Does Dorian Satoshi Nakamoto have a case against Newsweek?

Legal experts say it would be hard for Nakamoto to build a strong case

This week's emphatic denial from Dorian Satoshi Nakamoto that he had anything to do with the creation of Bitcoin also hinted at a possible lawsuit against Newsweek, though legal experts say it would be an uphill battle.

"I did not create, invent or otherwise work on Bitcoin. I unconditionally deny the Newsweek report," Nakamoto wrote in the letter, distributed by the Los Angeles law firm Kirschner & Associates, which says it was retained by Nakamoto to represent him.

Nakamoto writes that his background is in engineering and he has "the ability to program," but that he has "no knowledge of, nor have I ever worked on" cryptography, peer-to-peer systems or alternative currencies.

Some of the language in the letter, and the fact that Nakamoto hired a law firm at all, raises the possibility that he might be planning a lawsuit against Newsweek, which identified him as Bitcoin's inventor in a March 6 cover story.

"I am trying to recover from prostate surgery in October 2012 and a stroke I suffered in October of 2013. My prospects for gainful employment has been harmed because of Newsweek's article," he writes.

"Newsweek's false report has been the source of a great deal of confusion and stress for myself, my 93-year old mother, my siblings, and their families," the letter states.

Nakamoto had already denied his involvement with Bitcoin in an interview with the Associated Press hours after Newsweek's article was published. So a written denial, issued through an attorney, may be intended to do more than publicly clear his name.

Kirschner & Associates declined to say whether Nakamoto plans to take any legal action against Newsweek. "We have no comment beyond confirming that we've been retained by Mr. Nakamoto," his attorney, Ethan Kirschner, said via email.

Certainly there are those who would like to see Newsweek taken to court. As soon as the Newsweek story was published, many balked at what they saw as its invasiveness and -- if Dorian Nakamoto is telling the truth about not being involved with Bitcoin -- the unwarranted attention it brought on him.

Newsweek has stood by its story. On Monday, the magazine added that it had not received Nakamoto's letter, and its editor in chief, Jim Impoco, did not respond to a Twitter message seeking further comment.

If Nakamoto planned to sue, it would probably be under a claim that he was depicted in a "false light," said Jeffrey Pyle, a partner with the law firm Prince Lobel in Boston. But that could be a tough case to prove, he said.

False light claims require a plaintiff to show that something untrue and "highly offensive" was implied about them. That could be a high bar for Nakamoto to clear, since the article identified him as a brilliant, if quirky, mathematician who created a highly successful virtual currency.

Nakamoto would also need to show that Newsweek knew its conclusion was wrong and published anyway, or that it acted with reckless disregard for the truth.

"It essentially requires the person to prove not only that the reporter engaged in shoddy journalism, but also that the reporter harbored subjective doubts about the accuracy of what was being published," said Pyle, who represents media companies in libel and other cases but has not done work for Newsweek.

The author of the piece, Leah McGrath Goodman, has defended her reporting. Proving through depositions and discovery that she published without regard for the truth would probably be difficult, Pyle said.

Moreover, Nakamoto would need to overcome California's tough anti-SLAPP law, which helps protect the First Amendment rights of media organizations such as Newsweek. The anti-SLAPP law would shift the burden to Nakamoto, early in the case, to demonstrate that he has a likelihood of prevailing.

"In other cases, the plaintiff sues, it goes into discovery and the plaintiff is able to develop the case over a period of time, subject to a low threshold of getting it into court. But with the anti-SLAPP law, there's a higher burden placed on the plaintiff early on in the case to demonstrate he has a claim."

If Dorian Nakamoto were to lose a case on an anti-SLAPP ruling, he would be liable for Newsweek's legal fees, Pyle said.

Another possible route is a claim of defamation. While false light claims focus on "subjective" harm -- the notion that Nakamoto suffered distress as a result of something untrue being written about him -- defamation claims deal with harm suffered to reputation in the community, causing someone to lose their job or be ejected from a club, for instance.

That too might be a high bar to cross, Pyle said. "This probably would not survive as a claim of defamation, because the article is claiming he is an ingenious cryptographer who created a digital currency that took off and went through the roof." And a defamation claim would still be subject to an anti-SLAPP challenge.

Steven Krone, a law professor at Southwestern Law School, said the comments in Nakamoto's letter suggest it's possible he plans to make both false light and defamation claims against Newsweek.

The comment that the article harmed his prospects of gaining employment could speak to the defamation claim, while the remark about the stress caused to him and his family could speak to false light.

Krone suggested that a false light claim was probably more viable than a defamation claim. "Mr. Nakamoto might or might not be able to demonstrate that being falsely identified as the creator of Bitcoin harmed his reputation," he said.

Even if Nakamoto were to highlight the negative publicity Bitcoin has received -- some have labeled it a scam, others an anonymous currency used widely by criminals -- that "doesn't necessarily mean that the community would view him negatively," Krone said. "But a false light claim would only require a showing that the false attribution would be highly offensive to a reasonable person."

There are other aspects to the Newsweek profile that portray Nakamoto in a negative light. His youngest brother describes him as "an asshole" and says he has "weird hobbies," while his eldest daughter says he is "totally not a normal person."

But for those who think that laying Nakamoto's life bare for millions of readers, and publishing photos of him, his house, and his car and license plate, should itself be an offense, there is no such right to privacy under U.S. law.

"Victims of highly publicized crimes don't ask for coverage, yet news trucks sometimes park outside their houses with reporters seeking comment, and their pictures are placed on the front page of newspapers," Pyle noted. "This isn't actionable -- it's reporting, subject to journalistic ethics and in some cases public criticism."

Whether Nakamoto will take legal action remains to be seen. It's entirely possible that his letter was simply a final attempt to deflect further attention.

"This will be our last public statement on this matter," the letter concludes. "I ask that you now respect our privacy."

James Niccolai covers data centers and general technology news for IDG News Service. Follow James on Twitter at @jniccolai. James's e-mail address is james_niccolai@idg.com

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