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The math prodigy whose hack upended DeFi won’t return funds

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Re: The math prodigy whose hack upended DeFi won’t return funds

#121

Post by knorker »

nomel wrote: post #113
Ataraxic wrote: post #94

Earlier quoted context omitted.

That may be the premise, but has that actually be held up and recognized as such in courts in major countries? Like are there precedents regarding this? At that point it's no longer a premise (for those particular countries), but until then it's just a supposition. I think courts are wary to wade deeply into a new financial system like this but at the same time I find it hard to believe that the judiciary and the leg…

> be held up and recognized as such in courts in major countries? Only having a slight understanding of crypto, if local courts are required, what's the point of crypto? Why not use the existing financial systems, where all of this is built in?

The article even hints at this:

> [a crypto bro] criticized the team for turning to a centralized institution like the courts for help

But that's exactly the flaw of smart contracts, and why its promises will never work.

The hard part of contracts was never execution. The hard part was always conflict resolution and abidance by fair rules (i.e. "laws"). The hard part is what creates the overhead.

Smart contracts never solved the hard part. They remove the solution to the hard part, claiming the hard part is not needed at all. But the problems these solutions solve are the hard part. Pretending they don't exist is not "solving" anything.

There are so many examples of this. A minor can't enter into a contract. Severely mentally disabled can't either. Someone with a gun to their head can't either. It doesn't matter if they enter into a million dollar contract. That contract is invalid.

This is not "waste". This is the hard parts.

Re: The math prodigy whose hack upended DeFi won’t return funds

#122

Post by glerk »

SamBam wrote: post #50

> But in our email exchanges, he argued that he'd executed a perfectly legal series of trades. In real finance, there is an understanding that technical loopholes can exist, since not every outcome can be foreseen when writing laws, but the legal system can frequently prosecute against a series of actions which are, individually, legal, but which together are taken in order to achieve something illegal. That is, mode…

They really don't have any leg to stand on.

A smart contract is a piece of code running on a public permissionless blockchain. The developers who deployed that code do not own it. Medjedovic had as much the right to take money out of the smart contract using the contract's logic as Kellar and Day.

Being blockchain developers, Kellar and Day know these facts very well, but they persist in their hypocrisy because it is in their financial interest to do so. They are betting on a non-technical jury being convinced by a good lawyer that Medjedovic "hacked them" or "stole their funds" (which is not at all what happened here).

Re: The math prodigy whose hack upended DeFi won’t return funds

#123

Post by zecken »

I feel like the fact this person, per the article, is a white supremacist who used the n-word in his code repeatedly is under-discussed here. Folks here jumping through hoops to rationalize why what he did is actually demonstrative of either flaws in crypto or the purity of arbitrage come off seeming very tone deaf.

Re: The math prodigy whose hack upended DeFi won’t return funds

#124

Post by antisthenes »

knorker wrote: post #118
twox2 wrote: post #57

Earlier quoted context omitted.

"Code is law" is a dream that is not actualized. It's not actually law, it's just code. I'm pretty sure law enforcement will gladly prosecute for a lot of these "hacks".

Indeed it cannot be actualized, as it connects to the real world. This is why things like "land registry on the blockchain" will never happen. When a court decides that a sale of a house was unlawful, then the blockchain is wrong and irrelevant. Code isn't law. Law is system that ultimately sends people to your house and puts you in a locked house that you're not allowed to leave, and lets other people live in "your"…

Exactly.

Law isn't law unless it's been enforced through courts, precedent and ultimately someone with authority to use force to force compliance.

Re: The math prodigy whose hack upended DeFi won’t return funds

#125

Post by colinmhayes »

bombcar wrote: post #80
criddell wrote: post #26

Earlier quoted context omitted.

There are lots of stories lately about stolen NFTs. The podcast ReplyAll did an episode where they tracked down the current owner of a stolen NFT. He had sympathy for the original owner but he had no intention of turning it over. I don’t get why purchasing a stolen NFT is different than purchasing a stolen guitar from a pawn shop. Shouldn’t the previous owner be able to use the courts to demand the return of the item…

The whole point of an NFT is that the ownership is on the blockchain and guaranteed by said blockchain - if the courts can "force" return of the NFT than the NFT isn't actually synonymous with the ownership, and so then is kinda pointless.

There are 2 different issues here. Do courts physically have the ability to change the blockchain so that an NFT goes to a different wallet? No. Do courts have the ability to arrest someone when they ignore a court order to transfer an NFT? Yes. I don't think the courts really care about some pure intentioned "code is law" argument, because they tend to think law is law.

Re: The math prodigy whose hack upended DeFi won’t return funds

#126

Post by knorker »

silentsea90 wrote: post #78
TameAntelope wrote: post #64

For all the people shouting "Way to go!" and "The money is his!" I think you should remember he's currently a fugitive, and would need to spend the rest of his life living this way. If that's what it takes to live the "code is law" dream, count me out.

I like the very web3 middle ground where the attacker negotiates with the company and returns a part of the money, the rest being the lawful reward for reporting the vulnerability.

Do you mean "like" as in you're amused by it's absolute absurdity, or that you think this is a good standard practice?

Re: The math prodigy whose hack upended DeFi won’t return funds

#127

Post by JackFr »

As I understand it, Indexed behaved as a sort of ETF for crypto, that had automated their creation/redemption mechanism.

Importantly they had automated the creation/redemption mechanism poorly. Here's the operative passage:

By eliminating human managers, Indexed could forgo management fees like the 0.95% its bigger rival, Index Coop, charged for simply holding its most popular index token. (Indexed would charge a fee for burning tokens and swapping assets within a pool, but those only applied to a small fraction of users.)

It also saved on costs by limiting the number of interactions between the platform and outside entities. For example, when Indexed needed to calculate the total value held within a pool, instead of checking token prices on an exchange such as Uniswap, it sometimes extrapolated from the value and weight of the largest token within the pool, called the “benchmark” token.

This way, it reduced the fees it paid for transactions on the Ethereum blockchain. Kellar saw full passivity as a “natural extension of the way index funds already operate.”

Kellar was wrong.

In bringing down the costs, they eliminated the very thing that might have prevented the transactions that cost them all the money. The trades were legitimate, just unfortunate for the holders and to ask the courts to reward the incompetence of the management of indexed is to ask the courts too much.

Re: The math prodigy whose hack upended DeFi won’t return funds

#128

Post by shadowgovt »

DangitBobby wrote: post #30
jakear wrote: post #5

> His profile on one social network included a quote from Kurt Vonnegut's Cat's Cradle about the futility of humanity's quest for knowledge: “Tiger got to hunt, bird got to fly; Man got to sit and wonder ‘why, why, why?' Tiger got to sleep, bird got to land; Man got to tell himself he understand.” Hey! He’s just like me. > But did Medjedovic do this, or did the algorithm? Barry Sookman, a lawyer in Toronto specializi…

If I write code that can be exploited with a buffer overflow and you exploit it, who is the law going to punish more harshly?

But the entire raison d'etre of most of crypto is to get out from under the thumb of existing national and legal entanglements.

So the question becomes "Who's law?"

Re: The math prodigy whose hack upended DeFi won’t return funds

#129

Post by xur17 »

kristjansson wrote: post #84
drcode wrote: post #48

Earlier quoted context omitted.

> And then if you like that state, you can then pay to send the working transaction to the mainnet to make that same state occur, in a sure bet. That often isn't true anymore, see https://ethereum.org/en/developers/docs/mev/

MEV is something different though? GPs (excellent) point is that anyone can play out the effects of their transaction locally ad infinitum, and chose to transact once they're convinced of its behavior. Of course, this can't account for the response of other actors, but the point stands that Medjedovic (should have) been taking far less risk than implied by that quote.

Medjedovic stood to lose all of the ETH he was paying in transaction fees (which could have easily been 3 ETH) if someone decided to frontrun his transaction. If that was most of his ETH, that does sound "significant" to me.

Re: The math prodigy whose hack upended DeFi won’t return funds

#130

Post by Brian_K_White »

meroes wrote: post #15
turtledove wrote: post #10

You love to see it. Love to see crypto taking Ls.

If only so it lessens some of the bad behavior I’ve witnessed. My cousin has been investing most of his paycheck in Bitcoin for several years. He also thinks Tesla Wall Batteries will mine crypto soon and “broke into” a private event Elon was at and made a TikTok of it. I want him to have a successful future is all.

I feel this, but you know in a case like that, Elon and Bitcoin don't actually matter.

If it weren't those, it would be whatever else existed to fixate on.

I have a friend or two like that and I know that if I could fix Bitcoin it would not clear up their life or make them safe.

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