Sebastian Sinclair

Florida has responded to Governor Ron DeSantis’ call to prohibit the use of CBDCs across the state.



The bill, known as HB 7049, amends the Uniform Commercial Code (UCC) to include a definition for <a href="https://blockworks.co/tag/cbdc">CBDCs</a>.&nbsp;



Despite lawmakers&#8217; divided opinions on the matter, the US <a href="https://blockworks.co/news/us-treasury-weighs-prospect-for-cbdc-adoption">Department of the Treasury</a>, under President Joe Biden, is currently outlining the technology required to develop a digital dollar.



That’s prompted some states, including <a href="https://blockworks.co/news/north-carolina-cbdc-bill">North Carolina</a>, to draw up legislation that seeks to protect against what critics argue is an invasion of privacy from the nascent tech.



Following a 34-5 vote by the Senate last week, which was also supported by seven out of 12&nbsp; state Democrats, the <a href="https://www.flsenate.gov/Session/Bill/2023/7049/BillText/c1/PDF">bill</a> passed a near-unanimous vote in the House, <a href="https://www.flsenate.gov/Session/Bill/2023/7054/Vote/HouseVote_s07054__377.PDF">116-1</a>. The only vote against the bill was cast by Rep. Felicia Robinson, a Democrat from Miami Gardens.



HB 7049 reads:



“A digital currency, a digital medium of exchange, or a digital monetary unit of account issued by the United States Federal Reserve System, a federal agency, a foreign government, a foreign central bank, or a foreign reserve system, that is made directly available to a consumer by such entities.”



The bill also clarifies that CBDCs may not be included in the definition of &#8220;money&#8221; under the UCC whose definition was revised under the state’s code.&nbsp;



The definition effectively <a href="https://floridapolitics.com/archives/609337-legislature-passes-gov-desantis-backed-ban-on-central-bank-digital-currency-with-democratic-support/">prohibits</a> CBDCs for use as money across the state, according to Ian Corp, attorney at law firm Agentis.



“If the federal government institutes a CBDC, it could trump the Florida bill under the supremacy clause of the constitution,” he said. That would be similar in nature to the way in which states have decriminalized marijuana while the federal government has not, Corp added.&nbsp;



Even so, proponents are concerned that the bill could have wider ramifications on <a href="https://blockworks.co/news/florida-cbdcs-bitcoin-ban">banning the use of bitcoin and digital assets</a> more broadly.



DeSantis, a vocal proponent against the issuance and acceptance of a CBDC across Florida, has <a href="https://floridapolitics.com/archives/596576-gov-desantis-wants-centralized-digital-currency-ban-raises-fear-government-could-control-purchases/">railed against</a> their potential existence. The governor, <a href="https://blockworks.co/news/fed-cbdc-robert-kennedy-fednow">among others</a>, views CBDCs as a tool for use in state-wide surveillance of Floridians and US citizens.



Its passage in the state’s legislature now means it <a href="https://fastdemocracy.com/bill-search/fl/2023/bills/FLB00029448/">heads to DeSantis’ desk</a>. If the governor signs it into law, it is expected to take effect on July 1.



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Florida Legislature’s Near-unanimous Vote Approves CBDC Ban

Casey Wagner

Consumers and investors burned in recent crypto bankruptcies and failures are taking a page from the Bernie Madoff trial book in opting for civil suits to try to get more assets back.&nbsp;



If certain crypto tokens are deemed securities, it opens a new area of liability with respect to state laws, James <a href="https://go.perkinscoie.com/e/987562/ssionals-james-f-vivenzio-html/3n9vx/104306895?h=LG7QJhyNqK_iRcS-XK-Up6y7AxO_wAwWkJNP7xwLWNs">Vivenzio</a>, senior counsel at Perkins Coie, said during a webinar Wednesday. 



When Madoff was arrested, many of his victims opted for civil litigation to recover losses. <a href="https://blockworks.co/news/the-madoff-playbook-how-ftx-creditors-could-get-their-money-back">Creditors successfully clawed back more than $14 billion</a> of the estimated $18 billion to $20 billion stolen, according to <a href="https://www.linkedin.com/in/marcpowers22/details/experience/">Marc Powers</a>, a former securities law practice leader at Baker &amp; Hostetler — a firm that worked to recover funds for victims of Madoff’s Ponzi scheme.



A similar situation is playing out in crypto, Vivenzio said. <a href="https://blockworks.co/news/what-do-tom-brady-steph-curry-and-naomi-osaka-have-in-common-an-ftx-lawsuit">One class action lawsuit in Florida</a> in November 2022 against former FTX influencers cites the state’s Blue Skies law.&nbsp;



“Blue skies laws are just a state securities fraud law that requires registration and requires that you speak truthfully in connection with a security,” Vivenzio said. “[They are] designed to protect investors from ventures that have no more basis than so many feet of blue sky, as the old saying goes.”&nbsp;



But crypto claims are different from a typical fraud claim, according to Vivenzio, because the asset class is not traded on a national exchange. The FTX lawsuit in Florida alleges that <a href="https://blockworks.co/price/ftt" target="_blank" rel="noreferrer noopener">FTT</a>, FTX’s native exchange token, is a security — and that anyone who aids the sale of that security is responsible for any ensuing damage that may be caused. 



It’s not a common argument because these issues can usually only be charged on a state level,&nbsp; Vivenzio said.



“The state ‘Blue Sky’ theory seen here doesn’t arise in a lot of other cases when you&#8217;re dealing with nationally exchange-traded securities, because there&#8217;s a federal statute that says you can&#8217;t bring a class action for those times,” he said.&nbsp;



A so-called Blue Sky <a href="https://www.investopedia.com/terms/b/blueskylaws.asp#:~:text=Blue%20sky%20laws%20are%20state%2Dlevel%2C%20anti%2Dfraud%20regulations,up%20to%20the%20laws'%20provisions.">theory</a> is generally a state-level protection put in place in an effort to protect investors from securities fraud.&nbsp;



“But crypto is not traded on a national exchange,” Vivenzio said. “If it is a security, it opens up a new area of liability with respect to state or state laws.”&nbsp;



For the most part, celebrities have been targeted with these types of allegations, Vivenzio said, but the law is not limited to public figures. 



“If the theory that is articulated in this lawsuit is upheld, it really would provide for a very broad civil liability on a variety of claims, not just for promoters, not just for celebrities or YouTube influences, but for any agent or employee or officer of the entity that&#8217;s issuing the securities,” he said.



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Keep Your Eye on That FTX Lawsuit in Florida, Attorney Says

Shalini Nagarajan

Florida lawmakers may have to revise a recently passed bill barring central bank digital currencies (CBDCs) to avoid inadvertently banning bitcoin.



Governor Ron DeSantis’ proposal would make Florida the first US state to ban CBDCs, with a House panel voting 15-5 in favor on Monday.



DeSantis, who has served as Florida governor since 2019, is opposed to the idea of a federally-controlled digital currency, arguing it would hurt innovation and “promote government-sanctioned surveillance.”



The bill blocks the use of a federally-backed <a href="https://blockworks.co/tag/cbdc" target="_blank" rel="noreferrer noopener">CBDC</a> as currency under Florida’s Uniform Commercial Code. It also prohibits CBDCs issued by a foreign reserve or foreign sanctioned central bank, and calls on other states to embrace the same prohibitions.



A CBDC is a type of digital currency, which may or may not run on a blockchain or distributed ledger system, backed and issued by a central bank. <a href="https://blockworks.co/news/biden-signs-crypto-executive-order-promoting-responsible-innovation">US President Joe Biden signed an executive order</a> last year asking federal agencies to study benefits and risks of a US CBDC, but no definite decision has been made on whether the US will actually come up with one.



Even so, the <a href="https://blockworks.co/news/us-treasury-weighs-prospect-for-cbdc-adoption">US Treasury is working on the technology</a> that would be required to create a CBDC if lawmakers do decide to go ahead with the concept.



But there’s a small problem with DeSantis’ bill. Per <a href="https://floridapolitics.com/archives/598740-house-moves-on-gov-desantis-call-for-centralized-digital-currency-ban/">Florida Politics</a>, it defines CBDCs as digital currencies “validated directly by” a foreign government.&nbsp;



While the language is somewhat open to lawmaker interpretation, bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) can fit that description: <a href="https://blockworks.co/tag/el-salvador" target="_blank" rel="noreferrer noopener">El Salvador</a> has adopted bitcoin as legal tender, thereby “validating” it in the non-technical sense (it’s unclear whether El Salvador’s central bank or other government institution runs fully-validating Bitcoin nodes, also known as full nodes).



Wyman Duggan, a member of Florida’s House of Representatives sponsoring the bill, reportedly said they hadn’t set out to ban bitcoin along with CBDCs, and that they may change the bill if necessary.&nbsp;



The Bitcoin Policy Institute, a nonpartisan bitcoin think tank, recently <a href="https://www.btcpolicy.org/articles/in-attempt-to-stop-cbdcs-states-are-rejecting-ostensibly-pro-bitcoin-legislation">warned</a> that anti-CBDC legislation could unwittingly make it more difficult for the bitcoin ecosystem to flourish, unless they include specific language vetting BTC.&nbsp;



DeSantis has previously presented as pro-bitcoin, having floated accepting the top crypto for state taxes last March.



<h2 class="wp-block-heading">CBDCs and the US Constitution</h2>



While proponents of CBDCs argue that they can be used to speed up transactions, make cross-border payments more efficient, and discourage criminal activity, opponents like DeSantis believe such a system raises heavy privacy and security concerns.



Some Florida lawmakers have agreed with DeSantis’ view. Rep. Duggan reportedly raised apprehensions that CBDCs would give government in-depth insight into consumer purchases and could potentially freeze or seize anyone’s assets.



DeSantis himself previously <a href="https://floridapolitics.com/archives/596576-gov-desantis-wants-centralized-digital-currency-ban-raises-fear-government-could-control-purchases/">warned</a> that government oversight of digital currency would mean people wouldn’t be able to purchase gas or guns. “Who knows whether they would let you buy a firearm or things they disapprove of?” he said.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The Biden Administration’s creation of a central bank digital currency is about one thing &#8211; control. I am calling on the Legislature to prohibit the use of a so-called CBDC in Florida, protecting Floridians from government surveillance and control of their personal finances. <a href="https://t.co/ob1E90R5Gn">pic.twitter.com/ob1E90R5Gn</a>&mdash; Ron DeSantis (@GovRonDeSantis) <a href="https://twitter.com/GovRonDeSantis/status/1638173916299657225?ref_src=twsrc%5Etfw">March 21, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Democrats were among those who voted against the bill. They raised the debate of unconstitutionality, since it is the US Constitution that gives the federal government the power to create and circulate national currency.



Rep. Allison Tant reportedly asked the House panel whether such a move indicated that Florida would be lagging economically. Duggan disagreed that this would happen, but admitted that there could be legal challenges if the bill became law.



“There’s obviously a federal Supremacy Clause in the [US] Constitution. That’s an enumerated power of the federal government, to mint money,” Duggan said. “We’re clearly going to have to have a court explore the contours of this relationship.”



The bill hasn’t yet become law and must pass the entire chamber of the House and Senate, before finally reaching the governor. He can then choose to sign it, or allow it to become law without signature, or veto it.



David Canellis contributed reporting.



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Florida Bill Banning CBDCs Might Accidentally Ban Bitcoin Too

Looking to the future, policymakers in Arizona referred an <a href="https://www.azleg.gov/legtext/56leg/1R/bills/SCR1007P.pdf" target="_blank" rel="noreferrer noopener">amendment</a> to the state constitution in the Arizona State Legislature last week, seeking to exempt digital assets from property taxation.



Following its second reading on Jan. 23, the resolution now has a small shot of making it to a ballot initiative. If approved by a majority vote in the legislature and subsequently passed by voters, the amendment would make crypto tax-exempt at the state level.



It would also make it one of the more favorable states for tax purposes, alongside Wyoming, which passed a law <a href="https://blockworks.co/news/daos-favor-classic-tax-havens-passing-up-crypto-friendly-us-states">recognizing a DAO’s legal status</a> as akin to a limited liability company. 



Arizona had originally toyed with the idea of making <a href="https://blockworks.co/news/arizona-considers-making-bitcoin-legal-tender">bitcoin legal tender</a> early last year, but that bill was subsequently <a href="https://legiscan.com/AZ/text/SB1341/2022" target="_blank" rel="noreferrer noopener">shelved</a> shortly after being introduced.



On a federal level, all individuals are required to pay income and capital gains taxes, but individual US states approach taxation differently, with some eschewing the concept of capital gains or personal income tax altogether at the state level.



Income tax at the state level is triggered when a user produces additional income deriving from mining, staking or airdrops, while capital gains (or losses) are triggered when a cryptoasset is disposed of on the basis of its cost basis and sale price.



Aside from Arizona, here are four other “friendly” states based on regulatory and tax advantages ahead of the federal tax filing deadline come April 18.



<h3 class="wp-block-heading">Wyoming</h3>



Wyoming, long-viewed as one of the country’s most progressive crypto regions, does not collect personal or corporate income tax. The state also began regulating the industry early on by introducing a financial <a href="https://wyomingbankingdivision.wyo.gov/banks-and-trust-companies/financial-technology-sandbox" target="_blank" rel="noreferrer noopener">technology sandbox</a> for testing financial products and services.



As mentioned, it formally legalized DAOs in 2019, allowing for clearer guidelines on how those entities would be taxed. Typically, LLCs don’t pay taxes on business incomes, but instead, members are required to pay taxes on their share of the LLC&#8217;s profits.



The state also passed its <a href="https://blockworks.co/news/legal-expert-avanti-may-face-uphill-battle-getting-fed-payment-access">charter for banks</a> dealing in digital assets back in 2019 making it possible for crypto firms to both hold customer cash deposits and custody crypto — later able to be traded on exchanges.



High electricity prices have caused some crypto miners to balk at setting up shop in the state, though Wyoming has recently attempted to tackle the issue by introducing two bills that may result in bitcoin <a href="https://blockworks.co/news/pro-crypto-wyoming-not-yet-pro-enough-to-attract-bitcoin-miners">miners paying less</a>.



<h3 class="wp-block-heading">Texas</h3>



Like Wyoming, Texas allowed for <a href="https://www.dob.texas.gov/sites/default/files/files/news/Industrynotices/in2021-03.pdf" target="_blank" rel="noreferrer noopener">chartered banks</a> to custody digital assets in June 2021, which was viewed at the time as a way to tap into the state&#8217;s booming domestic crypto market. 



Coinciding with its cheap electricity — beneficial to crypto mining activity two years ago — the state also features no income tax.&nbsp; Still, Texas does not recognize crypto as legal money and instead is concerned with the asset class as a taxable commodity on a transactional basis.



The state does not require firms, such as exchanges, to obtain a money transmitter’s license. It also passed its <a href="https://freemanlaw.com/cryptocurrency/texas/" target="_blank" rel="noreferrer noopener">Texas Virtual Currency Bill</a> in 2021 which provides a legal definition of digital assets. There is no income tax in the state.



Miners too benefit from a favorable framework that was put in place for firms to profit from 10-year tax abatements and tax credits, alongside additional state training for their workforce.&nbsp;



<h3 class="wp-block-heading">Florida</h3>



Florida, like Wyoming and Texas, does not feature a state income tax.&nbsp;



The state has a number of high-profile politicians opting for local crypto and blockchain regulation, including Miami Mayor Francis Suarez, who previously pushed for city residents to <a href="https://www.newsweek.com/miami-passes-resolution-allow-paying-city-workers-bitcoin-attempt-woo-big-tech-1568784" target="_blank" rel="noreferrer noopener">receive their paychecks</a> and pay for their property taxes in bitcoin.



While the state’s governor <a href="https://blockworks.co/news/desantis-says-florida-should-be-willing-to-accept-taxes-in-crypto">Ron DeSantis floated the idea</a> of allowing businesses to pay taxes using crypto to Florida’s Legislature’s 2022 session, his proposed measures failed to pass. 



As such, the state currently does not address the sales and use tax treatment of transactions involving crypto though, like Wyoming, a money transmission license is not required courtesy of changes made to <a href="https://www.flsenate.gov/Session/Bill/2022/273" target="_blank" rel="noreferrer noopener">House Bill 273</a>.



<h3 class="wp-block-heading">Colorado</h3>



Colorado, unlike other states listed, does tax income at 4.55% including wages and salaries deriving from crypto activity.&nbsp;



The outlier here is that Colorado is attempting to position itself as a crypto-friendly state by ensuring broader digital asset use cases for tax purposes.



In September of last year, Colorado’s Department of Revenue <a href="https://blockworks.co/news/colorado-residents-can-now-pay-state-taxes-with-crypto-for-a-fee">began accepting crypto as an additional form of payment</a> for all resident taxpayers, becoming the first US state to do so.&nbsp;



That includes individual income tax, business income tax, sales and use tax, withholding tax, severance tax and excise fuel tax.



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These 5 Crypto-friendly US States Show Initiative on Tax Laws

<div id="highlights-block_623a77ce9696f" class="highlights">
 <ul>
 <li>Florida Gov. Ron DeSantis said he is working with state agencies to figure out means for businesses to pay tax in crypto</li>
 <li>Fellow Floridian politician Miami Mayor Francis Suarez pushed for city residents to receive their paychecks and pay for their property taxes in bitcoin</li>
 </ul>
 
</div>



Ron DeSantis, Florida&#8217;s 46th governor, <a href="https://www.youtube.com/watch?v=epihxImrhbU&amp;t=89s&amp;ab_channel=ABCActionNews" target="_blank" rel="noreferrer noopener">said Tuesday</a> his office is working to allow businesses to pay taxes using cryptocurrency.



DeSantis, who has been serving as governor since 2019, said he is working with state agencies to figure out the logistics of businesses paying taxes with crypto, indicating the tax strategy was something Florida could adopt.



The governor responded to questions from the media following his signing of a bill that requires financial literacy classes for high school students.



<blockquote class="wp-block-quote">&#8220;Clearly something like a bitcoin and other cryptocurrencies — that&#8217;s something we should be willing to accept,&#8221; he said in relation to tax payments.</blockquote>



It&#8217;s not the first time DeSantis has floated the idea of allowing Floridians to utilize crypto as a form of state payment. Last year, DeSantis proposed measures in the 2022-23 budget that sought to enable businesses to pay state fees in crypto.



He also proposed leveraging blockchain technology for use in pilot programs to govern certain backend functions within the Florida Highway Safety and Motor Vehicles and Medicaid payments, among other areas.



&#8220;I actually had some money in the budget the legislature didn&#8217;t pick up to try to do some experiment with blockchain technology on some of the state functions,&#8221; DeSantis said Tuesday. The proposed measures failed to pass into law via the&nbsp;<a href="https://www.flsenate.gov/session" target="_blank" rel="noreferrer noopener">Florida Legislature’s 2022 session,</a>&nbsp;which ended on March 14 with bipartisan approval of a $112 billion budget.



Florida possesses a number of high-profile politicians opting for local crypto and blockchain regulation, including Miami Mayor Francis Suarez who previously pushed for city residents to <a href="https://www.newsweek.com/miami-passes-resolution-allow-paying-city-workers-bitcoin-attempt-woo-big-tech-1568784" target="_blank" rel="noreferrer noopener">receive their paychecks</a> and pay for their property taxes in bitcoin.



Crypto proponents view the city, as well as the state, as forward-looking for the industry often criticized by other policymakers for facilitating money laundering.



The governor, who has for some time pushed bitcoin adoption alongside Suarez, also noted the difference between cryptos that were decentralized versus that of a centrally issued digital dollar, which he said presents &#8220;a lot of hazards&#8221; when it&#8217;s &#8220;centrally controlled.&#8221;



&#8220;I worry about the amount of power that would give someone — an essential authority — to basically be able to shut off access to purchasing certain goods,&#8221; DeSantis said. &#8220;We&#8217;d be in uncharted territories.&#8221;



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DeSantis Says Florida ‘Should Be Willing’ To Accept Taxes in Crypto

Morgan Chittum

<div id="highlights-block_620a991ad3971" class="highlights">
 <ul>
 <li>The NFT sale could “turn into a standard in the [real estate] industry,” according to a blockchain startup executive</li>
 <li>The NFT can now be used as collateral for crypto borrowers and lenders</li>
 </ul>
 
</div>



A Florida home was auctioned off as an NFT (non-fungible token) — a potential first for both real estate and cryptocurrency.



The Gulfport four-bedroom house sold for $653,163 of ether, and the winning bidder now holds the NFT, signifying ownership on-chain.



Propy, a blockchain real estate startup, hosted and facilitated the sale.



“This is just the first seller in our pipeline and we&#8217;re seeing a lot of demand,” Natalia Karayaneva, chief executive of Propy, said in a statement.



The home’s property rights were minted as an NFT, Karayaneva said, which cuts down on closing time. The NFT holder will own the property via a limited liability company (LLC) that houses the crypto asset.



The real estate-backed token can be used as collateral for crypto borrowers and lenders.



Roughly 50 people <a href="https://fortune.com/2022/02/12/nft-florida-home-sale-ether-crypto/" target="_blank" rel="noreferrer noopener">signed up</a> to bid in the auction — verifying their identities per the platform’s requirements. However, only two people actively bid in the sale.



Propy previously <a href="https://www.businesswire.com/news/home/20210525005839/en/Propy-Auctions-World%E2%80%99s-First-Real-Estate-NFT-with-Ownership-Transfer" target="_blank" rel="noreferrer noopener">sold</a> TechCrunch founder Michael Arrington’s studio apartment in Ukraine for roughly $113,176 of ether last year.



The NFT sale could “turn into a standard in the [real estate] industry,” Karayaneva said. “NFT sales reached $4 billion in December 2021, and real-world assets will soon represent a significant portion of that market.”



Former Commodity Futures Trading Commission (CFTC) enforcement attorney Braden Perry <a href="https://cms.blockworks.co/nft-home-sale-has-1500-bidders-lining-up/" target="_blank" rel="noreferrer noopener">told Blockworks</a> that real estate has a “huge upside potential” when it comes to NFTs and blockchain technology at-large.



But the US regulatory environment, Perry said, “lags innovation” to adapt to it.&nbsp;



“The [real estate] title process is ideally suited for streamlined and protected recordings on a blockchain,” he said. “But the regulatory system is still new, and there are a lot of questions regarding the government’s role in crypto.”



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A Real Estate-Backed NFT Sold For $653,000

Macauley Peterson

<div id="highlights-block_61a416f02d14a" class="highlights">
 <ul>
 <li>Wright’s defense team declared victory, as their client avoided the worst outcomes</li>
 <li>The jury was initially unable to reach agreement last week but were instructed by the judge to keep trying</li>
 </ul>
 
</div>



Jurors in the Florida trial of Craig Wright, an Australian computer scientist who claims to have invented Bitcoin, were deadlocked as recently as last Wednesday, after several days of deliberations. The judge in the case, US District Judge Beth Bloom, issued what’s known as an <a href="https://www.law.cornell.edu/wex/allen_charge" target="_blank" rel="noreferrer noopener">Allen charge</a>, instructing them to “carefully reexamine and reconsider all the evidence” in an attempt to reach an agreement. Now they have.



On Monday, the jury found Wright liable on one of the plaintiff’s claims, that of conversion — unauthorized possession of personal property,&nbsp; in this case intellectual property — and awarded $100 million in damages, according to <a href="https://storage.courtlistener.com/recap/gov.uscourts.flsd.521536/gov.uscourts.flsd.521536.812.0_1.pdf" target="_blank" rel="noreferrer noopener">court documents</a>. Notably, no bitcoin was directly ordered to be paid.



Wright <a href="https://cms.blockworks.co/craig-wright-trial-goes-to-florida-jury-which-could-award-as-much-as-189b/" target="_blank" rel="noreferrer noopener">could have been found liable</a> for a range of behavior including fraud, theft, breach of fiduciary duty, with damages potentially reaching into the billions, therefore he and his legal team see the outcome as a victory.&nbsp;



“This has been a remarkably good outcome — I feel completely vindicated,” Wright told his supporters in a <a href="https://twitter.com/JimmyWinSV/status/1467910308953997314?s=20" target="_blank" rel="noreferrer noopener">recorded video message</a>.



The jury rejected plaintiff Ira Kleiman’s claim that his deceased brother David was a business partner of Wright’s, and decided that Wright would owe nothing to the David Kleiman estate. Instead, the sole monetary award went to W&amp;K Info Defense Research LLC, a company for which Ira Kleiman is now the only registered director, but that was once a joint venture between Wright, his wife at the time Lynn Wright, and David Kleiman.



In <a href="https://cryptopotato.com/wp-content/uploads/2020/08/lynn-wright-ira-kleiman-petition-071620.pdf" target="_blank" rel="noreferrer noopener">a separate legal maneuver</a>, the ownership of the company is an ongoing matter of dispute, and Lynn Wright contends that Ira Kleiman was “not authorized to act on behalf of W&amp;K Info Defense.”



Lawyers for Ira Kleiman, see the jury award as a win for their client, even if it falls far short of what they claimed:



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Kleiman v. Wright update: We are incredibly gratified the jury found Craig Wright has to pay our client, W&amp;K, $100,000,000 for the bitcoin-related assets he stole. This is a great win for our client and for justice!&mdash; Vel Freedman (@VelvelFreedman) <a href="https://twitter.com/VelvelFreedman/status/1467923812075421701?ref_src=twsrc%5Etfw">December 6, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<h3 class="wp-block-heading">Satoshi Nakamoto’s bitcoin stash</h3>



The identity of Satoshi Nakamoto was not a subject of this case. It was simply assumed that Wright had access to Satoshi&#8217;s 1.1 million bitcoins, which could have been awarded as damages. The jury elected not to award any bitcoins, opting instead to levy money damages in dollars.



For Ira Kleiman to collect on the $100 million from Wright due to <meta charset="utf-8">W&amp;K Info Defense Research, he will first have to resolve the dispute over the company’s ownership. If he does retain control, and successfully turns the jury award into a definitive money judgment that Wright must pay, the question remains, where will the money come from?



Earlier in the trial, the initial judge, Judge Reinhart, <a href="https://www.govinfo.gov/content/pkg/USCOURTS-flsd-9_18-cv-80176/pdf/USCOURTS-flsd-9_18-cv-80176-9.pdf" target="_blank" rel="noreferrer noopener">found</a> that Wright submitted forged documents and offered perjured testimony related to the production of a list of bitcoin addresses under his (supposedly Satoshi’s) control.



Wright has so far failed to prove that he is in possession of, or has access to, the private keys needed to move those early Satoshi-mined bitcoins. Absent such proof, he is unlikely to persuade <a href="https://bitcoinmagazine.com/business/op-ed-how-many-wrongs-make-wright" target="_blank" rel="noreferrer noopener">skeptics</a> that he is in fact Satoshi.



Wright disputes the consensus view of what bitcoin even is. In 2018, Wright’s <a href="https://www.gemini.com/cryptopedia/bsv-what-is-bitcoin-sv" target="_blank" rel="noreferrer noopener">preferred bitcoin, BSV</a>, which stands for “Bitcoin Satoshi’s Vision”, forked from the Bitcoin Cash (BCH) blockchain, which itself forked from the original BTC chain in 2017.



Speculators evidently view the trial outcome as beneficial for the prospects of the bitcoin fork — BSV has surged 34% in the past 24 hours and now as a market cap of just under $3 billion. That remains a far cry from the market cap of BCH at about $9 billion, much less the BTC market cap of $962 billion.




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Verdict in Craig Wright Civil Trial: $100M  Award for Plaintiff; No Punitive Damages

<div id="highlights-block_61a416f02d14a" class="highlights">
 <ul>
 <li>Wright’s defense team’s Motion for Judgment as a Matter of Law was denied on November 22, ensuring a jury decision</li>
 <li>Seven counts, including Civil Theft and Fraud, are now in a jury’s hands</li>
 </ul>
 
</div>



He claims to be the inventor of Bitcoin and the author of the original 2008 <a href="https://bitcoin.org/bitcoin.pdf">Bitc</a><a href="https://bitcoin.org/bitcoin.pdf" target="_blank" rel="noreferrer noopener">o</a><a href="https://bitcoin.org/bitcoin.pdf">in white paper</a>, under the pseudonym Satoshi Nakamoto. But the ultimate outcome of the civil trial of Dr. Craig Steven Wright, an Australian computer scientist, is unlikely to settle that mystery.



The United States District Court for the Southern District of Florida, however, accepts it as a given, by granting the plaintiff in the case standing to sue Wright in the first place. Although the prevailing view among Bitcoin proponents is that Wright’s assertion <a href="https://bitcoinmagazine.com/business/op-ed-how-many-wrongs-make-wright" target="_blank" rel="noreferrer noopener">is specious</a>, as far as Judge Beth Francine Bloom is concerned, Wright has 1.1 million bitcoins.



The jurors, slated to resume deliberations on Monday after a Thanksgiving break, are tasked with passing judgment on a more limited question: whether Wright is guilty of fraud, theft, breach of fiduciary duty, and a handful of other counts that could leave him liable for half of the bitcoin stash that he may have mined in Bitcoin’s early days.&nbsp;



The plaintiff in the case, Ira Kleiman, says that the <a href="https://cms.blockworks.co/bubbles-bitcoin-and-whats-next/" target="_blank" rel="noreferrer noopener">bitcoin,</a> while ostensibly Wright’s, rightfully belongs to the estate of Kleiman’s deceased brother David, a friend and alleged business partner of Wright’s. David Kleiman died in April 2013 at the age of 46, without ever laying hands on the fortune his brother now says should be his.



Ira Kleiman initially sued Wright in February 2018, claiming that Wright schemed to steal both the 1.1 million bitcoins and the intellectual property connected with Bitcoin’s open-source code that David Kleiman may have helped develop. At the time of the original suit, the quantity of bitcoin at issue was valued at just over $10 billion. The stakes are somewhat higher now — that much bitcoin is worth some $60 billion dollars today.



If the jury of three men and seven women finds that Wright had a partnership with David Kleiman to mine those coins, assuming they are in fact under Wright’s control, they will have to determine the value owed to Kleiman’s estate, plus any punitive damages — and the plaintiffs&#8217; lawyers have asked for plenty — bringing the total claims and damages to $189 billion. (For comparison, the world’s richest person, Amazon founder Jeff Bezos, is worth $177 billion and just the $30 billion in bitcoin alone would put Ira Kleiman among the top 50 richest people in the world, <a href="https://davidgerard.co.uk/blockchain/2021/11/13/news-craig-wright-in-court-mt-gox-settlement-bitcoin-futures-etf-reddit-community-points-miners-still-cant-sell-their-bitcoins/" target="_blank" rel="noreferrer noopener">according to Forbes</a>.)



Ira Kleiman <a href="https://www.law360.com/articles/1438959" target="_blank" rel="noreferrer noopener">has testified</a> that Wright and his brother created a company in Florida in 2011 — W&amp;K Info Defense Research LLC — which is how the Australian has ended up spending time in and out of a Miami courtroom <a href="https://news.bitcoin.com/judge-orders-craig-wright-to-physically-appear-in-florida-lawsuit/" target="_blank" rel="noreferrer noopener">since 2019</a>.



Wright denies the allegations, and says Kleiman merely helped him temporarily transfer control of the bitcoin — which <a href="https://www.law360.com/fintech/articles/1439426/bitcoin-inventor-accused-at-trial-of-lying-about-trust" target="_blank" rel="noreferrer noopener">he says</a> was purchased in 2011 from a &#8220;dodgy&#8221; Russian exchange — to keep it out of reach of Australian tax authorities.



<h3 class="wp-block-heading">A last-ditch effort to avoid a jury verdict</h3>



Shortly before closing arguments last week, Wright’s legal team filed a Motion for Judgement as a Matter of Law — basically an appeal to the judge that the plaintiffs haven’t presented sufficient evidence. Such a preemption by the judge is only an option if there “is no legally sufficient evidentiary basis for a reasonable jury to find for the non-moving party.” According to <a href="https://www.govinfo.gov/content/pkg/USCOURTS-flsd-9_18-cv-80176/pdf/USCOURTS-flsd-9_18-cv-80176-25.pdf" target="_blank" rel="noreferrer noopener">court documents</a>, there is, and the motion was denied.



The court previously <a href="https://www.govinfo.gov/content/pkg/USCOURTS-flsd-9_18-cv-80176/pdf/USCOURTS-flsd-9_18-cv-80176-23.pdf" target="_blank" rel="noreferrer noopener">denied a motion</a> from the defense for Summary Judgement, which uses a similar legal standard, so this last legal maneuver was a long shot.



Among the Wright team’s arguments was that the market value of the bitcoins at issue could not be used as the basis for the jury judgment under a Florida precedent known as the “Blockage Discount Theory” —&nbsp; that the bitcoin could not be sold without substantially adversely affecting the price. The judge disagreed.



<h3 class="wp-block-heading">To be or not to be Satoshi Nakamoto</h3>



Wright has never been able to prove that he is Satoshi Nakamoto by either signing a message using the PGP key for Satoshi’s encrypted emails, or moving any of the early Satoshi-mined bitcoin he presumably should control.



The case has yielded more sordid details of Wright’s behavior. In March 2020, a previous judge in the case, Judge Bruce E. Reinhart, <a href="https://storage.courtlistener.com/recap/gov.uscourts.flsd.521536/gov.uscourts.flsd.521536.420.0.pdf" target="_blank" rel="noreferrer noopener">reprimanded Wright</a> for forging documents and giving perjured testimony.



Gavin Andresen, who once claimed that he was personally convinced Wright was indeed Satoshi, expressed doubts on that view in <a href="https://storage.courtlistener.com/recap/gov.uscourts.flsd.521536/gov.uscourts.flsd.521536.589.3.pdf" target="_blank" rel="noreferrer noopener">a sworn deposition</a> during the trial, referring in particular to supposed proof proffered by Wright:



<blockquote class="wp-block-quote">“That gobbledygook proof that he published was certainly, deception, if not an outright lie. So at the very least, that, I consider, you know, that — he bamboozled me there.”</blockquote>



When Wright set a date to prove his claims — by transferring bitcoin known to belong to Satoshi Nakamoto to Andresen — he failed to deliver. On the day that he was due to transfer the bitcoin — May 4th, 2016 — Andresen says he was told Wright attempted suicide and was taken to the hospital.



Wright is now in a precarious position. If the jury finds in Kleiman’s favor, it is unlikely that Wright will be able to access the half a million in bitcoin — whether or not he is Satoshi — for one simple reason: It’s almost inconceivable that he would not already have done so. Satoshi’s coins have not moved for over a decade, even as the price of 1 bitcoin has gone from less than a penny to $68,521. That’s the clearest indication that Satoshi is either dead, or has lost the keys.



As <a href="https://davidgerard.co.uk/blockchain/2021/11/13/news-craig-wright-in-court-mt-gox-settlement-bitcoin-futures-etf-reddit-community-points-miners-still-cant-sell-their-bitcoins/" target="_blank" rel="noreferrer noopener">David Gerard put it</a>, “Wright could end up owing half a million bitcoins he doesn’t control to the estate of the guy he didn’t invent Bitcoin with, just because he wouldn’t admit he wasn’t really Satoshi.”



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