Kleiman’s brother Ira alleges Wright has transferred 1.1 million bitcoin, approximately $11 billion at press time, under his control through fraudulent contracts, emails, and business relationships.
The lawsuit, first filed in 2018, has resulted in back-and-forth claims between the two sides and a combative court appearance by Wright himself.
US Judge Beth Bloom has denied a request by Craig Wright to scuttle a lawsuit filed against him because of his past testimony and his credibility before the court, according to a court filing from August 15.
On April 15, Wright filed a motion challenging the Southern District of Florida’s jurisdiction over an ongoing lawsuit pursued by the estate of Wright’s former business partner, the late Dave Kleiman.
Wright has claimed in the past to have invented bitcoin through the pseudonym Satoshi Nakamoto, a claim that has been attacked by numerous critics. Wright, in turn, has pursued legal action against such critics, though in recent days a court tossed out a suit filed against investor Roger Ver.
Wright argues that the court does not have subject matter jurisdiction over the proceedings, because an entity oversight was granted on Florida-based W&K Info Defense Research, a now defunct firm, had a foreign national as “director.”
Specifically, Wright cites Uyen Nguyen, a Vietnamese national, as outside the jurisdiction of the court. Wright previously claimed not to have had contact with Nguyen since 2016.
In her motion, Judge Bloom states that Wright “failed to provide any credible evidence showing a lack of diversity.” She continued to explicate contradictory evidence Wright put forth showing Nguyen’s relationship to W&K.
Bloom provides 5 statements where Wright obfuscates the ownership structure of W&K. At varying points he said that only Kleiman owned W&K, that he and Kleiman split ownership, and that “he has ‘no idea’ who the owners… were.”
She calls Wright’s argument for dismissal “novel”, as “he seems to argue that even though his numerous conflicting statements are the very reason confusion has been created… the Court should nonetheless use these statements as a basis to challenge the Court’s subject matter jurisdiction.”
“In weighing the evidence, the Court simply does not find the Defendant’s testimony to be credible”, Bloom wrote.
Now, Bloom said, Wright insists that “three additional parties may be members of W&K”, and these persons and entities destroy jurisdiction.
After a “careful review”, Bloom found Wright’s evidence for supporting this claim that Nyugen, his ex-wife Lynn Wright, and the liquidated firm Coin-Exch were party to W&K as insufficient.
In particular she found emails, purportedly between Wright and Kleiman, as well as business registrations submitted as evidence, as “extremely speculative.”
In paragraph break, Bloom notably quotes Sir Walter Scott’s Marmion:
“Oh! What a tangled web we weave when first we practice to deceive.”
Further, Bloom states that that federal district courts in fact “have subject matter jurisdiction over civil actions where the amount in controversy exceeds $75,000.00 and the suit is between citizens of different states.”
Judge Calls Out Kleiman Attorneys Over ‘Excessive’ Fees in Craig Wright Case
Kleiman’s four-man legal team filed for a total of $658,500, comprised of more than $592,000 in attorney fees, as well as roughly $66,000 in other expenses like subject experts.
But finding these rates too high, the judge slashed what the Kleiman team can actually claim to $113,760 in fees and $52,000 in expenses. That’s a grand total of $165,800 – approximately a quarter of the amount originally sought.
Kleiman’s suit against Wright – which claims Wright had tried to seize assets that rightfully belonged to his dead brother’s estate – has been rocky for the Australian tech entrepreneur (who also claims he’s bitcoin’s inventor, Satoshi Nakamoto). Wright has been found in contempt of court for not revealing bitcoin holdings and accused of abusing privilege to withhold documents potentially crucial to the case.
But in this week’s order, Judge Reinhart found Kleiman’s four attorneys claimed fees at rates that either exceeded their experience or were simply out of proportion to the amount usually charged in the Florida court system. He also found the legal team inflated billable hours, by either overstaffing or exaggerating the time it took to perform tasks.
“I find all these rates to be excessive. I am personally familiar with the hourly rates charged by the top civil litigators in Palm Beach County,” said Judge Reinhart.
In one example, the judge asked why three attorneys were needed to prepare and review the response to a motion from the defendant. “It was not reasonable to have three lawyers involved to this extent to review a draft for a relatively straight-forward pleading,” he said. In another instance, Judge Reinhart said the attendance of three attorneys at an evidentiary hearing was excessive.
The costs were awarded due to “protracted litigation over production of documents identifying Dr. Wright’s bitcoin holdings,” according to the order.
Wright now has until March 30 to pay out the legal team’s reduced fees and expenses.