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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

#151

Post by wang_li »

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.

Plus his family aren’t choosing to live their lives in hiding. What part of the smart contract is going to prevent acts of violence against them? Seems like he was relying on maintaining anonymity and now that that’s out the window his family is on real danger. $16-17 million is a lot of dough and it would cost a lot less than that to hire some kidnapping & ransom specialists to visit his family.

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

#152

Post by roastedpeacock »

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…

Am I missing something or did Medjedovic simply use unforeseen actions in the implementation of the contract as arbitrage and did not have an agreement to not attempt such actions?

Do not see any 'unauthorised access' in that case i.e not the classic definition of 'computer hacking'. However if the case does end up progressing I do wonder what form a defense will take.

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

#153

Post by silverlake »

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…

Citibank mistakenly sent $900M to a bunch of hedge funds. Many refused to return it. Citi lost the court case.

https://www.cnn.com/2021/02/16/business/citibank-revlon-laws...

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

#154

Post by sushid »

SamBam wrote: post #77
Ajedi32 wrote: post #65

Earlier quoted context omitted.

I've seen this argument regarding smart contracts several times now, and I don't think it makes any sense. It's like robbing someone in real life, then claiming you did nothing wrong because you didn't violate the "laws" of physics. Those are two entirely separate things. In the world of smart contracts code is indeed law, but that doesn't change the fact that in the real world law is law, and the fact that you used…

But that is the premise of smart contracts. Sure, it doesn't excuse you from the law if your contract is to pay someone to shoot someone, but it's supposed to be the final word on the actual financial transactions that happen within the contract. Plenty of crypto hypers say the same. E.g. from a quick search of "Smart Contract advantages," the very first article, by a law firm: > Guaranteed Outcomes: Potentially the…

Smart contracts allow for guaranteed outcomes. Some commentary added by a random law firm does not mean that guaranteed outcomes == no need for litigation and courts.

Just think of non-smart contract parallels. If a bank had an ATM, the premise is that this ATM will execute a series of commands and allow you to withdraw/deposit/transfer funds. If a nefarious back actor found a series of user input that allowed them to withdraw millions of extra dollars, do you believe that the ATM provider will have no legal recourse? What about electronic slot machines?

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

#155

Post by motohagiography »

mathgenius wrote: post #148
motohagiography wrote: post #60

This isn't a hack, it was straight arbitrage. I distinguish them because there was at no time a transfer of administrative power or control over the contract or targets infrastructure to Medjedovic. In a smart contract, I'd make a legal distinction between syntactic parsing and calculation, which has to do with the purity of functions and data. An arbitrage would be fair game if it levered an unanticipated calculatio…

> This isn't a hack, it was straight arbitrage. Yeah, but tradfi has this problem too: sometimes it's hard to tell the difference between straight up trading, and spoofing/otherwise manipulating the market. Maybe the moral of the story is this, that free markets are a myth, and crypto is just making this even more clear.

Arguably, the myth is that markets are efficient. That is to say that the clearing price is the expression of all the information available to participants is a fiction.

This idea of the Turing completeness, or maybe complexity class of your transaction logic determining whether it is an endogenous logical arbitrage trade, or an exogenous manipulation scheme may have some really appealing features.

Hypothetically, if the steps of your transaction logic operate on or recurse over feedback into and from the market, you are in fact, "manipulating," it. I'd wonder how describing manipulation in terms of recursion limits and feedback would impact the definiton. Whereas, if you are precalculating or front running some periodic market function, you are arbitraging it with endogenous market information and that makes it "legit."

Where this guy might be vulnerable in that model is the question of how far upstream of his actual transaction did he get before the feedback loop he was operating over is not considered a part of that market - and whether his arbitrage was legit because it was between markets.

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

#156

Post by tablespoon »

omarhaneef wrote: post #6

What is interesting to me is how it shines a light on the regulatory framework of the non-crypto economy. If you read up on edge cases, there is a lot of people deciding if something is "fair", and my notions of fair and a particular judges notions of fair are often at odds. To steal from Frank Zappa: Legal isn't the same as allowed, allowed isn't the same as fair, fair isn't the same as just, and just isn't music.

> What is interesting to me is how it shines a light on the regulatory framework of the non-crypto economy. If you read up on edge cases, there is a lot of people deciding if something is "fair", and my notions of fair and a particular judges notions of fair are often at odds.

Yeah, that's by design. If your "notions of fair are often at odds" with someone else's notions of fair, and a judge needs to intervene to resolve the dispute, then things may not break your way.

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

#157

Post by trasz »

DangitBobby wrote: post #36
trasz wrote: post #21

I find it disturbing that Medjedovic was prosecuted in the first place. If anyone is guilty of this situation, it's Kellar and Day.

Absolutely. They are guilty of writing vulnerable code, being hacked, and stolen from.

They are guilty of implementing a mechanism that was broken by design, and wasting customers' money. They hadn't been hacked or stolen from - the "attacker" didn't need to hack any particular security mechanism, he was just smarter at how their market worked than the owners.

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

#158

Post by rat9988 »

silverlake wrote: post #153
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…

Citibank mistakenly sent $900M to a bunch of hedge funds. Many refused to return it. Citi lost the court case. https://www.cnn.com/2021/02/16/business/citibank-revlon-laws...

They sent their lender the exact sum of the loan. It's kind of a different case.

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

#159

Post by tablespoon »

colinmhayes wrote: post #125
bombcar wrote: post #80

Earlier quoted context omitted.

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.

> I don't think the courts really care about some pure intentioned "code is law" argument, because they tend to think law is law.

"Code is law" is a mantra chanted by people in no position to make it so.

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

#160

Post by hartator »

blakesterz wrote: post #2

This was an interesting read. The case is now in limbo until authorities can locate Medjedovic or he decides to appear. “I did not steal anyone's private keys. I interacted with the smart contract according to its very own publicly available rules. The people who lost internet tokens in this trade were other people seeking to use the smart contract to their own advantage and taking on risky trading positions that the…

> I did not steal anyone's private keys. I interacted with the smart contract according to its very own publicly available rules.

Yes, it's a little disingenuous to claim "code is law" until it doesn't suit you anymore.

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