Another blow for Newsweek's Bitcoin claim

Newsweek could face legal repercussions over its claim to have found Bitcoin's inventor.

Dorian Satoshi Nakamoto has hired a lawyer specializing in business, entertainment and the arts and issued a lengthy statement denying any connection with the virtual currency, alluding to the "confusion and stress" the newsweekly's story has caused him and his family.

The magazine's cover story on who invented Bitcoin was supposed to help re-launch Newsweek as a print publication after its 2013 purchase by IBT Media. The article, which centered on reporter Leah McGrath Goodman's efforts to uncover the person's identity, drew attention earlier this month.

But concerns about the accuracy of the story have grown. Among other red flag are the Bitcoin inventor's history of secrecy, making it unlikely that the person would use his or her real name, and differences in the command of English exhibited by Bitcoin's inventor and Dorian Nakamoto.

Nakamoto had previously said that he did not invent Bitcoin, but his new statement is more specific and categorical in dismissing Newseek's portrayal.

"I did not create, invent or otherwise work on Bitcoin," the statement read. "I unconditionally deny the Newsweek report." According to Nakamoto, he had never heard of the term Bitcoin before one of his sons mentioned it to him in February 2014 after being contacted by Goodman.

"Shortly thereafter, the reporter confronted me at my home," he said in the statement. "I called the police. I never consented to speak with the reporter. In an ensuing discussion with a reporter from the Associated Press, I called the technology 'Bitcom.' I was still unfamiliar with the term."

According to Nakamoto, he has been unable to find steady work as an engineer or programmer for a decade and has worked as a "laborer, polltaker and substitute teacher." He claims to have discontinued his Internet service last year because of "severe financial distress," even though Bitcoin's inventor is believed to have untapped reserves in the currency with a value estimated to run into the hundreds of millions of dollars.

Nakamoto also said that he is still trying to recover from 2012 prostate surgery and a stroke last fall. He stated that his "prospects for gainful employment has been harmed because of Newsweek's article."

What started as a coup for Newsweek and its owner could amount to a blow for the company. As media pundit Michael Wolff has put it, printing magazines is relatively easy.

Distributing them is the hard and expensive part -- the real printing. You'll be lucky to find the new Newsweek on the newsstand. And it would be a rarity if you were one of the few to pay its high subscription price. So, this print version is more in name -- a conceit, a promotion -- than it is an actual business strategy.
Buzz can work two ways for a business, either driving it forward or scaring off potential partners and customers. The question now is whether Newsweek eventually shows up on more newsstands.

  • Erik Sherman On Twitter»

    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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