Lawsuit against Craig Wright trudges forward, plaintiff wants to know who controlled Satoshi's 3 email addresses

Disclaimer: These summaries are provided for educational purposes only by Nelson Rosario and Stephen Palley. They are not legal advice. These are our opinions only, aren’t authorized by any past, present or future client or employer. Also we might change our minds. We contain multitudes.

As always, Rosario summaries are “NMR” and Palley summaries are “SDP".

[related id=1]Kleiman v. Wright, CASE NO. 18-CV-80176-BB (SD Fla. March 26, 2019)[NMR]

In a lawsuit, the most time-consuming part is often the discovery process. Discovery is the way in which each side in the lawsuit gathers all the information that they feel is relevant to the case at hand. Information is gathered through interrogatories (written questions the other side is required to answer), requests for documents, requests for admissions (requiring a party to admit or deny something), and deposing witnesses where people are questioned under oath.

The discovery process takes a long time, because there is usually a lot of information to sift through, and there is always disagreement as to what information is relevant to the case. Ultimately, those disputes are determined by a judge taking into consideration arguments from each party. Recently, there was a hearing on a newly filed joint discovery memo in this case that provides some insight into what information each side in this case wants.

Before jumping into what is going on in discovery, to briefly recap, this case involves Dave Kleiman’s brother Ira suing Dr. Craig Wright for alleged theft of over 1 million bitcoin that Dave allegedly controlled, as well as alleged theft of certain intellectual property associated with the creation of Bitcoin. Okay, so where is discovery at right now? The first thing that jumps out from the transcript is the sheer amount of information each side is having to deal with. Supposedly, the plaintiff has 1 million documents from the relevant time period, and the defense has somewhere in the neighborhood of 1.2–1.3 million documents.

One issue is what constitutes the universe of relevant documents. Typically, discovery works by identifying what documents might be relevant, collecting, and ultimately producing said documents for the other side. As the judge put it “what I hear both sides saying is I don’t really know what the other side has. To me, that is a fairly fundamental discussion that you don’t need me to be here today.” Neither side completely agreed with that characterization and instead think the issue is more that the other side will not give them all the information they feel they are entitled to. At the hearing, the judge ordered each party to commit to a rolling “production schedule” whereby at agreed upon intervals they would turn over whatever documents they had found to be relevant at that time. The reason for this is that each side is staring at a June deadline for completing discovery, and although the judge was sure to state that he felt each side was acting in good faith, they needed to move things along.

Another interesting consequence of this hearing has to do with the Satoshi Question. The plaintiffs allege that Dave Kleiman and Dr. Craig Wright partnered to create Bitcoin, mine bitcoin, and develop intellectual property related to Bitcoin. The plaintiff wants answers from the defendant to interrogatories as to who controlled the three email addresses known to have been used by Satoshi Nakamoto, as well as any information as to who was involved in what they believe was “association of co-owners for profit.” The defendant did not think these questions should be in an interrogatory, because:

[t]o put this in the form of an interrogatory essentially requires Dr. Wright to go back in time, because it’s asking for finite information, and sort of piece together everything that he’s done in his life in this space, as it were, in this cryptocurrency space, and we think it is inappropriate.

The judge overruled the objection to the interrogatories and as a consequence the defense will have to respond.

The Block is pleased to bring you expert cryptocurrency legal analysis courtesy of Stephen Palley (@stephendpalley) and Nelson M. Rosario (@nelsonmrosario). They summarize three cryptocurrency-related cases on a weekly basis and have given The Block permission to republish their commentary and analysis in full. Part III of this week's analysis, Crypto Caselaw Minute, is above.