also applied for three patents.
Recently, there has been a heated debate over whether the 52-year-old Wright is indeed Nakamoto, the inventor of Bitcoin. His Bitcoin wallet contains $3.3 billion worth of cryptocurrency (with the current price of Bitcoin at around $30,000), and his blockchain invention allows anyone in the world to send encrypted currency to others without relying on banks. According to data from Pitchbook, digital currencies have helped entrepreneurs raise $89 billion. Next year, Wright will go to the High Court in the UK to prove that he is the inventor of Bitcoin.
“I created Bitcoin,” Wright told Forbes in his London office.
But the focus of this debate may soon change. Regardless of whether Wright can prove that he invented Bitcoin, if he can use the 800 granted patents and 3,000 pending patents he owns in 46 jurisdictions in the way he wants, he will soon make a fortune from the trend of building widespread blockchain applications. This will have an impact on the $1 trillion cryptocurrency market and some of the largest companies in the world. Unfortunately, Wright is adopting a legal strategy to set a precedent for the release of software under permissive copyright rules (open source), including the widely used open source JavaScript framework (React) by Meta, Microsoft’s Visual Studio for code editing, and Linus Torvalds’ Linux operating system, which is associated with 40% of the entire Internet.
“I don’t like Silicon Valley, they are a cancer in this world,” Wright said. “They can steal whatever they want.” He paused for a moment, seemingly reconsidering his words, and added, “They are cancerous hemorrhoids on the world’s buttocks.”
Craig Steven Wright, born in Brisbane, Australia in 1970, had a mother who input data on punch cards for early computers and a father who served in the Vietnam War. Wright is a polymath, with his personal website listing over 20 degrees ranging from a Master’s in statistics and forensic psychology to a diploma in art appreciation. Over the years, his research on intellectual property (including various uses of blockchain technology) has been transferred into shell games of trusts and companies.
He said that in 1997, he founded an Australian trust company called Craig Wright R&D. This company originally owned Blacknet, which he described as a precursor to Bitcoin. In 2002, he transferred this research to another trust entity, Ridges Estate.
In the mid-2000s, while pursuing a postgraduate degree in international trade and commercial law, he met American security expert Dave Kleiman on an online forum. Although Wright claimed to have only met Kleiman once while drinking in 2013, the two collaborated on many projects, including a book on investigating computer hacking behaviors written by Wright and edited by Kleiman in 2007. A copy of an email allegedly sent by Wright to Kleiman in 2015, which appeared to show Wright seeking Kleiman’s help in editing a paper on Bitcoin, was provided to Gizmodo. Wright refused to confirm the authenticity of this email but claimed that Gizmodo’s article was based on forged documents from Kleiman’s estate, and he insisted that he himself created Bitcoin. The law firm Boies Schiller Flexner, representing Kleiman’s estate, has not yet responded to requests for comment.
On October 31, 2008, a group (or individual) using the pseudonym Satoshi Nakamoto published a white paper describing a “peer-to-peer electronic cash system” – Bitcoin, which allows for direct online payments from one party to another without the need for “financial institutions.” When the Bitcoin code was released to the Sourceforge software repository in January 2009, Nakamoto added a note allowing anyone to use it without any restrictions under the MIT license. The copyright was designated as Copyright (c) 2009 Satoshi Nakamoto.
Wright said, “The MIT license is very friendly to intellectual property.” He assigned the intellectual property related to Bitcoin to four Australian companies under his control, each with different businesses. In an email, he wrote that Information Defense obtained the intellectual property related to the Bitcoin database, Integyrs obtained his cryptographic research, Greyfog received the IP related to the Internet of Things, and Strassen received the research related to the so-called sharding network.
Although the audit documents from 2010 showed that no patents had been “submitted” yet, Wright said that he started working to change this situation in the same year. His first Bitcoin-related patent was a method where multiple users could split access code into blockchain registries to obtain content such as inheritance and company records. This method was granted by the United States Patent and Trademark Office in 2017. In December 2010, Satoshi Nakamoto wrote his last public article, which began with, “There is more work to be done…”
Wright said that in early 2011, he and his first wife Lynn, together with Kleiman, founded W&K Info Defense to develop blockchain-related intellectual property. He also renamed Craig Wright R&D to Tulip Trust, which would continue to play an important role in his business strategy. Although the actual composition of Tulip Trust remains a mystery, Wright stated that Tulip “owns companies and only owns companies.”
On December 13, 2010, the creator of Bitcoin logged in using the pseudonym Satoshi Nakamoto, which would be one of his last public acts, changing the license from “Copyright (c) 2009-2010 Satoshi Nakamoto” to “Copyright (c) 2009-2010 Bitcoin Developers.” A few days later, Andresen released a message stating, “With Satoshi’s blessing, I will begin more active project management of Bitcoin, although I am reluctant.”
In the following spring, Satoshi Nakamoto sent what was believed to be the final private message and then disappeared. “I’ve moved on to other things,” he wrote in an email to former Bitcoin core developer Mike Hearn, “Handing over to Gavin Andresen and others in the Bitcoin core development team is a good choice.” Hearn confirmed that such an email existed.
A colorful legend emerged: in order for Bitcoin to truly decentralize, it couldn’t have any loopholes. Therefore, Satoshi Nakamoto wrote the code and left it as a gift to the world, then entrusted a group of open-source developers to help it grow into a global currency independent of banks or governments. Nine months later, Gavin Andresen moved the code repository to Github.
Contrary to the email sent to Hearn and the hints from Sourceforge, Wright claimed that he did not agree to the transfer of power. He stated that a new group of Bitcoin developers, including Wladimir van der Laan, the former main maintainer of the code repository, bypassed his control over the repository and moved the software to Github, changing the license. Wright claimed that Bitcoin was essentially stolen. “I didn’t expect them to do something like this to circumvent my administrative control.” In an email to Forbes, van der Laan denied moving the code repository and also denied changing the license. “That was Satoshi Nakamoto’s doing,” he wrote.
Throughout, Wright’s work on intellectual property continued.
In April 2013, Kleiman passed away, and his brother Ira inherited his estate. W&K owned Bitcoin-related intellectual property as well as approximately 1.1 million Bitcoins acquired through mining (currently valued at $33 billion), although there is no evidence indicating that they possess Satoshi Nakamoto’s private key, which is required to transfer these assets.
In 2015, Wright founded the DeMorgan Group, headquartered in Sydney, which claimed to be a research and development company focused on “next-generation banking” and “alternative currency”. He transferred ownership of most of the Bitcoin-related work to DeMorgan and announced that the company was eligible for a subsidy of up to $54 million from the Australian Taxation Office for stimulating innovation. “This subsidy will enhance the company’s cash position,” he said in a statement at the time, “and is an important source of funding for our development.”
As the business grew that summer, Wright signed an agreement with former gambling entrepreneur Stefan Matthews, who purchased DeMorgan’s intellectual property for AUD 1.5 million and transferred it to a UK company, now known as nChain. The nearly AUD 15 million deal also included a five-year, AUD 3.5 million service agreement with Wright and his second wife Ramona, and granted them 37% ownership of the new company. The transaction with Matthews also transferred control of about 90% of Wright’s intellectual property to nChain. Later, the major shareholder of nChain was found to be Robert MacGregor, the founder of the Canadian payment company nTrust. Forbes attempted to contact him through two email addresses associated with MacGregor, but was unable to send the message successfully.
On December 8, 2015, following reports from Wired and Gizmodo about an anonymous leak, Wright became a controversial public figure in the crypto world, claiming he was very likely to be Satoshi Nakamoto, or as Wired put it, “an excellent conman who very much wants us to believe.” Wright said, “The articles from Wired and Gizmodo are based on information from Ira Kleiman. To fabricate a never happened story about his brother, Ira forged documents, made false statements, and used multiple emails to impersonate multiple people contacting the reporters. He did this to obtain money that does not belong to him.”
nChain Chairman Matthews said Wright’s newfound notoriety changed nChain. While his vision for the company had always been to become a long-term software and intellectual property developer, MacGregor saw a Steve Jobs-like figure in Wright, someone who could elevate 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 about my thoughts on Silicon Valley before doing so.”
Wright gave speeches at various events, including a panel discussion with another “suspect” of being Satoshi Nakamoto, Nick Szabo, and both he and Matthews claimed that many of the blog posts attributed to the author were actually written by MacGregor. The strategy was to make the world believe once and for all that Wright was Satoshi Nakamoto through a series of “proof meetings”. In April 2016, entrepreneur Jon Matonis and software developer Andresen claimed to have witnessed Wright sign a message to the Bitcoin blockchain using encryption signatures related to Satoshi Nakamoto; the two subsequently publicly stated that they believed his claims.
Although Wright seemed to have used Satoshi Nakamoto’s signature, doubts about its authenticity quickly arose. A report by Vice revealed that there could be multiple ways to forge the signature. Wright’s subsequent written explanation was refuted by security researcher Dan Kaminsky, who said that the messages could have been sent without knowledge of Nakamoto’s private key.
In his apology on his website, Wright seemed to acknowledge that the evidence was not convincing, but he insisted that he was Nakamoto. “As the events of this week unfolded and I prepared to publish the proof of access to the earliest keys, I broke. I do not have the courage. I cannot,” he wrote. “From the beginning, my qualifications and character have been attacked. When these accusations were proven false, new accusations began.”
Until now, Wright has not publicly proven himself again, nor has he transferred any Bitcoin from Nakamoto’s account. One of the upcoming British court hearings may require the adoption of one of these methods. Matonis claimed to believe that Wright’s article can still be found on his Medium website, but this year, Andresen added a note to his original statement in May 2016, stating that “trusting Craig Wright like I did was a mistake.”
Matthews said that in the following months of 2016, Wright spent most of his time at home, occasionally sending him some invention ideas. The animosity between Wright and MacGregor continued to escalate. “I have had to act as a referee in some incredible fights between them,” Matthews said. “MacGregor told me that he no longer wanted anything to do with Craig Wright or nChain.” Matthews said that he formed a Maltese private equity fund to acquire MacGregor’s shares, and by November 2016, MacGregor left the company.
Matthews began to look for new funding.
Not long after, he found former billionaire Calvin Ayre, who had briefly appeared on the wanted list of the U.S. Immigration and Customs Enforcement for running the Bodog gambling business, which was accused of illegal operation in Maryland. “We considered ourselves completely legal,” Ayre said. “Once, 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 become a private investor again. Matthews, who manages Ayre’s venture capital work, said he met Wright in 2000 when the inventor helped his gambling industry employer Centrebet conduct security audits. Matthews believed the two would hit it off. “He brought Wright in,” Ayre said. “Told me there was someone I’ve known since 2006. I knew he was Satoshi Nakamoto. So we wanted to come and talk to you because he needs some help.”
Matthews flew from his home in Manila, and Wright flew from Australia to meet on the rooftop of Ayre’s penthouse in Vancouver. The three spent two days drinking wine, getting to know each other, and having a great time. “From the moment I introduced Calvin and Craig, there was an attraction between them,” Matthews said. After this meeting, Ayre invested in nChain. “Stefan and I pulled him out,” Ayre said. “Built some infrastructure around him and created a complete ecosystem.”
If nChain is the foundation of the ecosystem, then they are starting to install bolts and beams. In August 2017, Ayre acquired the cryptocurrency news website CoinGeek. In 2018, Wright, Ayre, and Matthews launched a fork of Bitcoin called Bitcoin Satoshi Vision (BSV), which is a cryptocurrency based on a version of Bitcoin prior to 2017, without the upgrades that make Bitcoin more private. “You can mix, you can transfer, without any record,” Wright describes the transactions in BSV.
According to data from CoinGecko, BSV has achieved some success, with a market capitalization of $767 million, ranking 54th on the cryptocurrency market cap rankings. Wright says he owns a “small amount” of BSV, Ayre says he owns some, “but not a large amount,” and Matthews did not respond to questions about his BSV holdings.
In April 2019, Wright registered two copyrights with the United States Copyright Office – one for the Bitcoin white paper and another for the Bitcoin software. The following month, the office issued a statement saying, “With respect to the two registrations issued to Wright, the Copyright Office does not investigate the truth of any statement made, and during the examination 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 claimant of the works being registered. Wright confirmed this.”
If Wright wants to convert that IP into cash, he is likely to do it through nChain. Nchain is based in London, where Wright resides, but is officially registered in Zug, Switzerland, a cryptocurrency-friendly jurisdiction. Nchain’s main sources of revenue are royalties and consulting fees from its licensed patents. Despite being primarily funded by Ayre, Wright stated that a private equity fund based in Liechtenstein is also an investor, and his wife is a “trustee.” When asked to clarify whether nChain has trustees or if he is actually referring to the Tulip Trust she helps operate, Wright says the trust is “associated” with nChain.
“I deliberately pretend to have no foresight or insight,” Wright says with a laugh when talking about the internal workings of the trust. “Once I know something, someone wants to sue me over it, so I make sure I don’t know.” After a long pause, he adds, “I deliberately don’t know.” Documents filed in the Kleiman estate’s lawsuit against Wright show that at least three Tulip Trusts exist.
Despite having 260 employees, Wright claims this will be nChain’s first profitable year. Chief Intellectual Property Officer Robert Alizon says the company currently has 5 individuals licensed, with an expected 20 by the end of this year. He says his main focus is helping entrepreneurs build profitable businesses on the BSV blockchain, but nChain also lays the foundation for charging developers who create projects for other applications using the blockchain. “We want to support the ecosystem that chooses BSV at its core,” Alizon says. “Clearly, if people are competing without paying fees, we need to start regulating that as well. Whether you’re operating within BSV or outside of BSV, you have the right and you must obtain nChain’s permission.” David Pearce, a lawyer based in Birmingham, UK, tracks 440 nChain patents in Europe alone and says, “Many of these patents, for better or worse, are valid.” Although he has challenged three nChain patents on behalf of Bitcoin advisor Arthur van Pelt, he believes that the majority of the patents have “been validly granted by the European Patent Office, which is generally considered one of the most difficult patent offices in the world to obtain patents from.”
But here’s the catch. Despite nChain holding 765 patents in jurisdictions such as the United States, 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 firm Unisot, which paid a one-time licensing fee. Among other licensees, e-Livestock is developing software that allows people in developing countries to use farm animals as collateral, and the company claims it hasn’t paid a licensing fee for years. Ed Rivera of blockchain-based film studio MyMovies says Wright granted him the right to use streaming and encryption patents, although Wright told Forbes this is not true. The government of Badian Province in the Philippines signed a memorandum of understanding with nChain in December and, if a formal agreement is reached, they can jointly develop the patents owned by the company.
Smart Ledger, based in New Hampshire, operates on BSV and its chairman, Bryan Daugherty, says he does not have a license and does not believe his company needs one to operate, but he feels protected by nChain. “They are protecting us,” he said. “I hope to create a good, friendly atmosphere for the emergence of this technology beyond what we see today in the world of crypto gambling.”
Behind the scenes of Wright’s team building its BSV ecosystem, a complex legal battle is underway that could impact the future of the industry. In February 2018, the estate manager of Dave Kleiman filed a lawsuit against Wright in the Southern District Court of Florida, accusing him of “conspiring to seize Dave’s bitcoins and his rights to certain intellectual property related to bitcoin technology.”
With the lawsuit being postponed, in January 2021, Wright’s team sent a cease-and-desist letter to Block, a subsidiary of payment company Square, demanding the removal of a copy of the Bitcoin whitepaper from its website. Lawyers from the Crypto Open Patent Alliance (COPA) responded with a letter requesting Wright to prove he authored the whitepaper, which was followed by a lawsuit in the UK High Court demanding a ruling on the inventor’s patent rights to prove himself as the author.
In December 2021, back in Florida, the jury in the Kleiman estate case dismissed almost all claims against Wright. W&K (not the estate manager) was awarded $100 million in damages and $43 million in interest. Wright stated, “Apart from the shares I gifted to Dave, W&K’s intellectual property has no connection to Dave.” Besides the monetary damages, Wright’s reputation may also have been damaged. The judge in the case wrote that she found him to have forged documents and she does not believe the Tulip Trust actually exists: “All 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 controlling rights to W&K and that they are partial owners, suggesting that the judgment may partially blame Wright’s own family. Although a federal judge in Florida refused to intervene in the dispute, Wright stated that he is researching 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 keep them in a way that people can access.”
In February, Wright launched another attack. He claimed that Tulip Trading, a company under the Tulip Trust, had sued 16 bitcoin developers, including van der Laan, in the UK’s Royal Court, alleging that they had a fiduciary duty to maintain the bitcoin code, which effectively stole $3 billion from him, not including the $33 billion worth of bitcoin claimed by W&K.
In June, the UK High Court stated that the COLianGuai case, the bitcoin developers case, and two other cases would be jointly heard starting in January 2024. In particular, they will examine the “identity issues” that the court said apply to each case. “None of these cases will make any progress until Craig Wright proves he is Satoshi Nakamoto,” patent lawyer Pearce said. “They all have something to do with intellectual property. But they all depend on the premise that Craig Wright is Satoshi Nakamoto. And he is not.“
Jess Jonas, Chief Legal Officer of the Bitcoin Legal Defense Fund, which represents developers involved in 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 Nakamoto, so the courts will figure that out and everything will be over,'” she added. “Developers and other industry participants have paid a huge price for having to respond to these claims, and they have to because it’s about one of the most important open-source licenses. If that protection doesn’t exist, then why would people put themselves at risk and develop free open-source software for public use?“
When asked if he is concerned that his patents could affect bitcoin and other open-source developers, Wright replied, “They are public. If people don’t verify these things, it’s not my fault.” Although Wright said he plans to enforce his intellectual property more broadly, his current focus is on the current case and obtaining licensing fees from those willing to pay. One possible future defendant is Apple, as Wright claims the company infringed on copyright by distributing the bitcoin white paper on certain devices.
As Wright prepares for the January High Court hearing, he stated that much of his legal strategy will depend on the migration of the bitcoin codebase to Github and the alleged acts of circumventing his administrative control. He described it as a violation of the 1990 UK Computer Misuse Act. Wright stated, “This is a criminal offense.”
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