Last Week Today: Bitcoin and Cryptocurrency Weekly Digest for August 19-26

Satoshi Nakamoto Renaissance Holdings, which claims to be a new blockchain company, hired the services of Ivy McLemore, a New York based PR …
  • A new individual claims he is Satoshi in risible PR stunt
  • Liquidity analysis pegs Bitcoin’s market dominance beyond 90%
  • Japanese Amazon launches cryptocurrency wallet and exchange
  • Original faketoshi, Craig Wright loses Kleiman lawsuit

Yes, as we can all see, the price of bitcoin dropped over $550 in a matter of hours on August 28th to see a low of $9,613 BTC/USD after being $10,269 earlier in the day. But, aside from the real time action, let’s recap the last week of bitcoin and cryptocurrency news stories and map out a timeline of what transpired for those who may have missed any important headlines.

Another Satoshi Wannabe Emerges With Sob Story And New Project to Shill

Before getting stuck into this story, it would be remiss not to make it unequivocally clear that this is a story that I would much rather not cover, were it not for the publicity and conspicuity it has been afforded in mainstream media.

With the most notorious claim to the moniker, courtesy of Craig Wright, falling apart at the seams in the middle of a Florida courtroom, it would seem many a wannabe Satoshi is now emboldened to step into the breach with some pretty ridiculous backstories.

Satoshi Nakamoto Renaissance Holdings, which claims to be a new blockchain company, hired the services of Ivy McLemore, a New York based PR agency, to reveal the identity of Satoshi Nakamoto.

A three-part reveal was published last week over the course of three days by the PR firm and it has left many in the crypto community fuming and wondering just how much more blatantly false and downright preposterous these claims are going to get and what it’s going to take to stop the faketoshi farce.

The individual claiming to be Satoshi was revealed by many online to be Bilal Khalid from Pakistan, by looking up the registration for another website he owned, even before he himself came around to revealing his identity in the third installment of his three-part reveal on the website.

Most of the efforts at debunking the claims focused on the use of basic word press, multiple edits and poor choice of words, but all that is really of any relevance is whether he is able to sign a message from Satoshi’s address, which predictably he cannot.

As narrated to Ivy McLemore, Bilal talks about the origins of the Bitcoin idea as everyone knows it, the cryptography mailing list et all., and then explains the provenance of the Bitcoin name as stemming from a disgraced, defunct Pakistani bank, Bank of CredIT and COmmerce INternational (BCCI).

He shows proof of registering a domain named after BCCI in 2008, talks about being paranoid over his identity, says his pseudonym was inspired by Chaldean numerology, thanks Hal Finney and explains how he solved the Byzantine General’s Problem.

In parts two and three, he narrates his life story, which comes across as a cookie-cutter sob story – about how being denied banking services in the UK inspired him to create a currency independent of banks, losing access to his email addresses and his 980,000 bitcoins.

Bilal Khalid, who adopted the alias James Caan in the UK, claims that he mined his bitcoins using a remote computer, which he then transferred to his Fujitsu laptop and then to an Acer laptop. Being of the habit of “never leaving data that was recoverable on any remote PC or laptop,” he then wiped all the data from old devices.

As luck would have it, the Acer stopped working the very next day. He sent it to Acer support, who diagnosed a corrupt hard drive and replaced it. Thus, Satoshi lost his 980,000 bitcoins.

In all of this tedious yarn, where exactly is there any semblance of proof to adduce this individual’s claim to being the creator of Bitcoin?

Ignore the story, but does the reveal consist of any verifiable information at all that only Satoshi and maybe a few early contributors, someone like Andresen, would be privy to?

Everything in the reveal, besides the individual’s life story, is publicly available information. The best thing you could say about this wannabe’s claim is that it can justifiably be argued to warrant a B-grade disaster fiction movie.

Ivy McLemore doesn’t seem like a serious PR firm but if it has any designs on being one someday, it should have simply said to Bilal, “Cool story, bro. But do you have any actual proof?”

Is Bitcoin More Dominant Than What Market Cap Indicates?

We tend to measure Bitcoin’s dominance by calculating the share of its market cap against the combined market cap of all cryptocurrencies but how reliable is the method?

Arcane Research published an analysis last week based on volume and liquidity of the various markets to show that Bitcoin’s actual dominance might be a lot higher than what market cap data suggest. The study claims that the market cap measure is deeply flawed and underestimates the relative strength of Bitcoin.

The argument put forth is that the market cap does not reckon for liquidity, which is the ability to execute large orders in a market without slippage and a tight spread between ask and bid prices. A good indicator of liquidity is volume and the study uses volume to measure the relative dominance of different currencies.

Using this method, which excludes stablecoins as a fiat alternative, thus not being true cryptocurrencies, Bitcoin’s dominance is estimated to be over 90%.

By using volume data only from the top 10 exchanges, which are largely regulated and reputed to not indulge in wash trading, Bitcoin’s dominance using the volume-weighted method is a staggering 92.4%.

Japanese Central Bank “in love” With Blockchain Technology

As inventors of fiber-optic communication, microprocessor, laptop and camera phones, among a myriad other technologies, Japan is widely regarded as the most progressive country in the world for developing and adopting revolutionary technologies. Obviously, you wouldn’t expect Japan to stifle blockchain innovation in the country.

Last week, an executive from Bank of Japan (BOJ) revealed that the country’s central bank is “in love” the technology behind virtual currencies and has no fear of capital outflows through new forms of money, “Because of fear of capital outflows, China regards all financial assets as enemies. But we are not worried about capital outflows. We are in love with the technology behind it (virtual currency) and interacting with the technical community.”

The country’s largest e-commerce platform, Rakuten, often dubbed “Japanese Amazon”, released a wallet last week, first for android devices and a few days later for iOS devices. Along with the wallet service, the app also provides feeless spot trading service for crypto assets.

Rakuten Wallet’s parent company, Rakuten Group, had been seeking regulatory clearance since March and has now obtained license to allow trading of three crypto assets – Bitcoin, Ethereum and Bitcoin Cash.

Customers of Rakuten will be able to deposit Japanese yen to their account and exchange it to any of the three crypto assets using the smartphone app. To encourage users to adopt crypto payments, no fee is charged on crypto to crypto transactions.

This is a major development in Japan, the equivalent of Amazon integrating crypto payments in the US, and shows how progressive Japan continues to set the benchmark for adoption of revolutionary technologies.

Craig Wright Is Found Guilty of Perjury to No One’s Surprise

Since we’re talking faketoshis this week, we might as well round it up with the Kleiman lawsuit involving Craig Wright.

Ira Kleiman, who is the brother of Wright’s erstwhile business partner, late Dave Kleiman, litigated Wright in February 2018 over embezzlement of 1.1 million bitcoins which were mined and jointly held by Wright and Dave Kleiman.

The lawsuit, which has rumbled on for 18 months, seems to have been all but settled. Reports emerged on Monday from courtroom eyewitnesses that the judge had ruled the case in favour of the Kleiman estate.

Wright was found guilty of perjury, falsifying documents and in contempt of court by Judge Bruce E. Reinhart, who rejected all of Wright’s testimony. It was also found that “Tulip Trust”, which was the trust created for holding the coins the pair had mined between 2009 and 2011, does not exist.

In his final ruling, Judge Reinhart awarded the Kleiman trust 50% of intellectual property rights and 50% of bitcoins mined before Dave Kleiman’s passing.

At least, Wright won’t be able to sue anyone that calls him a fraud for libel while he busies himself trying to cough up the 550,000 bitcoins which he likely never mined.

In the immortal words of Walter Scott, “Oh, what a tangled web we weave, when first we practice to deceive!”

Trading Insights

It would be fair to suggest that August has been a pretty mundane month with a lot of sideways movement and relatively little volatility. That may not be a bad thing.

Bitcoin has already spent more days above 10000 than it did back in Dec ’17 to Jan ’18, which shows that it is comfortable at this level and doesn’t feel out of place. A necessary spell of consolidation following a steep upsurge is characteristic of a healthy, mature market.

Last week’s trading closed in red in a short body which indicates that sell pressure has relented once again at the key Fibonacci ratio of .38. This level, near 9400 has proven to be a formidable layer of support throughout the month. The resistance to break still remains 10800.

The weekly chart is showing bearish tendencies on multiple fronts for the first time in nearly six months. Although RSI remains healthy in the bull market zone, there are rumblings which indicate a slide could be imminent. Whether or not it comes to pass, 9400 still remains the support zone to defend for the time being.

Weekly MACD saw bearish convergence this week, with ADX holding high and DI likewise evincing bearish convergence.

On the Daily chart, which has been largely bearish since last week, RSI has formed an ominous M-top formation just above lower bull cycle level of 40.

After showing some signs of mounting a revival, Ethereum has gone back to treading water, struggling to break above 0.019 BTC. Ethereum Classic (ETC) was the best performer among leading altcoins last week, gaining nearly 30%, rising from 55k sats to 70k sats.

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Judge savages self-proclaimed bitcoin inventor Craig Wright

Ethereum creator Vitalik Buterin labeled Wright a “fraud” last year. Of course, another possibility is that Wright isn’t Nakamoto but did mine some …
Craig Wright, right, arrives at federal court in West Palm Beach, Florida, on June 28, 2019.
Enlarge/ Craig Wright, right, arrives at federal court in West Palm Beach, Florida, on June 28, 2019.
Saul Martinez/Bloomberg via Getty Images

Australian Internet personality Craig Wright claims he is bitcoin inventor Satoshi Nakamoto. A lot of people don’t believe him. But one person who does believe him is Ira Kleiman, the brother of deceased technologist Dave Kleiman. According to possibly forged emails published by Gizmodo in 2015, Wright and Kleiman worked together to develop and launch bitcoin in 2008 and 2009.

Those documents suggested that Wright and Kleiman collaborated to mine hundreds of thousands of bitcoins in 2009 and 2010. That would make Ira Kleiman the heir to a multibillion-dollar fortune. So last year, Kleiman sued Wright, seeking his share of the Nakamoto bitcoins.

Kleiman and Wright have been battling in a Florida courtroom ever since. In a Tuesday ruling, federal Magistrate Judge Bruce Reinhart savaged Wright for repeatedly misleading the court and generally wasting everyone’s time.

Wright claims that after drug dealers and human traffickers started using bitcoin, Wright got spooked and decided to dissociate himself from the cryptocurrency. He created a legal entity called the Tulip Trust, with him and Dave Kleiman as trustees. Then he encrypted the keys to his bitcoin holdings using an encryption scheme that required multiple keys to unscramble the data. With Kleiman dead, Wright claims he can no longer unscramble the file.

Judge Reinhart isn’t buying it.

“Dr. Wright’s demeanor did not impress me as someone who was telling the truth,” the judge wrote. “I completely reject Dr. Wright’s testimony about the alleged Tulip Trust, the alleged encrypted file, and his alleged inability to identify his bitcoin holdings.” Indeed, Reinhart concluded that “Wright’s testimony that this trust exists was intentionally false.”

“Dr. Wright’s story not only was not supported by other evidence in the record, it defies common sense and real-life experience,” the judge added. More generally, Reinhart found that Wright’s “non-compliance with the court’s orders is willful and in bad faith.”

The judge invited Kleiman to submit a request for attorney’s fees in the case. And crucially, he ruled that any bitcoins Wright mined prior to 2013 were the joint property of Wright and Kleiman.

The judge didn’t decide whether Wright is Satoshi

The entire case has an air of unreality because Reinhart’s ruling doesn’t address the most important question: do the bitcoins exist at all?

Bitcoins were easy to mine in cryptocurrency’s early years. Forensic analysis indicates that more than 1 million bitcoins were mined in 2009 and 2010 and haven’t been moved since then. These bitcoins are now worth around $10 billion. It’s widely assumed that many of these bitcoins belong to bitcoin creator Satoshi Nakamoto. Kleiman’s lawsuit is based on the assumption that Wright is Nakamoto and controls those bitcoins.

But if Wright isn’t Nakamoto, then there’s no reason to think Wright has a million bitcoins—or anything close to that figure. Kleiman and Wright might be fighting a legal battle over bitcoins that don’t exist.

But Tuesday’s ruling doesn’t address this issue. “The court is not required to decide, and does not decide, whether defendant Dr. Craig Wright is Sata[o]shi Nakamoto, the inventor of the bitcoin cybercurrency,” Reinhart wrote.

There’s a lot of reason to doubt Wright’s claim to Nakamoto’s mantle. Key pieces of evidence linking Wright to Nakamoto appear to have been forged years after the fact. More importantly, if Wright wanted to prove that he is Nakamoto, he could do it quite easily by producing a cryptographic signature using a private key associated with Nakamoto’s identity. Wright has ducked repeated challenges to do this.

Ethereum creator Vitalik Buterin labeled Wright a “fraud” last year.

Of course, another possibility is that Wright isn’t Nakamoto but did mine some bitcoins in the early years of the cryptocurrency—either with Kleiman or on his own.

In any event, Reinhart’s Tuesday ruling doesn’t end the case—far from it. Wright will be given yet another opportunity to produce information about his bitcoin holdings. If he can’t do so—and can’t convince the judge that he’s incapable of doing so—he could face more serious consequences, including a finding of contempt. On the other hand, if Wright does produce a credible record of his bitcoin holdings, the case will proceed to a legal fight over how much of Wright’s fortune properly belongs to the Kleiman estate.

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Judge Confirms Ruling: Craig Wright to Forfeit 50% of Bitcoin Holdings

In a court document published Tuesday, Magistrate Judge Bruce E. Reinhart confirmed that Wright, the self-declared inventor of bitcoin, must forfeit …

A corroborating order has been filed in Craig Wright’s sanctions and contempt hearing.

In a court document published Tuesday, Magistrate Judge Bruce E. Reinhart confirmed that Wright, the self-declared inventor of bitcoin, must forfeit half his crypto mined prior to 2014 to Ira Kleiman as well as half his intellectual property. Additionally, Wright is ordered to pay the attorney’s fees and related expenses incurred in this motion.

The court found Wright had argued in bad faith, perjured himself and admitted false evidence during the motion.

The ongoing trial began in 2018, when Kleiman – the brother of Wright’s late business partner Dave Kleiman – sued for half the bitcoin holdings in the so-called Tulip Trust, alleging that Wright defrauded the family’s estate.

The magistrate said:

“Dr. Wright and David Kleiman entered into a 50/50 partnership to develop Bitcoin intellectual property and to mine bitcoin; (2) any Bitcoin-related intellectual property developed by Dr. Wright prior to David Kleiman’s death was property of the partnership, (3) all bitcoin mined by Dr. Wright prior to David Kleiman’s death (“the partnership’s bitcoin”) was property of the partnership when mined; and (4) Plaintiffs presently retain an ownership interest in the partnership’s bitcoin, and any assets traceable to them.”

Accordingly, Wright’s argument – that the bitcoin is inaccessible due both to his former business partner’s death as well as a complicated encryption mechanism – was found to be in bad faith.

The sanctions are Wright’s alone, Reinhart wrote.

“I find without hesitation that sanctions are not warranted against Dr. Wright’s counsel,” the judge wrote, adding:

“Counsel has zealously and ethically advocated for their client. Counsel has unfailingly been candid with this Court, even when Dr. Wright’s conduct and conflicting statements have created awkward situations for counsel.”

Jason Gottlieb, partner at Morrison Cohen LLP, said the ruling was “atypical” procedurally, and the district judge overseeing the trial may not accept Reinhart’s decision without amendment.

Previously, Wright’s testimony was declared to be “inconsistent” by District Judge Beth Bloom.

Kleiman was represented by Kyle Roche and Velvel Freedman of Roche Freedman LLP, while Wright was represented by Rivero Mestre LLP.

Kleiman must alert Wright of the appropriate costs due to him on or prior to Sept. 20. While this ruling does determine liability, further discovery for the trial may be underway.

Craig Wright image via CoinDesk archives

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Wright’s Wife Among Two Others To Be Questioned In Kleiman Lawsuit

“Mr MacGregor was privy to details surrounding bitcoin’s creation, the alleged Satoshi Nakamoto partnership, and the trusts at the heart of the dispute …

Jul 25, 2019 20:40&nbspUTC

| Updated:

Jul 25, 2019 at 20:40&nbspUTC

By&nbspRishma Banerjee

The Florida court hearing the $10 billion Kleiman vs Wright lawsuit has made a request to the Queen’s Bench Division in London to question Craig Wright’s wife, Ramona Watts and two other UK residents, namely Andrew O’Hagan and Robert MacGregor.

The request was made on July 24 on behalf of Ira Kleiman, the brother of Wright’s deceased partner Dave Kleiman, who alleges Wright stole 1.1 million bitcoin from his brother.

Ramona Watts may be relevant to the case because being the defendant’s wife she was identified in his initial disclosures as “an individual with knowledge of the facts underlying the plaintiff’s’ claims”.

Andrew O’Hagan, the author of the book, “The Satoshi Affair”, was noted as a witness of interest because of a detailed recount in his book involving “Wright, his claim to have created bitcoin, and his relationship with Kleiman”. The legal filings say that during the six-month process of interviewing Wright for his book:

“Recorded ‘many hours of tape’ of his ‘many dozens of hours of conversations with Wright’ where they discussed information relevant to the lawsuit”.

Finally, Robert MacGregor, one of Wright’s business associates was mentioned in the document as:

“Mr MacGregor was privy to details surrounding bitcoin’s creation, the alleged Satoshi Nakamoto partnership, and the trusts at the heart of the dispute in this case.”

The most significant part of the case, is, however, the “Tulip Trusts”; two funds that were the destination of the bulk of bitcoins stockpiled by Wright and Dave Kleiman between 2009 and 2013.

Only seven trustees, including Wright and Kleiman, held encrypted keys, and were “managed by at least three people but not more than seven at any time”.

Wright, who will be appearing in the Florida court on August 7, accepted not having access to all the requisite keys to obtain the funds, but asserted that the entire 1.1 million bitcoins – valued at more than $10 billion at current prices – “will be returned” to him on January 1, 2020.

Rishma Banerjee

Rishma is currently pursuing a bachelor’s degree in International Relations and has a special place in her life for sifting through all sorts of random trivia, thank you very much.

Craig Wright’s Wife to be Questioned in $10 Billion Kleiman Lawsuit

The Florida court hearing the $10 billion lawsuit against Wright – who claims to be bitcoin inventor Satoshi Nakamoto – made the request to the UK …

New legal filings in the Kleiman vs Wright bitcoin trial have requested International Judicial Assistance with the Queen’s Bench Division in London to question Craig Wright’s wife and two other UK residents.

The Florida court hearing the $10 billion lawsuit against Wright – who claims to be bitcoin inventor Satoshi Nakamoto – made the request to the UK court on July 24 on behalf of Ira Kleiman, the brother of Wright’s deceased partner Dave Kleiman, who alleges Wright stole 1.1 million bitcoin from his brother.

The Kleiman estate is claiming at least 300,000 bitcoin along with any forked assets. Wright denies any wrongdoing, but failed in June to provide documents requested by the court showing his bitcoin holdings prior to December 31, 2013. Wright claims that he and Dave Kleiman had co-operated in mutual trust.

Three Witnesses Requested

In the latest filing to the court, the counsel for the Kleiman estate said they wanted to question three individuals:

  • Ramona Watts – the wife of Craig Wright
  • Andrew O’Hagan – author of the book The Satoshi Affair
  • Robert MacGregor – a business associate of Craig Wright

Ramona Watts

The estate’s lawyers said Ramona Watts’ was relevant to their case because she was the defendant’s wife and was identified in his initial disclosures as “an individual with knowledge of the facts underlying the plaintiffs’ [Kleiman estate] claims”.

The document continues:

Ms Watts worked with the defendant and has been involved in his companies since 2011, [and] before they were married he discussed Kleiman with her, she learned he created bitcoin, gave her detailed accounts of what he’d done to create bitcoin and ‘talked to [Ms Watts] about everything, including my past before we got married’.

Andrew O’Hagan

O’Hagan was noted as a witness of interest because he recounted in his book a detailed story involving “Wright, his claim to created bicoin, and his relationship with Kleiman”.

The document adds that during the six-month process of interviewing Wright for his book, he:

Recorded ‘many hours of tape’ of his ‘many dozens of hours of conversations with Wright’ where they discudded information relevant to the lawsuit.

Robert MacGregor

Finally, Robert MacGregor’s was named in the document as Wright’s business associate. It asserts:

Mr MacGregor was privy to details surrounding bitcoin’s creation, the alleged Satoshi Nakamoto partnership, and the trusts at the heart of the dispute in this case.

Tulip Trusts

Indeed, at the heart of the case are the so-called Tulip Trusts, two funds that were the destination of the bulk of bitcoins stockpiled by Wright and Dave Kleiman between 2009 and 2013.

Seven trustees, of which Wright and Kleiman were two, each held encrypted keys, and according to a document that emerged in December 2015, the Tulip Trusts were “managed by at least three people but not more than seven at any time”.

Wright has said that he doesn’t have access to all the requisite keys to access the funds, but that the entire 1.1 million bitcoins – valued at more than $10 billion at current prices – “will be returned” to him on January 1, 2020.

Wright’s next appearance in the Florida court is on August 7.

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