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Craig Wright Loses Trial and Must Forfeit 50% of Holdings

Courts have ruled that Craig Wright must surrender half of his Bitcoin holdings and intellectual property to the estate of Dave Kleiman. This Monday, resolution was given on a $10 billion lawsuit registered by the brother of the late Dave Kleiman. 

The ruling will apply to holdings and intellectual property predating 2014, and represents a big win for the plaintiffs. The lawsuit was originally filed after the plaintiffs realized that Craig Wright was attempting to seize their late family member’s Bitcoin holdings. 

The case has not yet concluded, as the mechanics of the collection of assets and other procedures that become more complicated with the involvement of Bitcoin still needs to be planned out. 

However, Wright will not be permitted to have a jury trial nor oppose the ruling. He may appeal or file exceptions/objections, but the main aspects of this case have been resolved and it is expected to be adopted by the District Judge. 

A Definitive Ruling

Kleiman passed away in 2013 after being an integral part in the early spreading of the Bitcoin community. Craig Wright was his business partner and offered to help his estate sell the Bitcoin, but allegedly defrauded the estate. 

The judge did not rule on Wright’s controversial claim that he was Satoshi, however the ruling specified that he did not seem to be acting as a credible source. This was largely due to the fact that Wright perjured himself by putting forward falsified documents. 

As the beneficiaries of Kleiman’s estate, the family will receive half of more than a million Bitcoins. This Bitcoin was jointly mined by Kleiman and Wright, and is valued at approximately $10 billion. That would place the value of the settlement in the $5 billion range, not including the intellectual property rights around Bitcoin’s software. 

The Crypto Market

There are two likely effects of settling this lawsuit. First, it will take away some of the short-term uncertainty regarding Bitcoin. It did not help the cryptocurrency’s perception for fraud and controversy to be continually connected to to it. Now, the storm clouds will clear and the Bitcoin image may become (a little) more reputable. 

However, the second effect is a steep drop in the price of Bitcoin as the Kleiman estate sells some of it to cover the tax liability due to the estate tax that will be triggered. It is not clear what the actual tax liability is, but with any bulk sale of Bitcoin there is usually a drop in price. 

Regardless of the estate tax implications, the estate may decide to cash out on a significant amount of their cryptocurrency exposure. With approximately $5 billion in Bitcoin, they might rather diversify their holdings. 

The price of Bitcoin hasn’t reacted to this potential situation and is still hovering just above $10k. This could be communicating market sentiments that the estate will slowly unload portions of their position so as to not miss out on gains. Time will tell what this development means for the crypto market at large, but a short-term unloading could be a great time for potential investors to get in. 

 

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