Satoshi Files: David Kleiman

David Kleiman was a cybersecurity expert and forensic analyst who worked in the field of computer forensics and digital investigations. Notably, his association with Bitcoin came with his relationship with Craig Wright, the infamous candidate of possible Satoshis.

Source: New York Post

Early Life

Years before he became a ‘possible Satoshi,’ before he even became interested in computing and cybersecurity, David Kleiman enjoyed an illustrious career in the US military. He was named US Army soldier of the year before turning 21, and he received the Army Achievement Medal. He also earned a citation from the Secretary of the Army in appreciation for his contributions. The statement read:

"Your appearance, general military knowledge, current events knowledge, and other subjects covered knowledge, coupled with your strong dedication to duty, never failed to produce anything but outstanding results."

After leaving the military, Kleiman returned to Palm Beach, Florida, the same town he grew up in. He accepted a position with the Palm Beach Sheriff's Office, where he served as a police officer up until he was injured in a motorcycle accident. He needed a wheelchair to get around from that point on.

Source: Palm Beach Post

Despite his disability, Kleiman continued working for the Palm Beach Police. He grew interested in computing and cyber security around the time he attained the level of detective. He soon began working as a System Security Analyst in the computer crimes division, thanks to his newfound love of computing and cybersecurity.

In addition to being a prolific writer, he was well-known for his skills in fields like data recovery, network security and computer forensics. He contributed to a number of books and papers on computer security and forensics, and he made multiple television appearances as a computer expert.

Craig Wright

The question of whether David Kleiman is or isn’t Satoshi Nakamoto is inextricably linked to the question of Craig Wright’s involvement in Bitcoin’s invention. Without Craig Wright’s claims, almost nobody would suspect that Dave Kleiman invented Bitcoin. As such, large parts of this piece analyse Craig Wright’s actions, history and claims about how he and David Kleiman invented Bitcoin.

W&K Info Defense Research

It's not entirely clear where Kleiman met Craig Wright, but it was probably online. We know that they met in person only once, in Disneyland Florida in March 2009. The two men shared many traits, including having served in the military as young men, being highly intelligent, and having jobs in computing, cybersecurity and cryptography.

On April 14, 2013, David Kleiman left the hospital against the specific instructions of his physicians and the rest of the medical team.

He died in his home two weeks after leaving the hospital with an MRSA infection and infected bedsores. His body was found besides dozens of empty bottles of alcohol and a loaded handgun. His friend Kimon Andreou later testified in court that Kleiman was behind on his mortgage payments and utility bills, and had asked friends for lottery tickets.

Email Exchanges

Wright also claims to have published a blog post that proves he invented Bitcoin during the time Kleiman was hospitalized. He wrote:

“The Beta of Bitcoin is live tomorrow. This is decentralized... We try until it works.”

Wright reportedly sent Kleiman an email in September 2011 in which he gave up on being Satoshi. He wrote:

“I cannot do the Satoshi bit anymore. They no longer listen. I am better as a myth.”

Tulip Trust

As David Kleiman worked from his hospital bed, he and Wright established a trust through which Kleiman would give Wright almost 1.1 million BTC that he had mined in Florida in exchange for a cash payment of $100,000. This was called the Tulip Trust, and its existence and purpose are central to Wright’s story of how he and Kleiman invented Bitcoin.

The Tulip Trust links together other pieces of evidence that he and David Kleiman invented Bitcoin. This mainly consists of emails Wright sent to David Kleiman’s co-workers, friends and family members during the months following his death. He told Kleiman:

“We do not touch the trusts. Not yet. Not even for this. ONE DAY, they will change the world. Not millions, not billions. If I am right, they will be trillions.”

Paige and Conrad

In 2013, Patrick Paige and Carter Conrad – who run a business in Palm Beach called Computer Forensics LLC, of which David Kleiman was a partner, had reached out to Wright and a handful of Kleiman’s other friends to share the news of his passing a few days earlier.

They didn’t hear from Wright again until later in 2013, when he emailed them about a secret and mysterious project he and Kleiman worked on together. The project he referred to was, of course, Bitcoin.

Paige and Conrad weren't convinced by Wright's explanation and pressed for more details. Wright told them that David Kleiman was Satoshi Nakamoto, the sole creator of Bitcoin.

It didn’t take long, however, for ‘David Kleiman invented Bitcoin,’ to become ‘Craig Wright invented Bitcoin.”

Wright begged Paige and Conrad to give him contact details for Kleiman’s relatives so he could ask them to preserve Kleiman’s computers and hard drives. They gave him an email for Louis Kleiman - David Kleiman’s uncle, whom Wright contacted immediately. He told Louis that he and David Kleiman were “two of the three people behind Bitcoin,” and that he desperately needed access to David’s computers.

Wright himself openly stated that Kleiman was Bitcoin’s creator — at least at first. Then, Kleiman was relegated to Bitcoin’s co-creator, alongside Wright. A few more months went by, and Kleiman’s role diminished further, from co-creator to one of the “three people behind Bitcoin.”

Four months after Wright sent the documents to Paige and Conrad that disassociated Kleiman from W&K, he launched a lawsuit against the firm. He claimed that he and Kleiman had an equal interest in the company and its assets.

Ira Kleiman

While Wright wrested control of W&K’s intellectual property, he also sought to convince Ira Kleiman – David’s brother – to help him find David’s Bitcoin stash. Wright told Ira that his and David’s Bitcoin stash was on one of David’s old hard drives, but he had the ‘rights’ to 300,000 of them in the Tulip Trust.

Wright and Ira appear to have gotten along swimmingly at first; both Ira and Craig eagerly anticipated an unearned windfall thanks to Dave Kleiman's Bitcoin. However, their budding friendship turned sour in April 2014. Wright told Ira he shouldn’t cash out his half of David’s money now because he stood to make a lot more by letting him manage it. But Ira didn’t trust Wright to manage his brother’s money.

Wright sought to win Ira over with some hastily assembled forecasts, which showed Ira would triple his money if he didn’t cash out for three more years. But Ira wasn’t convinced, and Craig turned nasty. If Ira didn't comply with Craig's demands, he threatened to make all of W&K's software open source, which would have cost both of them millions.

Stefan Matthews and Rob Macgregor

By some miracle, Wright is bailed out before his whole life collapses by two businessmen: Stefan Matthews and Rob Macgregor. The two men agreed to buy all of Wright’s intellectual property, pay off his fines, and invest millions into his companies.

Why would anyone, let alone two wealthy and successful businessmen, want to invest even one cent into Wright’s companies?

The answer, it turns out, isn’t that they were foolish. It’s that Wright told them that he and his friend David Kleiman invented Bitcoin, and their intellectual property would be worth billions in a few years’ time. The fact that Matthews and Macgregor paid Wright almost $1 million up front and promised an additional $500,000 annually for the rights to his life story lends credence to this theory. They even contacted a writer – Andrew O’Hagan – asking him if he was interested in writing Satoshi’s life story.

Wired and Gizmodo

Both Wired and Gizmodo explained that anonymous persons had emailed them copies of emails that showed Craig Wright and David Kleiman had in fact masterminded Bitcoin. Newsweek journalist Leah Goodman later revealed that the evidence had been “aggressively” shopped around, and many other media outlets had received it, but none besides Wired and Gizmodo felt the evidence merited further investigation.

Two days after publishing the article, Wired added a subheading: “Probably not.”

Failed Cryptographic Proof

On April 7, 2016, Wright and his business partners – Matthews and Macgregor – invited journalists from the Economist and the BBC to watch live as Wright provided the cryptographic proof that he was Satoshi Nakamoto. They also invited Bitcoin’s lead developer, Gavin Andresen. With everyone present, Wright signed a message that Gavin chose using the private key from the first Bitcoin block, also called the genesis block.

The first session was considered a success at the time. Wright had convinced Gavin Andresen and the journalists that he was Satoshi Nakamoto.

A second session was set up with Dr. Nicolas Courtois, an academic and cryptography expert, and some journalists from GQ. Dr. Courtois would interview Wright and assess his proof, and the journalists would record the session. After inspecting the same proof that convinced Andresen and journalists from the BBC and the Economist, Dr. Courtois told Wright that his evidence was “inconclusive.”

The following morning, Dr. Courtois delivered some damning news:

“Craig has cheated us. It is a hoax. I have proof.”

Wright had used an early Bitcoin transaction already signed by Satoshi some years earlier to sign a new message. The story of Wright and Kleiman being Satoshi Nakamoto were cast into serious doubt.

Lawsuits Ensues

“And goodbye” was how Wright signed off this message. But it wasn’t goodbye.

In fact, since posting this message, Wright has more than doubled down; he and his financial backers have dug trenches and embarked on an all-out legal offensive against anyone who says Craig Wright and Dave Kleiman didn’t invent Bitcoin.

As a matter of fact, Wright and his associates have engaged in no less than five lawsuits concerning his claim to be Satoshi, four of which — against Vitalik Buterin, Roger Ver, Pete McCormack and Hodlonaut — he brought himself. Ira Kleiman — David’s brother — filed the first and largest lawsuit against him.

The end of Hodlonaut’s trial brings us to the present day. Craig Wright still maintains that he invented Bitcoin, but after a grueling trial against Ira Kleiman, he now neglects to mention David Kleiman’s supposed role. So despite the many lawsuits Craig Wright has lost, is there any truth in his story – that he and David Kleiman invented Bitcoin together?

Let’s take a look at the evidence.

The Evidence That David Kleiman Could Be Satoshi Nakamoto

#1 The Emails From Craig Wright

In 2015, Wired and Gizmodo made available emails between Wright and Kleiman showing them discussing Bitcoin before it went live.

It’s not possible to verify whether the emails are authentic (some are known to be fake), but if they were real, they would be a smoking gun. If Craig Wright provided the original emails and they were proved to be authentic, it would probably mean he and David Kleiman invented Bitcoin.

#2 The Timeline Matches Up

David Kleiman went into the VA hospital in September 2010, around the time Satoshi started handing over control of Bitcoin to Gavin Andresen and the other developers. In that sense, the timeline fits.

Additionally, the fact that he passed away in 2013 would explain Satoshi’s absence from the forums since mid-2011.

#3 His Sleep Schedule Matches Satoshi’s

Satoshi rarely emailed anyone or posted to the forums between 1-7 a.m. EST, which suggests that’s when he slept. It’s not a certainty, but a fairly safe assumption. So it’s likely that when he was developing Bitcoin, Satoshi lived on the US East Coast, where Kleiman lived.

We have to admit that this is flimsy evidence: 120 million other people also live on the US East Coast, including tens of thousands of coders, cryptographers and cybersecurity experts.

#4 Craig Wright’s Behaviour

The fact that Craig Wright claims to have either invented Bitcoin, or to have been involved in its creation, strongly suggests he either is Satoshi, or he knows who Satoshi is.

In this last scenario, we have to assume that Wright either discovered Kleiman was Satoshi, or he helped him build Bitcoin, and then took credit for the whole project after Kleiman passed away. Of course, there’s no hard evidence suggesting Wright ripped off his dead friend’s work – it’s just a theory, but it’s one worth considering.

Looking at the emails Wright sent to Ira Kleiman, and those he sent to David Kleiman’s colleagues Paige and Conrad, Wright was absolutely certain that David held a significant sum of Bitcoin. This wasn’t for show – he didn’t make plans to be outed as Satoshi until nearly a year later. He asked for Kleiman’s computers and hard drives to be kept safe, and for Ira to search David’s computers for any wallet files. What would be the point of doing so if he didn’t believe David had a considerable sum of Bitcoin?

So the question is – what did Craig Wright know that convinced him that David Kleiman had amassed a Bitcoin fortune? Had David told him so, perhaps? Or was he just guessing?

The Evidence That David Kleiman Isn't Likely Satoshi Nakamoto

#1 His Friends and Family Don’t Think He Was Involved in Bitcoin

During Ira Kleiman’s suit against Craig Wright, a handful of David Kleiman’s friends and relatives were asked whether they believed he invented Bitcoin.

Most of them said they didn’t think he did, while others referenced his 850-day stint in hospital as reason to think that he almost certainly didn’t. After all, his doctors were turning him every few hours to stop him getting bed sores, and the nurses and other hospital staff would have been running in and out all day to check on his condition. It’s hard to imagine he would have got much work done.

Similarly, Ira Kleiman told Gawker journalist Andy Cush that he didn’t believe his brother invented Bitcoin. He said:

“If my brother had Bitcoin of any value he wouldn’t have died with only debts. He was in and out of the VA hospital for about 2 years before he passed away so he didn’t have a steady income. And shortly before he died I learned his house was in foreclosure. If David owned a great number of Bitcoin, why wouldn’t he sell a few to help pay off his bills?”

#2 He Probably Lacked the Technical Skills

There’s no doubt that David Kleiman was a cybersecurity expert. He was qualified, he worked in the sector for a decade – including for the police, and he regularly appeared on the news to provide an expert’s opinion.

However, there’s little evidence that he understood cryptography or P2P networks, and there’s not a shred of evidence that he could code. In fact, nobody’s ever found a single project that he coded. And if he didn’t code, how could he have built Bitcoin?

#3 The Tulip Trust Probably Didn’t Exist When Kleiman Was Alive

Craig Wright claims that he and David Kleiman mined Bitcoin together and stored it in a Seychelles trust called the Tulip Trust. Wright’s entire narrative about him and Kleiman inventing Bitcoin together relies upon this offshore trust’s existence: it’s the keystone to his narrative.

When Wired and Gizmodo ‘outed’ Wright in 2015, one of the documents they relied on was a Deed of Trust dated from October 2012, which outlined how the Tulip Trust worked. It contained numerous inconsistencies, grammatical mistakes and factual errors. And in 2019, computer analysts proved in court that the document couldn’t have been created until 2015 at the very earliest: the specific font Wright used didn’t exist until then, so the whole document must have been backdated.

Similarly, we also have copies of the original Tulip Trust documents that show it didn’t exist until well after Kleiman died. The documents show the Trust was a shelf company that Wright bought in 2014, five years after Bitcoin was created, and a year after Kleiman passed away.

Furthermore, the Australian Tax Office, during their investigation into Wright’s business dealings, found that the Tulip trust didn’t exist as early as Wright said it did. “We do not accept that the Seychelles Trust existed as a matter of law or fact…we do not accept that a pool of 650,000 Bitcoin was in fact held according to the terms of the Seychelles Trust,” they found.

Analysis from WizSec showed that many of the Trust’s Bitcoin addresses were controlled by other people with no links to either Wright or Kleiman, including the people who hacked Mt Gox, a cryptocurrency exchange.

One person who owned 145 of the addresses Wright claimed were controlled by the trust signed a message saying, “Craig Steven Wright is a liar and a fraud. He doesn't have the keys used to sign this message.”

So, do you think David Kleiman invented Bitcoin?