Altcoin market behavior these last few days has been so anachronistic for 2020 that it feels like we are back in 2017.
For Bitcoin SV, it all began with a court filing on Tuesday, January 14, by Craig Wright which notified the US District Court of Southern Florida that he had obtained all the necessary information to unlock the bitcoins held in the Tulip Trust and that he had produced to the court a list of 16,404 addresses which held the bitcoins.
Wright had originally claimed that a bonded courier would arrive on January 1, delivering him the private keys to these addresses. But on January 10, Wright requested an extension and was granted until February 3 to notify the court of the courier's arrival, which he did on Tuesday.
News of the court filing spurred a Bitcoin SV feeding frenzy but given Wright's propensity to take liberties with the truth, this is likely just another play for time. Let's be clear that Wright only produced a list of addresses in the filing. No evidence has been shown that he actually owns the keys to these addresses.
The Kleiman estate promptly refuted Wright's notice as “simply a list of addresses” with no reference or information pertaining to the bonded courier. While experts hired by the plaintiffs analyze the list of addresses, Wright has ten days within which to respond to 7 questions from the plaintiffs regarding the courier.
The plaintiffs, exasperated with Wright’s tarrying “antics”, have also requested a 90-day extension of pre-trial deadlines and expect to be prepared to depose Wright in March. The full response can be read here.
Kleiman lawsuit backstory
Ira Kleiman, who is the brother of Wright's erstwhile business partner, late Dave Kleiman, litigated Wright on behalf of the Kleiman estate in February 2018 over embezzlement of 1.1 million bitcoins which were mined and jointly held by Wright and Dave Kleiman.
After rumbling on for 18 months, a settlement was recommended in August 2019, when Magistrate Judge for the Southern District of Florida, Bruce E. Reinhart ruled the case in favor of the Kleiman estate.
Wright was found guilty of perjury, falsifying documents and in contempt of court by Reinhart, who rejected all of Wright's testimony as inconsistent and unreliable. It was also established during the proceedings that the “Tulip Trust”, a trust supposedly created for holding the bitcoins Wright and Kleiman had mined together between 2009 and 2013, did 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. This ruling had to be upheld by District Judge for Southern Florida, Beth Bloom, for it to become final.
Wright apparently agreed to this settlement, requesting a deadline for settlement up to the end of October. On November 1, court documents revealed that Wright broke this non-binding settlement agreement without advance notice, claiming that he was unable to finance the settlement since the keys to unlock the Tulip Trust would only be delivered to him in January 2020.
Last Monday, Judge Bloom suspended Reinhart's earlier ruling until the “discovery issue” of whether Wright does indeed own the bitcoins he claims to is resolved. Although Wright has now produced a list of addresses, he has yet to prove that he actually controls these addresses.
So, look, I'm not saying that the list is or isn't authentic. I am saying that this is a guy who two federal judges have basically called a liar and he just opened a new Pandora's box of discovery. So it may not end well.
Also, gotta wonder about some market timing issues, no?
— Palley (@stephendpalley) January 15, 2020
What if scenarios
What if the 16,404 addresses are found to be holding 1,100,111 BTC?
Nothing. Anyone could compile a similar list of inactive addresses. Wright's claim that the keys would not be delivered until January 2020 was probably just to allow him the time he needed to compile this list to further prolong the trial.
What if Wright can prove he controls these addresses?
Given that Wright has previously claimed to control known addresses belonging to others, including a Mt. Gox address, the list of addresses first needs to be looked into. Wright will then need to sign messages from all the addresses. If he does, it may prove that he mined those bitcoins with Kleiman.
Will it prove that he is Satoshi?
No. This lawsuit has nothing to do with proving that he is Satoshi. There's only one way for anyone claiming to be Satoshi to prove that they're Satoshi, signing a message with the key associated with block zero or the genesis block. There’s no other way to prove it.
What if Wright cannot prove he controls the addresses in the list he produced?
He could be staring down an endless litany of lawsuits that a quantum computer will have a hard time keeping up with.
The news wasn't a big deal then. Why the big pump?
Wright's ploy has always been to weave an inextricably tangled web of lies which, although easily disproved by experts, appeals to the less critically discerning folk. His target audience is the sort you'd typically find at a flat earth conference or a Trump rally.
Even if nobody believes Wright anymore, as long as people expect there are others who do, there's going to be a market reaction. It's a classic exemplar for the greater fool theory.
Further, since Bitcoin SV has been blackballed by some of the biggest altcoin exchanges and trades largely at shady venues with limited liquidity, this makes it a lot easier for a single entity to move the market in a very significant way. After driving the price up with a large volume market buy orders on a low-liquidity pair, this entity can then sell into unsuspecting FOMO buyers.
On-chain data indicates price manipulation by a single entity
According to data from IntoTheBlock, 2.66 million BSV were transacted on Tuesday at an average cost of roughly $905 million. Of this, $833 million or 92% were large transactions higher than $100k. 173k addresses were active and 102k new addresses were created on the day.
While it’s normal for large on-chain transactions to spike when there’s an escalation of interest, it’s unusual for almost the entire on-chain volume to be made up of large transactions.
BSV also traded almost exclusively with Tether and reported volume, hugely disproportionate to recorded on-chain volume, exceeded the currency’s market cap late on Tuesday, which suggests untold amounts of blatant wash trading at dodgy, unregulated exchanges.
There’s a theory within the Bitcoin Cash (BCH) community that Calvin Ayre, Wright’s BSV buddy and owner of CoinGeek mining pool, has been mining Bitcoin Cash, dumping it for Tether and wash trading BSV/USDT pairs to present an illusion of market interest in the pair.
A certain amount of credence is lent to this theory from the fact that there are only 412 active nodes on the BSV network and that nearly two-thirds of the total hash rate on both BSV and BCH chains are controlled by miners unwilling to identify themselves.
Keeping it simple
Craig Wright has been so prolific at lying and glozing, often contradicting his former claims, that under the stress of cognitive dissonance, overwhelmed by the sheer volume of lies, indolent minds resort to entertaining the preposterous notion that Wright may not be lying and the facts are just really complicated.
The secret to any good charade is making it so intricate that the layman is unable to see through it. Wright is a seasoned charlatan. In 2017, Wright's own mother attested to his perfidious tendencies dating back to his childhood.
The crypto community seems to have taken amiss the moral of one of Aesop's fables, The Boy Who Cried Wolf. Far from suggesting that a serial liar may eventually tell the truth, the cautionary tale warns that a liar is never heeded, even when he tells the truth.
With Craig Wright, we won't ever have to worry about him telling the truth. So let's just keep it really simple. If Wright said it, then it's wrong.