Kleiman vs Wright: Judge Bloom lifts sanctions issued by Judge Reinhart

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The Tulip Trust 3 document being admitted into evidence was not the only thing that happened last week in the Kleiman vs Wright case. In a major legal victory for Dr. Craig Wright on Friday, U.S. District Judge Beth Bloom said U.S. Magistrate Judge Bruce Reinhart’s sanctions order was too harsh a punishment for the Bitcoin inventor.

Dr. Craig Wright sought review of Magistrate Judge Bruce Reinhardt’s prior order on the parties’ discovery disputes in which the Magistrate recommended sanctions, including determining certain key factual findings against Dr. Wright, rather than letting those issues be determined by a jury at trial.

Dr. Wright filed objections seeking review to the District Court judge Beth Bloom; in this order, Judge Bloom reversed most of the Magistrate’s prior order and the recommended factual sanctions against Dr. Wright but still left an order for payment of attorney’s fees.

The District Court also is giving Dr. Wright until February 3, 2020, to produce the list of his Bitcoin holdings for the time period in dispute (through 2013).  If Dr. Wright produces that information, no further sanctions will be issued.

“Given the defendant’s many inconsistencies and misstatements, the court questions whether it is remotely plausible that the mysterious ‘bonded courier’ is going to arrive, yet alone that he will arrive in January 2020 as the defendant now contends,” Judge Bloom said. “However, given that the defendant maintains that he should at least be afforded this opportunity, the court will indulge him this much.”

In essence, the District Court judge will let the key issues in the Kleiman case be decided at trial by a jury which will be allowed to determine if Wright and Dave Kleiman had a partnership and whether the Kleiman estate is entitled to any Bitcoin holdings or intellectual property of Dr. Wright rather than have those issues be decided against him without a trial as a discovery sanction.

“The critical thing about this ruling is it allows us to go to trial to prove that there was no partnership,” stated Wright’s attorney Andres Rivero to Law360.com.

This latest victory will have implications on other pending litigation that Dr. Wright is involved in, namely his libel case against podcaster Peter McCormack in the U.K. This ruling makes all the old ruling by Judge Reinhart inadmissible in the U.K. court.