Australian Police Storm Home Of Outed Bitcoin "Founder"

On Tuesday, Wired and Gizmodo revealed the identity of the man they say is Satoshi Nakamoto, the pseudonymous creator of Bitcoin. 

Although they stop short of saying that the “trove” of evidence obtained from Gwern Branwen (another pseudonym), an independent security researcher and dark web analyst is conclusive, they seem all but certain that Nakamoto is actually a 44-year-old Australian named Craig Steven Wright. 

In the world of bitcoin enthusiasts Wright was, until yesterday anyway, a “nobody.” When he spoke via Skype at the Bitcoin Investor’s Conference in Las Vegas, the moderator had to ask him who he was.

Branwen allegedly began receiving leaked documents from a source close to Nakamoto last month - he then passed along the information to Wired. According to Wired’s detailed account, the documents immediately led to several direct, publicly visible connections between Nakamoto and Wright. Here they are: 

  • An August 2008 post on Wright’s blog, months before the November 2008 introduction of the bitcoin whitepaper on a cryptography mailing list. It mentions his intention to release a “cryptocurrency paper,” and references “triple entry accounting,” the title of a 2005 paper by financial cryptographer Ian Grigg that outlines several bitcoin-like ideas.
  • A post on the same blog from November, 2008. It includes a request that readers who want to get in touch encrypt their messages to him using a PGP public key apparently linked to Satoshi Nakamoto. A PGP key is a unique string of characters that allows a user of that encryption software to receive encrypted messages. This one, when checked against the database of the MIT server where it was stored, is associated with the email address, an email address very similar to the address Nakamoto used to send the whitepaper introducing bitcoin to a cryptography mailing list.
  • An archived copy of a now-deleted blog post from Wright dated January 10, 2009, which reads: “The Beta of Bitcoin is live tomorrow. This is decentralized… We try until it works.” (The post was dated January 10, 2009, a day after Bitcoin’s official launch on January 9th of that year. But if Wright, living in Eastern Australia, posted it after midnight his time on the night of the 9th, that would have still been before bitcoin’s launch at 3pm EST on the 9th.) That post was later replaced with the rather cryptic text “Bitcoin – AKA bloody nosey you be…It does always surprise me how at times the best place to hide [is] right in the open.” Sometime after October of this year, it was deleted entirely.

Of course this isn't the first time Nakamoto has been "found" and we'll leave it to readers to review the Wired piece and evaluate the evidence in its entirety, but it seems fairly clear that Wired managed to convince the Australian Federal Police because on Wednesday, they broke into what Reuters describes as "a modest brick house in the leafy middle class suburb of Gordon" in an apparent raid on Wright's property. 

"Locksmiths broke open the door of the property, in a suburb on Sydney's north shore," Reuters writes, adding that "when asked what they were doing, one officer told a reporter they were 'clearing the house.'"

"More than 10 police personnel arrived at the house in the Sydney suburb of Gordon at about 1.30pm. Two police staff wearing white gloves could be seen from the street searching the cupboards and surfaces of the garage. At least three more were seen from the front door," The Guardian adds.

Authorities then proceeded to "clear" Wright's businesses as well. Again, from Reuters: "A reporter who approached an office listed as the location of two of Wright's registered businesses, DeMorgan Ltd and Panopticrypt Pty Ltd, in another Sydney suburb, was turned away by police with one officer saying: 'There's an operation going on at the moment, I can't answer any questions.'" 

Yes "an operation" was going on and although you'd have to be completely naive to believe that the raids aren't connected with the revelation that Wright may be Nakamoto, that was the official line: "Officers' presence at Mr. Wright's property is not associated with the media reporting overnight about bitcoins".

Of course not - it's a complete coincidence.

As Reuters goes on to remind readers, "the treatment of bitcoin for tax purposes in Australia has been the subject of considerable debate [and] the ATO ruled in December 2014 that cryptocurrency should be considered an asset, rather than a currency, for capital gains tax purposes."

Police referred all inquiries to the Australian Tax Office, which in turn said it wouldn't comment due to legal confidentiality of individuals' tax affairs.

Wright lived at the home with his wife Ramona Watts, who landlord Gary Hayres described as “a lovely lady," "They didn’t seem bad," he added.

Amusingly, one neighbor said Wright had a nickname: "Cold fish Craig." 

Gizmodo published a transcript of an interview Wright allegedly conducted with Australian Tax authorities (embedded below). "I did my best to try and hide the fact that I’ve been running bitcoin since 2009 but I think it’s getting – most – most – by the end of this half the world is going to bloody know," the document quotes Wright as saying. 

As Gizmodo goes on to recount, "Wright appears to have been trying to persuade the Australian government to treat his Bitcoin holdings as currency, as opposed to an asset subject to greater taxation. Without this regulatory move, his business interests would be scuttled."

John Chesher, Wright’s accountant, who attended one of the ATO meetings told Gizmodo that he "may have" told autorities that Wright was in possession of a Satoshi-sized Bitcoin sum. For the uninitiated, a "Satoshi size sum" is rumored to be somewhere in the neighborhood of nine figures worth of the cryptocurrency. 

So clearly, the idea that the raids and the revelations published by Wired and Gizmodo aren't related is patently absurd, but hey, it's the governement so what do you expect? 

Regardless of whether Wright is Satoshi (and we wouldn't be entirely surprised to see this story fade away like those that came before it), the bottom line here seems to be that the Australian Tax authority thinks this is a guy who may be sitting on a rather sizeable fortune that isn't getting taxed "properly" and we all know what happens when the government thinks it might not be getting its cut.

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