The family of a dead IT programmer has filed a $5 billion (€4.6 billion) lawsuit against the man who two years ago said he was the creator of Bitcoin. The case may shine light into the cryptocurrency's darker corners.
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The family of dead American IT specialist Dave Kleiman filed a lawsuit in a US federal court in Florida on February 14 against Australian businessman Craig Wright, alleging he had stolen up to 1.1 million Bitcoins, the family said on Tuesday.
Kleiman's brother Ira told the tech site Motherboard that the total amount of Bitcoin in question is unknown and could be between 300,000 and 1.1 million.
Bitcoin: Where it came from and where it's headed
The booming cryptocurrency has a cryptic backstory and a perplexing modus operandi. Following a year of particularly tumultuous growth, DW asks where Bitcoin will go next. Can it sustain its incredible ascent?
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Good time to start a currency
Introduced in 2009, Bitcoin was the world's first decentralized digital currency. It quickly gained traction amid lingering uncertainty in the wake of financial crisis. Designed to be as rare as gold, Bitcoin was created to have a maximum of 21 million "coins." Initially worth just a fraction of a cent, by February 2011 the currency had gained parity with the US dollar, then it really took off.
Image: picture-alliance/dpa/J. Kalaene
An anonymous founder
The name Satoshi Nakamoto is synonymous with Bitcoin. It is said to be the alias for an unknown IT whizz who invented the cryptocurrency. But despite claiming to be a 30-something Japanese national, it is generally thought that several computer science experts created the technology behind the digital coin. One rumor even suggested that Tesla chief Elon Musk is the real Satoshi, which he denied.
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So no coins then?
Instead of being printed like dollars and euros, each Bitcoin is created on a global network of computers and verified by the system rather than a bank. There are no transaction fees. The smallest amount you can buy is a "Satoshi" or one-hundred-millionth of a Bitcoin. Purchases can be made anonymously and even at digital currency ATMs. When you buy Bitcoin, it is often stored in a digital wallet.
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Complex puzzles
To ensure that not too much Bitcoin comes into circulation, a process called mining was created where blocks of transactions could only be processed once a difficult math problem was solved by geeks. The puzzles are becoming so complex that bigger and bigger computers are being utilized to decipher them. That's led to concerns about the amount of electricity used to handle Bitcoin transactions.
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Are Bitcoin fortunes legit?
Due to its anonymous nature, Bitcoin's success is likely being fueled by organized crime, including money laundering and the purchase of illegal goods. The currency is also being targeted by cybercriminals. A recent hack blamed on North Korea forced a South Korean digital currency exchange into bankruptcy. Reports suggest the "Islamic State" armed group used Bitcoin to receive funds to buy arms.
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Bitcoin leads, others follow
Bitcoin is the largest of all the cryptocurrencies and its incredible rise has spawned many imitators. Other large digital cash creators include Ethereum, Zcash, Bitcoin Cash, Ripple and Litecoin. As of November 2017, their number had swelled to 1,324. Hundreds of others have attempted and failed to launch their own digital coins. The market is now coming under increasing scrutiny by regulators.
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Watch it skyrocket
2017 was a stratospheric year for Bitcoin. Worth close to $1,000 in January, some twelve months later it had scaled to an all-time high of $19,784. Despite much skepticism, the currency started to see serious interest from institutional investors. Two exchanges began Bitcoin futures trading, allowing speculators to punt on the incredible volatility in the value of the cryptocurrency.
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Warnings abound
From central banks to respected investors, almost the entire financial establishment warned of a massive Bitcoin bubble, which they said can only end in disaster for holders of the digital currency. Among them was Nobel prize-winning economist Joseph Stiglitz who said Bitcoin "ought to be outlawed." Jamie Dimon, the CEO of JPMorgan Chase labeled those who buy the currency "stupid."
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The shape of things to come?
Just before Christmas 2017, Bitcoin saw a dramatic rally, topping out at nearly $20,000 before losing a third of its value in just five days. More intense volatility followed early in the New Year, only to be reversed when it plummeted by almost half. Are we in for an even bigger rollercoaster ride if Wall Street adopts Bitcoin?
The family claims they are owed at least half of the Bitcoins mined by the two men, which have an estimated worth of about $11.6 billion at today's value.
Early adopters of the cryptocurrency were able to acquire large quantities of it through what is known as mining in its first few years, when its value ranged from a few cents to about one US dollar.
The allegations
Wright and Kleiman created a cybersecurity company, W&K Info Defense Research, in 2011 and after Kleiman died in 2013, Wright allegedly backdated contracts to transfer the ownership of the coins and intellectual property to himself.
Craig Wright, speaking in LondonImage: picture-alliance/AP Photo/BBC News
The suit alleges that at the time of Kleiman's death "no one in his family was aware of the extent of his involvement in creating Bitcoin […] and recognizing this, Craig perpetrated a scheme against Dave's estate to seize Dave's Bitcoins and his rights to certain intellectual property associated with the bitcoin technology.”
The lawsuit does not claim that Kleiman or Wright are the actual inventors of Bitcoin, but instead alleges that the two were heavily involved with Bitcoin in its infancy.
