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Crypto brothers front-ran the front-runners

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Re: Crypto brothers front-ran the front-runners

#61

Post by paulryanrogers »

tmn wrote: post #57
akira2501 wrote: post #6

I'm uncomfortable with the tax dollars of hard working people being used to defend the likes of those who use robots with million dollar wallets to rake up the low hanging fruit of digital arbitrage on an entirely unregulated network. They wanted the rewards that came with this risk. Now that they got hustled, they cry foul, and the DOJ is going to spend huge amounts of money litigating their case? Perhaps it is in a…

The government believes it’s entitled to taxes on the usd value of any acquired digital coins/tokens. I’d have more sympathy to your perspective if this wasn’t the case (although I’m still sympathetic)

My guess is the government is trying to disincentivize tax evasion and money laundering.

Re: Crypto brothers front-ran the front-runners

#62

Post by aj3 »

Electricniko wrote: post #46

I feel like the people who wonder why this is a crime are missing something pretty important: this isn't the SEC attempting to regulate a crypto market by prosecuting securities fraud, it's the DOJ prosecuting straight-up old fashioned fraud. The crime is changing the terms of the transaction within the 12 second time frame after it had begun but before it had finished, and ultimately selling something different than…

But you're not signing EULA's in order to participate in the network. Moreover, there are no real "laws / regulations" within the network either, specifying what you are or are not allowed to do. Ethereum standards merely determine how the software is supposed to work, but even then I'm sure Ethereum devs would oppose treating their docs as an agreement (because they don't offer any warranty, licensing or attestation). Moreover, there is an express goal to have a diverse set of software clients, so even developing your own software to be interoperable with existing standards can't be constructed as "an attack".

All this to say, I just fail to say how this can be constructed as "changing the terms of the transaction". There was no legal agreement between parties and no existing precedent to treat this as a malicious attack at all.

All I see is a Wall Street establishment pulling strings in order to protect their investment, by asking for a sudden government oversight in the system that was built with the express goal of not requiring any government oversight.

Re: Crypto brothers front-ran the front-runners

#63

Post by aj3 »

tmn wrote: post #55
b0r3datw0rk wrote: post #51

Earlier quoted context omitted.

how is the blockchain under the purview of the us govt? these were transactions submitted to a blockchain created for the sole purpose of not being controlled by the government all these code is law folks are constantly exposed as just looking to get rich quick

They did decide they’re entitled to taxes on transactions..

I bet this indictment will be used as a case study to justify the need for government oversight and taxation.

Re: Crypto brothers front-ran the front-runners

#64

Post by Arrath »

b0r3datw0rk wrote: post #51
Electricniko wrote: post #46

I feel like the people who wonder why this is a crime are missing something pretty important: this isn't the SEC attempting to regulate a crypto market by prosecuting securities fraud, it's the DOJ prosecuting straight-up old fashioned fraud. The crime is changing the terms of the transaction within the 12 second time frame after it had begun but before it had finished, and ultimately selling something different than…

how is the blockchain under the purview of the us govt? these were transactions submitted to a blockchain created for the sole purpose of not being controlled by the government all these code is law folks are constantly exposed as just looking to get rich quick

> how is the blockchain under the purview of the us govt?

Likely some inter-state commerce clause that gets used to bring many things under the purview of the feds. It may be more appropriate to ask how it was supposed to not be under the rule of law?

> these were transactions submitted to a blockchain created for the sole purpose of not being controlled by the government

Simply creating a blockchain with that intent in mind seems to be no more effective than a sovereign citizen ranting to a LEO that they are 'traveling by conveyance' in their car and thus not subject to traffic laws.

Re: Crypto brothers front-ran the front-runners

#65

Post by Terr_ »

phyalow wrote: post #53
dheera wrote: post #38

Earlier quoted context omitted.

TFA: "They worry that this microsecond-scale competition between algorithms is socially wasteful" I would LOVE to see a stock market that (a) time-penalizes large orders -- 1 share trades in a microsecond, 10000 shares takes a week to execute OR (b) adds a random time delay to all orders in the range of [0,60] minutes for corporations, [0,10] minutes for residential traders, and [0,1] minutes for people who have prov…

[flagged]

Nah, it will just create separate markets for participants that think the HFT arbitrage malarky is/isn't to their advantage.

So yeah, trading on other markets will still be a thing that happens, but that doesn't mean it will necessarily siphon off all the activity.

Re: Crypto brothers front-ran the front-runners

#66

Post by aj3 »

mrguyorama wrote: post #34
AlexandrB wrote: post #8

Earlier quoted context omitted.

"Code is law" was always just marketing. For example the original "DAO" had buggy code that allowed malicious actors to take money from the wealthy early investors. Suddenly "code is law" went out the window and the Ethereum chain was forked to get the investors their money back[1]. [1] https://www.gemini.com/cryptopedia/the-dao-hack-makerdao#sec...

Also, much more relevant than a bunch of hucksters showing that they care more about money than ideology, The DOJ doesn't GAF what you say, they care what the laws are. Tokens are property. They technically gain all the standard property protections, like people aren't supposed to steal them from you, and fraud is still fraud. If you want code to be law, you would have to pass legislation to that effect, and good luc…

> Tokens are property.

What law says this? Technically, tokens are smart contracts, basically OOP classes with both data and behavior. They also by design have public methods which are meant to be triggered by anyone on the chain. It's not at all obvious that triggering these methods in an unexpected order or with unexpected data is breaking any laws whatsoever. It's bytecode anyway, so there's no human readable EULA's or explanations on what you're allowed to do with the token.

Re: Crypto brothers front-ran the front-runners

#67

Post by solveit »

dheera wrote: post #38
akira2501 wrote: post #6

I'm uncomfortable with the tax dollars of hard working people being used to defend the likes of those who use robots with million dollar wallets to rake up the low hanging fruit of digital arbitrage on an entirely unregulated network. They wanted the rewards that came with this risk. Now that they got hustled, they cry foul, and the DOJ is going to spend huge amounts of money litigating their case? Perhaps it is in a…

TFA: "They worry that this microsecond-scale competition between algorithms is socially wasteful" I would LOVE to see a stock market that (a) time-penalizes large orders -- 1 share trades in a microsecond, 10000 shares takes a week to execute OR (b) adds a random time delay to all orders in the range of [0,60] minutes for corporations, [0,10] minutes for residential traders, and [0,1] minutes for people who have prov…

I think this runs counter to the purpose of having a stock market. The stock market is not supposed to let everyone can gamble on a level playing field, it is supposed to make it as easy as possible for companies to raise money.

Re: Crypto brothers front-ran the front-runners

#68

Post by Electricniko »

b0r3datw0rk wrote: post #51
Electricniko wrote: post #46

I feel like the people who wonder why this is a crime are missing something pretty important: this isn't the SEC attempting to regulate a crypto market by prosecuting securities fraud, it's the DOJ prosecuting straight-up old fashioned fraud. The crime is changing the terms of the transaction within the 12 second time frame after it had begun but before it had finished, and ultimately selling something different than…

how is the blockchain under the purview of the us govt? these were transactions submitted to a blockchain created for the sole purpose of not being controlled by the government all these code is law folks are constantly exposed as just looking to get rich quick

The brothers did the act while in the US, so they're still under the jurisdiction of the US legal system. You can agree by contract to have contractual disputes handled under a certain jurisdiction, arbitration, or within the contractual agreement that defines all rights in a dispute, but you can't just will yourself out of criminal legal culpability by saying that no laws apply to you, even if the victim also were to say no laws should apply. Think about it from another practical perspective: if immunity from laws could be granted by the victim of a crime, imagine the pressure criminals would put on victims to state that they consented to the crime.

Re: Crypto brothers front-ran the front-runners

#69

Post by jiveturkey »

OutOfHere wrote: post #59
jiveturkey wrote: post #32

I'm not really sure how this is a crime. Can someone explain?

The MEV bots had a protocol that they were expected to follow. These two guys were running a secret cluster of their own bots that strongly violated the expected protocol.

I get that. Where's the criminality in that?

Re: Crypto brothers front-ran the front-runners

#70

Post by aj3 »

OutOfHere wrote: post #59
jiveturkey wrote: post #32

I'm not really sure how this is a crime. Can someone explain?

The MEV bots had a protocol that they were expected to follow. These two guys were running a secret cluster of their own bots that strongly violated the expected protocol.

The strategy that MEV bots use is not a law. It is not even defined or endorsed by Ethereum standards, and arguably is not an intended feature of the network.

You could alternatively claim that the guys defined their own protocol which addressed market inefficiency (which MEV is). Imo it's insane to claim that a trading technique you invented should have zero risk, and any losses you take are an indication of theft.

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