The latest twist in the Bitcoin founder mystery and what it means for IP

A UK court’s rejection of an Australian computer scientist’s claim to be the enigmatic Bitcoin founder marks an important step towards protecting developers’ rights, say Phil Sherrell and William Wortley of Bird & Bird.

Following the conclusion of a six-week trial in the High Court of England and Wales that has been the subject of worldwide media attention, Justice James Mellor declared that Craig Wright is not Satoshi Nakamoto—the pseudonymous creator of Bitcoin. While he indicated that a “fairly lengthy” judgment would follow in due course, the judge stated that evidence was “overwhelming”, declaring that:

● Wright is not the author of the Bitcoin white paper and is not the person who adopted or operated under the pseudonym ‘Satoshi Nakamoto’ in the period 2008 to 2011.

● Wright is not the person who created the Bitcoin System and is not the author of the initial version of the Bitcoin software.

In this article we take a brief look at just some of the unusual aspects of this case that unfolded in the lead-up to trial, and how they were dealt with.

An unusual case

In October 2008, a person (or persons) operating under the pseudonym Satoshi Nakamoto released the Bitcoin white paper, the foundational paper underlying Bitcoin (as well as other blockchain and cryptocurrency technologies).

Shortly after, in January 2009, Satoshi released the Bitcoin code and early adopters commenced mining. Satoshi was involved in the development of Bitcoin until April 2011, at which point they vanished from public view.

Many Satoshi candidates have been suggested over the years but Australian computer scientist Wright was unusual because he himself had long claimed to be Bitcoin’s pseudonymous creator, having been ‘outed’ in articles published in Wired and Gizmodo in December 2015—following an alleged doxxing. The proof offered in those articles was immediately challenged by members of the Bitcoin community as including material that was doctored or otherwise unreliable, such that both publications cast doubt on their claims almost immediately.

Several months later, in May 2016, Wright publicly ‘revealed’ himself as Satoshi, having held several private sessions with certain Bitcoin experts and journalists in which he had supposedly demonstrated possession of one of Satoshi’s private keys. As part of this process, Wright published an article on his website describing a process of verifying cryptographic keys by signing a message quoting French philosopher Jean-Paul Sartre. This was said to demonstrate his possession of the private key linked to an early Bitcoin block, which was known to be associated with Satoshi because it recorded an early Bitcoin transfer that they made.

However, again this proffered ‘proof’ was debunked, as it emerged that the signature provided was in fact from an early Bitcoin transaction that was publicly available on the blockchain.

Assertion of IP rights

In recent years, Wright’s assertion of his claim has led to numerous lawsuits in multiple jurisdictions, including defamation proceedings brought against several individuals within the Bitcoin community who had accused him of being a fake. In early 2021, Wright started to assert ownership of IP rights relating to Bitcoin, writing to a number of companies, including several members of the Crypto Open Patent Alliance (COPA—a non-profit organisation based in the US set up to encourage the adoption of cryptocurrency technology through open development and innovation).

In these letters, Wright claimed to own copyright in the Bitcoin white paper and sought to have it taken down from their websites.

COPA reacted by launching its own claim, on its own behalf and in a representative capacity for its members, seeking a declaration that Wright was not the author, or the copyright owner, of the Bitcoin White Paper. In support of its claim, COPA initially pleaded four instances in which it said Wright had proffered false or forged evidence in support of his claim. This was later supplemented with further examples of what COPA said were forged documents, following forensic analysis of Wright’s disclosure.

Following the issue of the COPA proceedings, Wright brought a number of new IP claims against COPA and others. They included a claim against 26 defendants (including a number of Bitcoin developers) who Wright claimed had infringed his database rights in the Bitcoin system (the ‘BTC Core Claim’), and claims for passing off in respect of the use of the name ‘Bitcoin’.

In June 2023, Justice Mellor ruled that these proceedings would be jointly managed, so that the resolution of the main issue in the COPA Proceedings, namely the ‘identity issue’ (ie, whether Wright is Satoshi) would apply to all four of the claims. A number of the Bitcoin developers who were defendants in the BTC Core Claim chose to actively participate in the trial alongside COPA.

Events leading up to the trial

Given the central importance of document authenticity, Wright was ordered at an early stage in the case to nominate the documents that he relied on in support of his claim.

COPA challenged the authenticity of documents and some of those were then forensically analysed by the experts. However, following the first round of forensic reports, Wright produced several new sets of documents in support of his claim to be Satoshi—two of which would go on to play a prominent role at trial.

One class of documents related to a hard drive that Wright claimed to have discovered in September 2023, which allegedly contained significant documents contemporaneous to and pre-dating the publication of the Bitcoin White Paper.

Later, in November 2023, Wright provided evidence for the first time that he had written the Bitcoin White Paper in a software package called LaTeX, and disclosed a number of LaTeX files.

Wright contended that some of these files were an exact copy of the Bitcoin White Paper, and that (if correct)this would be strong evidence that he was Satoshi Nakamoto.

The evidence at trial

Unsurprisingly for a trial of this nature, extensive factual and expert evidence was relied upon. Much of the trial was dedicated to cross-examining Wright on his own documents and witness evidence (which ran to 15 witness statements by the time trial concluded). Originally scheduled for 5.5 days of cross examination covering his backstory, the allegations of forgery and other matters relating to his claim to be Satoshi, Wright was then recalled twice to give further evidence to deal with:

● The authenticity of documents that were disclosed very shortly before trial.

● A series of emails between and among Wright and his former and current solicitors, which included material that COPA’s forensic expert concluded had been forged.

Wright also relied on evidence from a number of individuals who he said corroborated his story. These included a long-time business associate of Wright who said he had received an early version of the Bitcoin White Paper, as well as others from Wright’s past who provided evidence of his technical abilities generally and characteristics which were said to support the idea that he was Satoshi.

Many anomalies

COPA’s 20 witnesses notably included some of the earliest known people to have interacted with Satoshi, such as Adam Back (whose ‘Hashcash’ paper is cited in the Bitcoin White Paper) and Martti Malmi (who helped Satoshi develop early source code). They also included several software developers, who gave evidence that various software tools and features present in Dr Wright’s documents said to be contemporaneous to the period of developing Bitcoin and the White Paper were in fact not available or in use in 2007 to 2008.

There was also expert evidence in several fields, including digital currency technology, with the experts in this field providing technical evidence on (inter alia) the signing sessions and Sartre blog post. COPA’s document forensics expert was cross examined on his extensive conclusions that many of Wright’s documents bore signs of alteration and tampering.

These included anomalies in the timestamp metadata, indications of later editing of documents and the use of fonts in documents that were created several years after the supposed date of the document. These findings were largely supported by Wright’s own expert in their joint report. Similarly, experts in LaTeX were in almost complete agreement, including in relation to the conclusion that (contrary to Dr Wright’s evidence) the Bitcoin White Paper was written in Open Office, rather than LaTeX.

A chilling effect

During his own cross examination, Wright called the expertise of both his document forensics and LaTeX experts into question and unusually, shortly before they were due to give evidence, he chose to dispense with both of his experts in these fields. COPA’s document forensics expert was recalled to deal with the additional forged emails referred to above.

Ultimately, having heard all the evidence, Justice Mellor chose not to wait for the handing down of judgment to share his conclusions, which he considered “useful and necessary” to do justice between the parties. That he was able to do so after a long trial, involving multiple parties, extensive factual evidence and varied and technical expert evidence, is a model of how the English legal system can be used effectively to handle complex pieces of litigation and deliver swift justice. The parties will now await handing down of the judgment—following which there will be a form of order hearing to determine the scope of other relief sought by COPA.

The effect of the decision is not merely academic. COPA provided unchallenged evidence of the chilling effect of Wright’s threats on the Bitcoin community; those threats had led, in particular, to a number of the developers on whom the Bitcoin software depends for its maintenance from withdrawing. The ruling of Justice Mellor represents an important step towards protecting those developers and ensuring that the cryptocurrency space is able to develop free of Wright’s claims.

Bird & Bird acted for the Crypto Open Patent Alliance.

Phil Sherrell is a partner at Bird & Bird.

William Shortley is an associate at Bird & Bird.