Craig Wright Denied Attempt to Dismiss Lawsuit Over Billions in Bitcoin

A U.S. federal court has largely denied crypto entrepreneur and self-proclaimed bitcoin inventor Craig Wright’s attempt to dismiss a lawsuit alleging that he misappropriated billions of dollars'-worth of bitcoin from the estate of a former business partner.

Wright is being sued by Ira Kleiman on behalf of the estate of his brother, the late Dave Kleiman, a forensic computer investigator and author, who passed away in 2013 following a battle with MRSA.

The suit accuses Wright of scheming to “seize Dave’s bitcoins and his rights to certain intellectual property associated with the bitcoin technology,” and is seeking return of a good portion of the 1.1 million bitcoins (worth roughly $3.9 billion as of press time) mined by the two, or its “fair market value,” as well as compensation for IP infringement.

Wright, the controversial cryptographer who has claimed to be bitcoin’s creator, Satoshi Nakamoto, filed a motion in April of this year to dismiss the case.

However, a court document filed in the southern district of Florida on Thursday reveals that most counts of Wright’s motion have been denied.

Of particular note, the order states:

"Here, the Court finds that Plaintiffs have sufficiently alleged a claim for conversion. The Amended Complaint alleges that Defendant converted at least 300,000 bitcoins upon Dave’s death and transferred them to various international trusts, which was an unauthorized act that deprived the Plaintiffs of the bitcoins therein. Accordingly, Plaintiffs’ claim for conversion (Count I) survives Defendant’s Motion to Dismiss. "

Elsewhere in the document, the court states that the exact number of bitcoin involved is yet to be determined, but the estate contends that it is "entitled to at least 300,000 bitcoins, along with their forked assets."

The estate's claim for constructive fraud also survives the motion to dismiss, it adds.

Wright's motion did, however, succeed on the claim that counts III and IV over misappropriation of "trade secrets" were not valid, as the three-year statute of limitations in Florida had been exceeded.

The order indicates that the plaintiffs stated that they were aware of Wright’s conduct on April 22, 2014, adding: "Even if they did not know the extent of the harm, upon learning of the Defendant’s conduct from the ATO auditor, the Plaintiffs should have discovered the Defendant’s misapplication of the trade secrets through the 'exercise of reasonable diligence.'"

Wright must now respond to counts I, II and V-IX, no later than Jan. 10, 2019.

The full court document can be found below:

Court order on motion to dismiss on Scribd

Craig Wright image via CoinDesk archive