January 2020 is almost upon us. Why is the Bitcoin world clamoring to watch something called the “Tulip Trust”?
The Tulip Trust is one of the Bitcoin world’s favorite things to speculate about. Years in the making, it’s something that could finally reveal more about Satoshi Nakamoto and the roles of Dr. Craig Wright and Dave Kleiman. Its consequences could crash the market price of BTC, BCH, or Bitcoin (BSV), or cause one or all of them to soar. It could be a very public demonstration of what Bitcoin can actually do.
Or it could be none of that.
At the center of the legend is Dr. Wright, and the assumption (or disbelief) that he will be able to control anything between 821,050 and 1,100,111 million Bitcoins at some point next year. One long-reported trigger event is supposedly set to occur in January 2020.
If and when the Tulip Trust door is opened, what will we see inside? A Bitcoin version of Aladdin’s Cave, Geraldo Rivera’s “Al Capone Vault”, or a comeback season of “Lost”?
Is there no door at all, but instead a Rube Goldberg machine of cryptography, code and companies set in motion years ago that can’t be stopped?
Discussion surrounding the Tulip Trust could by now be relegated to obscure subreddits, were it not for comments Dr. Wright made in mid-2019 and more recently, a court case in Florida.
So that’s why we’re here. On with the story…
Dr. Craig Wright’s plans for BTC, BCH and BSV
Whether or not you “believe” Dr. Craig Wright is Satoshi Nakamoto is not relevant to the Tulip Trust story. The issue is simply whether he will gain access to a market-altering stash of Bitcoin in 2020… and what he does with it. Read Dr. Wright’s statement on Tulip Trust here.
Dr. Wright has posted publicly (in chat groups and on social media) that he intends to do something with a large amount of BTC in 2020.
“This is the final advance notification. Please don’t bother asking me to explain.”
“In 2020, I will only have BSV. BTC and BCH are to be used to fund a number of charities and development projects. The BTC will not be dumped immediately… I plan to maximize my donations.”
“So. I am going to have 821,050 BTC used in 2020.”
NOTE: Dr. Wright’s posts do not mention any “Tulip Trust” or specify a date. He is under no legal obligation to fulfil a chatroom promise, and it may not have anything to do with the Tulip Trust details we’re about to discuss.
Trust, legend, smart contract or concept – or all of that?
There are really two parts to this story. One is what is publicly understood about the “Tulip Trust” either from media references, or more recently the Florida lawsuit brought by the estate of Dr. Wright’s friend, Dave Kleiman.
The other is the deeper and more historic narrative of what the concept of the expression “Tulip Trust” actually represents. It may refer simultaneously to specific legal arrangements concerning Dr. Wright’s Bitcoin holdings, and/or a trust-like concept that combines smart contract scripts with Bitcoin’s nLockTime function.
Thanks to history and current events, these two seemingly separate parts are overlapping and interacting with each other in unusual ways, as lawyers and laymen attempt to bridge money and business concepts with computer science concepts that remain esoteric even to many Bitcoiners.
The Infamous Dave Kleiman email
Other articles published on this topic tend to look only at the details of one email, purportedly sent from Dave Kleiman to Dr. Wright in 2011. This is understandable. The email, leaked to the public illegally by employees of the Australian Tax Office (ATO), contains the most specific information about the 1,100,111 Bitcoin amount and the January 1st, 2020 return date.
On the surface it appears simple, and contains concepts most people can relate to. This explains the many references to it over the years. However we think it forms only part of the Tulip Trust story. Read on to find out why.
First mentions of a Tulip Trust
The public first heard the name “Tulip Trust” and some hints to its nature in two December 2016 articles that claimed Dr. Wright could be Satoshi Nakamoto. One appeared in Gizmodo, the other in WIRED (the WIRED article was later amended to express doubt at the notion.)
Citing the ATO-leaked emails, they detailed a “Tulip Trust” arrangement between Wright and Kleiman, the latter confirming he had received 1,100,111 Bitcoin to put into the trust.
The trust would be managed by at least three, but not more than seven, people at any time and all bitcoins would be returned to Dr. Wright on January 1st, 2020—in the form of a company he controls.
It includes provisions for a loan of some of the Bitcoin balance to Dr. Wright for further Bitcoin research or commercial activities that enhance Bitcoin’s value and position. However it stipulates the trust must hold at least 100,000 Bitcoin at the time of the 2020 transfer.
Other conditions say that if Dr. Wright dies before 2020, the trust holdings transfer to Ramona Watts (who would later become Wright’s wife) and that if Kleiman dies, trust and company shares would return to Dr. Wright 15 months later.
It sounds pretty straightforward so far. However Kleiman did die, raising questions over whether any of the details or conditions are still applicable at all.
Enter the Kleiman family and the Southern Florida District Court
More details regarding this arrangement would later emerge in the Florida lawsuit.
Whether these documents were created in 2011, before Dave Kleiman’s death, or after it in 2014, remains disputed. Moreover, Florida Magistrate Judge Bruce Reinhart, in his August 27, 2019 Order on Plaintiff’s Motion to Compel Wright to divulge his Bitcoin holdings as of December 31, 2011, rejected the very notion that the Tulip Trust even exists.
In his deposition to the court, Dr. Wright testified that the Tulip Trust does not contain actual Bitcoins (or their key pairs), but control of them via access to an encrypted file. Encryption keys to the file were divided among trust participants using a version of Shamir’s Secret Sharing algorithm. He (Wright) did not have access to the complete decryption key and would be unable to obtain them from other participants, and thus was unable to reveal exactly how many bitcoins the trust would grant control over.
In the Order, Judge Reinhart found Wright’s testimony to be “intentionally false,” and “part of a sustained and concerted effort to impede discovery into his bitcoin holdings.” It also stated that Dr. Wright had provided conflicting testimony as to whether the trust did or didn’t hold Bitcoins (or Bitcoin keys).
There also appear to be no blockchain records available that resemble ~1.1 million Bitcoins entering a trust or file. More on that later.
Judge Reinhart also granted the plaintiff’s request that, should Dr. Wright be unable to declare the exact number of Bitcoins he held in December 2011, any Bitcoins he and Kleiman mined should be considered 50/50 joint property of the two men—making them subject to any ruling should the matter proceed to trial. Note that this would apply whether the Tulip Trust exists in reality or not.
Contrary to some media and social media speculation, Judge Reinhart’s ruling was not a final and binding decision and as of press time, the case is ongoing. There has not been a trial, and even if there is, both legal and technical questions about the Florida court’s authority to even rule on the matter remain. There will be plenty more courtroom drama unfolding so stay tuned.
It’s a lot less straightforward now
Here’s some background on the “Tulip Trust” as it’s currently understood from publicly-available information sources. These sources include the media (from various “leaks” over the years since 2015, court proceedings and online posts.
There are three known examples of entities described as “Tulip Trusts.” For the purposes of this section we’ll assume they all existed as described in court testimony, regardless of subsequent rulings and opinion.
The first is the one concerning control over bitcoins mined between 2009 and 2011. Rather than existing as a legal entity, “Tulip Trust” at this point refers more to a “technical solution” with information related to early mined Bitcoins held at various times in Liberty Reserve and a company in Panama.
The next is referred to in court documents as “Tulip Trust I” (TT1) which was Wright and Kleiman settled in October 2012 using the Seychelles jurisdiction as a “legal solution” to hold the information contained in the less-formal technical arrangement mentioned above. This reportedly holds the 1,100,111 bitcoins mentioned in the Wright/Kleiman emails.
Trustees to TT1 are:
– “A company in the UK registered by number 08248988” (previously C01N Ltd UK, since dissolved)
– Uyen T. Nguyen
– Craig Wright
– David (Dave) Kleiman
– Panopticrypt Pty Ltd (Australian company now in liquidation)
– Savannah Ltd (Seychelles entity)
– the holder of PGP keys [REDACTED] “which is Satoshi Nakamoto, ie: Craig Wright”
Beneficiaries of TT1 are known to include Wright International Investments Ltd., Tulip Trading Ltd. Related to these companies in documentation is company 08248988/C01N LTD UK.
Several pundits have attempted to unlock the Tulip Trust’s secrets by looking at these parties. However very little useful information has come from this.
Uyen Nguyen gets a lot of attention due to the lack of information about her available online. She appears to have entered the narrative as an associate of Dave Kleiman, and at times was a director at C01N LTD UK from October 2012 to June 1st, 2016.
Posts on forums like Reddit have speculated she used the alias “Horigoshi Takanobu” on Facebook, and it appears she had control of the @Dr_Craig_Wright Twitter account from June to December 2015, and again for some time after that. The language contained in those tweets does not appear to be Dr. Wright himself, or a native English speaker.
The next entity known as “Tulip Trust” was referred to as “Tulip Trust II” in court records. It was settled in 2014, also in the Seychelles.
Trustees for TT2 is listed as “Tulip Trading Ltd”, which according to Dr. Wright was a company he formed and “controlled or not controlled it at different points.” “I don’t control it at the moment,” he said.
The court identified the trustee as actually being Denis Mayaka, representing Equator Consultants AG. Under cross-examination by Kleiman estate counsel, Wright said the following:
Q Who is the trustee?
A Denis was running Tulip Trading for me at that stage.
Denis was the nominal holder of the bearer shares through a
company he had through Savanah and others, and Denis and his
company out of Kenya were doing this so that I wasn’t listed
on the company.
Q So as of the date of this document, you were the
controlling trustee?
A No, Denis was.
Q For you?
A Sorry?
Q For you?
A For myself and my wife equally at this point.
Beneficiaries are Craig Wright, his wife Ramona Watts, and secondary beneficiaries (information redacted, possibly Dr. Wright’s children).
Since TT2 was settled in 2014, it does not include Dave Kleiman as a trustee or beneficiary. However the Kleiman estate is interested in its contents, if it holds information regarding any bitcoins Dr. Wright and Dave Kleiman controlled before the end of 2011.
What’s actually in the Tulip Trust/s?
What has emerged from the Florida lawsuit is that Dr. Wright is not able to directly access information regarding the bitcoin value (or any information about it) and does not seem overly concerned about this inability. More from the cross-examination transcript:
Q And you were asked a question about that provision in the
trust agreement which allows the trustee to do certain things.
A Yes.
Q In fact, in this trust agreement, the trustee is allowed
to do more things than that; isn’t that right?
A Yes.
Q Is there anything in this trust agreement that the trustee can do which overrides or trumps the technological impossibility that you face to decrypt the file and provide the information that has brought us here today that you have not been able to provide?
A No.
Why would a man, supposedly the inventor of Bitcoin with billions of dollars at stake, seem so cavalier about trusts concerning his wealth? Judge Reinhart himself was incredulous at the thought, which led him to express his disbelief in the trust’s very existence. He wrote:
As part of his efforts to disassociate from Bitcoin and “so that I wouldn’t be in trouble,” he put all his bitcoin (and/or the keys to it – his story changed) into a computer file that is encrypted with a hierarchical Shamir encryption protocol. See Id. at 23. He then put the encrypted file into a “blind” trust (of which he is one of the trustees), gave away a controlling number of the key slices to now-deceased David Kleiman, and therefore cannot now decrypt the file that controls access to the bitcoin. His only hope is that a bonded courier arrives on an unknown dated (sic) in January 2020 with the decryption keys. If the courier does not appear, Dr. Wright has lost his ability to access billions of dollars worth of bitcoin, and he does not care. Inconceivable.
Here’s where we turn to look at other possibilities. There is a degree of speculation here, so we’ll explain the reasons.
Dr. Wright: ‘I’ve called a lot of things Tulip Trust’
Q Dr. Wright, in this litigation you’ve produced two
documents to us with the names Tulip Trust, Tulip Trust I and
Tulip Trust II. Do you recall that?
A I’ve called lots of things Tulip Trust.
Dr. Wright has frequently referred to using Bitcoin’s nLockTime function, combined with smart contract scripts, to create an automated trust in which a beneficiary can leave his/her wealth for future generations. It does so in a way that removes control of the assets from the trustee, but would only broadcast the transaction on the blockchain at some future point in time.
In fact, a blog post by Dr. Wright from March 29, 2019, describes a situation that resembles a/the “Tulip Trust.”
“Let’s imagine that Bob wants to ensure that his wealth can go to his children even if something happens. Bob has 50 bitcoin that he has allocated for his child’s college fund. Alice, his daughter, will turn 18 and go to university in 10 years time. He wants to ensure that nothing can stop it, he cannot be pressured into spending money that is put aside for her, and if anything occurs, she will be safe and secure. Bob is in a risky business, and knows that he has put everything into a company that could end up in liquidation, and Bob is guaranteed some of the accounts, meaning that he could be bankrupt if things don’t go as well as he hopes.”
One of Bitcoin’s (BSV) key selling points is its stable protocol, which makes it far safer for such constructs. Performing this operation on a protocol that can be altered at fundamental levels could risk losing access to the assets.
“Legally speaking, he has created a trust that takes control of the money away from himself and gives it to Alice in such a way that she will obtain control when she is 18 — but not before.”
“So Bob sets up his system and trust for Alice, and throws away his keys. He knows that Bitcoin is set in stone and in 10 years Alice will be able to run the transaction that gives her access to the money, but nobody else will be able to do so or take the money from her before she turns 18.”
Patent application WO2019049022A1 (inventor Craig Steven Wright, filed by nChain Holdings Ltd. on September 4, 2018) is one that concerns a technique using nLockTime to perform time-based operations on an unspent blockchain transaction output (UTXO).
This “Improved time lock technique for securing a resource on a blockchain” also details how external data (ie: data not currently recorded on-chain) can supply information to the locking script.
O’Hagan’s 2016 essay also refers to such an invention:
“We made a plan, then Wright asked me to come to his office so he could draw something for me on his whiteboard, a new timelock encryption scheme he’d come up with. He wanted to add it to the list of patent applications.”
The ‘technological solution’ makes more sense
The events of the Florida court case, the details Judge Reinhart found “inconceivable” and Dr. Wright’s apparent ambivalence to the Seychelles entities (and associated people) could start to make more sense if you add some blockchain to the mix.
The information regarding setup documents, including background information, may not be relevant to who ultimately controls the Bitcoins in the documented “Tulip Trust” entities. Neither are the people listed as trustees, many of whom only performed administrative tasks. Dr. Wright didn’t need to trust them or even know how to find them. Many of the details and the information they held could (possibly) only be useful if all were together, and in agreement.
The companies, new or shell, involved are also not relevant to the ultimate destination of the bitcoins. The details concerning their setup, personnel, and current status are unknown even to Dr. Wright—often deliberately so, to obfuscate his involvement for privacy reasons or as a safeguard should anyone attempt to force him to reveal the information. Satoshi Nakamoto would likely have taken steps to prevent loss by extortion or threat of violence.
I wanted gossip, but all I got was some amazing new technology
So in the end, the answer to the question “What Is the Tulip Trust?” and its Bitcoin treasure map remains unknown. And we won’t necessarily find out on January 1st, despite the promise of an old email no-one can agree on.
2020 still promises to be an interesting year for all forms of Bitcoin. Prices, reputations and career focuses will shift in some way or another. So while we wait to see what actually happens, let’s recall the time Dr. Craig Wright first said the word “Tulip” in public, before anyone started talking about Satoshi:
“I think everyone continues to think too small.”
“We’re talking about things like access to websites, digital rights management, we have all that capability actually there. So the majority… we’re still thinking it’s just money. There’s so much more.”
A fundamental right of property is the ability to not disclose what we have, to be able to dispose of it how we want, and to be able to share it, he said.
“Once we get things where we have redeemable contracts and we link them to the blockchain, where we can link money and goods, digital rights, ownership, into something that can’t be changed.”
UPDATE JANUARY 2020: On January 9th, 2020, plaintiff’s lawyers in the Kleiman case revealed they had received “a third Tulip Trust document” from Dr. Wright on January 6 (which the court and commentators have branded “Tulip Trust III”). Little is known of the new document’s contents, as Wright has marked it “Confidential” and all parties agreed to allow him 10 days to redact it. More details will likely emerge later.
Editor’s note: This article has been updated.
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