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The battle over ‘Nakamoto’ identity

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Craig Wright mostly cleaned up his internet personas but did not initially reply to claims that he was Satoshi Nakamoto

The world first saw Bitcoin in October 2008, thanks to Satoshi Nakamoto. But the truth is nobody is still unaware of Nakamoto’s identity. One individual emerged from the conjecture: Craig Wright, an Australian computer scientist who has claimed to be Nakamoto since 2016. Since then he has been trying to provide evidence to the court of his identity.

Wright’s claim to Satoshi-hood will be contested in a trial that will start in the United Kingdom High Court. The Crypto Open Patent Alliance (COPA), a non-profit organisation of tech and cryptocurrency companies, is bringing the case in response to numerous lawsuits that Wright has filed against other parties and Bitcoin developers, attempting to claim intellectual property rights over Bitcoin as its purported inventor.

The COPA alleges that Wright’s actions have had a “chilling effect,” discouraging developers and impeding Bitcoin’s development. It is asking for an order prohibiting Wright from denying that he did not write the original code and that he does not possess the copyright to the white paper that first suggested Bitcoin. In essence, COPA is requesting that Wright be declared not to be Nakamoto by the court.

The decision will directly affect a complex web of related cases that will decide whether Wright can restrict the use of the Bitcoin system and prohibit developers from working on it without his consent.

“There are a lot of stakes involved,” said a representative of the Bitcoin Legal Defence Fund, a non-profit that supports Bitcoin developers in court. The representative asked to remain anonymous out of concern for Wright’s potential legal retaliation.

“Wright is asking for ultimate control over the Bitcoin network in the eyes of the law,” the source told WIRED.

In the wake of the 2008 global financial crisis, Nakamoto published a white paper outlining plans for a peer-to-peer payment system and new electronic money that would do away with the need for unreliable middlemen like banks. He sent the first Bitcoin transaction in January of 2009. After that, he vanished into thin air a little over two years later. Finding Nakamoto became a mission.

Nakamoto mystery deepens

According to Jameson Lopp, a software developer and early adopter of Bitcoin, the lack of a “leader” has helped Bitcoin in the interim by requiring it to develop under an unadulterated anarchy system, which has made it “robust.”

Anyone who volunteered their time to work on Bitcoin could have a say in its direction, free from the censorious influence of a founder. However, Wright’s assertion that he is Nakamoto raises potential complications.

Wright was first nominated as a potential candidate by both WIRED and Gizmodo on the same day in December 2015. The original story, based on a trove of leaked documents, proposed that Wright had “either invented Bitcoin or is a brilliant hoaxer.”

WIRED released a follow-up article a few days later, highlighting inconsistencies in the data that bolstered the latter conclusion.

Wright mostly cleaned up his internet personas but did not initially reply to claims that he was Nakamoto. However, by the next year, he had started to identify himself as the person who created Bitcoin. He has made numerous attempts—using a variety of techniques—to unequivocally substantiate the assertion, winning himself a devoted following of believers.

In 2016, Wright succeeded in persuading Jon Matonis, the former director of the advocacy group Bitcoin Foundation, and Gavin Andresen, an early contributor to the underlying software of Bitcoin. The billionaire Calvin Ayre, whose venture capital firm recently bought a majority stake in one of Wright’s businesses is his most outspoken supporter.

Is Wright’s narrative falling apart?

Wright hasn’t been able to change the consensus that the identity of the founder of Bitcoin is still a mystery. Lopp asserts that only a small percentage of Bitcoin users—those who “really want for there to be a Satoshi figure”—buy into Wright’s narrative. Recently, Andresen reversed his stance, saying, “I now realise it was a mistake to trust Craig Wright as much as I did. I regret getting sucked into the ‘who is (or isn’t) Satoshi’ game,’ in response to a previous blog post.”

Wright appears to have turned to litigation as his main strategy for pursuing his claim since 2019. He has accused those responsible for maintaining the Bitcoin codebase, exchanges, and developers of violating his copyright. He has also filed libel suits against those who have publicly criticised him.

According to Lindsay Gledhill, IP partner at Harper James, Wright’s approach in the lack of a patent appears to be to utilise legal action to “cobble together a basket of rights” that, when taken collectively, serve a similar purpose. Wright says she has tried to “use the wrong tool to do the job of a patent” in an attempt to claim ownership of Bitcoin. That’s the main idea behind it.

Wright has brought three lawsuits, one against a group of Bitcoin developers and the other against cryptocurrency exchanges Coinbase and Kraken, all based on the theory that he is Nakamoto. As a result, Edward James Mellor, the judge overseeing the cases, has made arrangements for the COPA proceeding to start first. In the vernacular of the courts, it will function as a preliminary issue trial, the decision of which will also be honoured in the related disputes.

According to IP specialist Rachel Alexander of the legal firm Wiggin, the identity problem is fundamental.

“It becomes much more difficult to pursue the broader claims if COPA can put an end to that,” the expert noted.

It is anticipated that the COPA case will last six weeks. Wright is scheduled to testify early, and the majority of the remaining time will be devoted to evaluating the veracity of the documentary evidence supporting his claim to be Nakamoto.

Charges against Wright

The principal accusation is that Wright falsified numerous of these records to give the impression that they were written at a specific period. A COPA representative requests that their identity not be made public in order to shield themselves from potential legal action from Wright.

“COPA has filed extensive evidence that we believe shows Wright has fabricated and forged,” the representative said, while asserting that, “COPA systematically reviews and dismantles the documents in reports filed with the court, pointing out ‘anachronisms’ that undermine his claim to have been Satoshi Nakamoto.”

Several individuals in the Bitcoin community, such as Lopp and blogger-podcaster Arthur van Pelt, have made prior efforts to enumerate Wright’s purported misrepresentations. Van Pelt refers to Wright’s actions as a “Satoshi Nakamoto cosplay” and the narrative he has created as a “Potemkin village.” Wright has written off criticisms of this nature as “basically fluff.” He declared before a Norwegian court in September 2022 that he had “never changed any documents or manipulated any documents.”

According to Gledhill, it is noteworthy that one of the highest courts in the UK is permitting COPA to make forgery claims.

She continued, “The courts will not let you make vague suggestions.”

This is not an accusation that the court will automatically accept. Strict guidelines apply. To put it another way, COPA would not be permitted to accuse Wright of forgery unless the court determined that it had sufficient justification to do so.

According to Alexander, the disagreement over the documents will be the “heart of the case.” That will be the main problem the court has to deal with. Wright’s chances of winning the COPA case and those who depend on its outcome would be harmed if the judge finds him guilty of forgery.

It could also result in a contempt of court charge against him. Alexander continued, “The punishment for this could be a fine, imprisonment, or both.”

Wright made COPA an unexpected settlement offer on January 24, two weeks before the start of the trial. Under the terms of the proposal, Wright would give up the right to pursue IP rights over Bitcoin and halt his own legal action in the related cases.

COPA would be required to acknowledge Wright as Satoshi Nakamoto in exchange for a number of other requirements. Tweeting that there were “loopholes that would allow (Wright) to sue people all over again,” COPA declared that it would “hard pass” on the offer.

The representative for COPA states that the organisation hopes a decision in its favour will “create a safe space” where developers won’t be “bullied or cowed” into stopping work on cryptocurrency technologies.

What if Wright wins the case?

Wright’s victory would essentially mean the opposite of COPA’s, which would be a return to business as usual. It would be easier for Wright to prevail in the related cases in which he is the plaintiff if the court determines that Wright is, in fact, Nakamoto, the author of the Bitcoin white paper. Wright accuses Bitcoin developers of violating his intellectual property rights by making “fundamental changes” to the system without first obtaining a license or authorisation in the most well-known of those cases, which is colloquially referred to as the Database Rights Case.

By essentially requesting a ruling, he would gain control over the primary software and prevent developers from making changes to the Bitcoin code without his consent.

The effects would also be felt globally. According to James Marsden, a senior associate at the law firm Dentons, “Each country will analyse a copyright case on their own basis, but the general principles underneath copyright law are harmonised by an accord that has been ratified by the vast majority of nations.”

In other words, if a United Kingdom court finds that Wright is Nakamoto, courts all over the world will probably conclude the same.

According to Lopp, the architecture of the Bitcoin network prevents code changes from being enforced on the parties operating the client software, or “nodes,” which support the payment system. Changes are intended to be suggested only, not imposed. This implies that Wright would be unable to alter Bitcoin on his own.

However, if he prevails, Wright might use the validation of his intellectual property rights to bring legal action against people who do not apply for a license, making it more difficult for developers to work together freely on the Bitcoin codebase—thereby ruining the unspoiled anarchy. It might be necessary for project developers to work in secret in order to keep themselves safe.

“We’d have to become much more ardent cypherpunks. The system’s functionality and health may suffer if developers become less and less willing to take legal action. There’s a chance that Bitcoin will become less well-known over time,” Lopp said.

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