Craig Wright, Dave Kleiman and Satoshi Nakamoto Part 1 — A Pattern of Deception

June 21, 2019 / by Ronald Tichenor

This piece ran in last month’s edition of Proof of Brain, Crypto.IQ’s monthly newsletter.

People love a good mystery, and there is none better in crypto than the identity of Bitcoin’s creator, Satoshi Nakamoto. His, her, or their identity remains unknown even though Bitcoin’s creation played out in public view on internet forums and mailing lists over several years. The bigger Bitcoin gets, indeed the bigger the whole crypto ecosystem gets, the more weight the mystery carries.

But one Florida court case between the estate of IT security expert Dave Kleiman and Australian cybersecurity academic Craig Wright may have far-ranging consequences. The lawsuit isn’t just about who owes some mined Bitcoins to whom.

Craig Wright has publicly claimed to be Satoshi Nakamoto, and that claim is a critical point in the suit. We’ll get into the specific details of the case next month in part two, but first we need to look at the history of Craig Wright’s claims and why almost no one believes him.

In December of 2015, if you asked the question “who is Satoshi Nakamoto?” nobody would have named Craig Wright. He wasn’t on anyone’s radar. Known cryptographer members of the Cypherpunks mailing list such as Nick Szabo and Adam Back had always been the likely candidates. Hal Finney was the popular favorite and was the first person to receive Bitcoin in a transaction from Satoshi Nakamoto. But it was always assumed that Satoshi Nakamoto was likely a group of people as Bitcoin was a rather large and complex computing problem that one person likely didn’t solve alone. Other candidates included obscure mathematicians and computer scientists with only tenuous or coincidental connections. It was only when Craig Wright was “outed” when both Gizmodo and Wired wrote articles based on leaked emails and other evidence that his name became associated with Satoshi Nakamoto. And as with everything related to Craig Wright since then, that evidence is controversial.

Beginning in November of 2015, both Gizmodo and Wired received a small trove of materials from an anonymous source who claimed to know Craig Wright. There were blog posts, emails, and copies of documents that implied that Wright was the reclusive Bitcoin creator. Both publications produced articles the following month. Neither stated that Craig Wright was Satoshi Nakamoto beyond the shadow of a doubt, but from that point on, the idea was out there.

Soon afterward, this evidence begin to unravel. When it was journalists following up on a juicy lead, it made for a good story. But under closer scrutiny, experts in cybersecurity and PGP encryption immediately began to point out gigantic holes in the information that had been provided. Questions began to arise over who leaked the information. As the evidence started to unwind, both Gizmodo and Wired were forced to update their articles with revisions, rewrites, and editor’s notes.

Among the evidence were three blog posts on Craig Wright’s personal blog that seemed to show that he was working on Bitcoin at the time of its known creation. Towards the end of a post dated Aug. 26, 2008, where Wright describes his upcoming relaxing evening in excruciating pedantic detail, Wright said, “Tomorrow — back to the DNS paper, my statistics dissertation and work. I have a cryptocurrency paper out soon. Twenty years. Triple entry book keeping. BDO was good for something.”

The Bitcoin white paper was released in October 2008, so this post several weeks before that is certainly interesting. But the internet archives stuff. A simple look at the Wayback Machine that keeps periodic snapshots of every website shows that the reference to the “cryptocurrency paper” was added no earlier than June 2, 2014 and possibly as late as Oct. 3, 2015. The other blog posts show similar editing.

In several of the documents and in one of the blog posts, there are examples of PGP keys. PGP is a form of encryption used as a personal signature or to timestamp a document. But the PGP keys used in these documents have several inconsistencies. An analysis showed that they do not match keys known to have been used by Satoshi Nakamoto.

In addition, some that were passed off by Wright as having been created on the same day as other keys associated with Nakamoto were made with an encryption algorithm Nakamoto didn’t use. That is not impossible, but it is unlikely. What is impossible is that a PGP key allegedly produced in 2008 was created with PGP encryption software that didn’t exist until 2012. Essentially, Wright was creating PGP keys and inserting them into documents and the blog post years after the fact. The change to the blog post was added sometime after 2013. Craig Wright deleted the blog posts after critics called attention to the discrepancies.

We will deal with the documents related to Wright’s outing again in Part 2 as they will reappear in the Kleiman case. But Wright has put forth other proofs of his claim only to have them similarly debunked. For example, on Feb. 10, he tweeted a screenshot of a paper he claims to have submitted to the Australian government in 2001. It is called BlackNet and is a near word for word duplicate of the abstract of the October 2008 Bitcoin white paper. But Satoshi Nakamoto claimed to have been working on Bitcoin for 18 months, not 7 years, and not 20 years as Wright mentioned in his altered blog post.

Furthermore, Wright seems to have been unaware of an earlier draft of the white paper that Nakamoto shared with Wei Dai and other cryptographers in August 2008. This draft had a number of word choices which were corrected in the final version in October. Those corrections appear in Wright’s 2001 BlackNet Tweet. Also, Nakamoto learned of the proof of work concept, which is mentioned in the abstract, from Adam Back. He didn’t publish his paper on proof of work until 2002, a year after Wright’s BlackNet was supposedly submitted.

There is more. Much more. Too much to cover here. Wright has established a pattern of deceptive behavior, and not just regarding Satoshi Nakamoto. His troubles with the Australian Taxation Office show he employed the same tactics of obfuscating information and altering documents such as backdating invoices in dealings with his own government.

Craig Wright seems to know enough about cybersecurity procedures to fool 99.9% of people who see his evidence. It’s the other 0.1% who are the problem for him. They’re not fooled one bit. But Wright is not playing to the experts. He’s playing to the masses, that 99.9%. If he can convince even some of them, then he can parlay this series of deceptions into something significant and lucrative.

Let’s backtrack a bit and consider this from Satoshi Nakamoto’s perspective. We know he developed Bitcoin, released the white paper in October 2008, and launched the code in January 2009. He worked with Hal Finney, Martti Malmi, Gavin Andresen, and others to improve the code and get the network running. By 2011, he signed off and left the project forever, keeping his identity (or identities) a mystery.

Why would Craig Wright come out and fraudulently claim to be Satoshi Nakamoto unless he knew for sure that the real Satoshi wouldn’t come out of retirement to prove otherwise?

The answer probably lies somewhere between 2013 and 2015, when Craig Wright started to alter documents, edit blog posts, fake PGP keys, and prepare a campaign of lies to link himself to the identity of Satoshi Nakamoto. What happened in that time period to precipitate Wright’s activities?

Dave Kleiman died on April 26, 2013.

It was immediately after Dave Kleiman’s death that Craig Wright began to work feverishly to get information from the family and former employers of Dave Kleiman. He also, once again and fraudulently, wrote Dave Kleiman out of a business they’d owned together since 2011.

It is highly likely that Dave Kleiman’s death sparked Wright’s highly orchestrated activities around his own outing as Satoshi Nakamoto and his subsequent public claims.

In an ironic twist of fate, Wright’s pattern of deception may be his undoing. Much of the evidence being used against him by the Kleiman estate originated with Wright, but he can’t take it out of play because he didn’t bring the case. Dave Kleiman’s estate did. Wright wants more than anything to battle out the identity of Satoshi Nakamoto in public, not in a US courtroom where the truth of evidence has legal bearing and his pattern of deception is beginning to work against him.

In Part 2 that will be published in next month’s Proof of Brain, we’ll discuss the details of the case and how they relate to Craig Wright’s activities beginning in 2013. One piece of evidence is nothing short of a legal bombshell scheduled to go off Jan. 1, 2020. It may turn out to be nothing more than legal vaporware, and it could still nonetheless prove that Craig Wright is Satoshi Nakamoto — or prove he’s a fraud and a criminal and put an end to his claim in more than one surprising way.