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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

#331

Post by t_mann »

woojoo666 wrote: post #320
t_mann wrote: post #279

Earlier quoted context omitted.

Rugpulls, as in projects attracting funds and then absconding with them, are different from exploits in that they involve outright lies / deception. There's a (moral, at least) difference between bad intent and honest incompetence. The attacker didn't ask anyone to contribute the funds that he appropriated.

But if we're talking about bad intent, then we could easily argue that Medjedovic (the hacker) acted with bad intent in this case. It goes both ways. If code is law, then hacks would be legal but so would rugpulls. If code is still ruled by law, then rugpulls and hacks can be judged by things like intention.

That dichotomy doesn't exist, because everything is ruled by law. But the courts look at the entire situation as well, and you'll find that having actively lied to people or not does make a difference in fraud cases.

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

#332

Post by mullingitover »

coffeedan wrote: post #325
fvdessen wrote: post #259

Earlier quoted context omitted.

AFAIK the legal system still applies to crypto; the recourse when somebody hacks your smart contract is the same as when somebody defrauds you; you sue. Except with smart contracts you have more traceability as to what happened. And you don't need to make the smart contract explicitly subordinate to the law, they are as a matter of fact, because everything de facto is. This idea that code is law and crypto exists in…

I mean, anyone can sue for anything, but if you're suing for this, good luck: a) finding a judge/jury that understands it, and b) collecting

The jury just needs to believe “this person stole something,” and there’s a good chance they’ll judge accordingly. At least there’s a good enough chance that it will happen that it will likely lead to an out of court settlement.

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

#333

Post by sushid »

shrimp_emoji wrote: post #321
sushid wrote: post #316

Earlier quoted context omitted.

I primarily care because I think there's money to be made. But I also think the shift directionally makes sense. Traditional finance (really most transactions for that matter) have moved towards fewer middlemen dependent, more democratized forms of transactions (e.g. wealthy folks can call their traders to buy/sells stock -> open to middle class -> no need to call traders -> no fee no minimum online trading). To me,…

> I primarily care because I think there's money to be made. Crypto /thread

I think there's a difference between betting on the future of an ecosystem and pumping the latest shiba inu X coin trading on Binance but you do you.

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

#334

Post by UncleEntity »

IanCal wrote: post #262
cogman10 wrote: post #218

Earlier quoted context omitted.

That sort of depends on what the exploit is, right? For example, if DRNK costs $1 per unit, but I find out that by putting in $1.25 I get 2 units, have I actually exploited the machine? Is it not reasonable to assume that discount was intended? Now, of course, if I'm prying open the machine with a prybar then we could argue that's just theft. But, putting money in the machine and getting units out is the intended int…

> For example, if DRNK costs $1 per unit, but I find out that by putting in $1.25 I get 2 units, have I actually exploited the machine? Is it not reasonable to assume that discount was intended? What if you remove the last part? What if you know, clearly, that your interaction what not what the designer wanted? > So, that's what I'd say the difference is. A smart contract defines all the interactions that are valid.…

> What if you know, clearly, that your interaction what not what the designer wanted?

This is what I like to refer to as “stupid tax”.

I’ve had cases where I put money into a soda machine and it gave me a drink plus more than I deposited into it. Or kicked out more than one item because one was stuck and my purchase obviously unstuck it.

Does this make me a criminal?

As an aside I used to work at a place with a soda machine that was basically like a slot machine with slightly higher payouts than one in Los Vegas. This was at a grocery warehouse and the drinks were at cost so “losing” your bet cost like a quarter. Probably designed that way, who knows?

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

#335

Post by sushid »

SamBam wrote: post #328
sushid wrote: post #110

Earlier quoted context omitted.

I never hear "code is law" from defi protocols, their ToS, or really from anyone. It's only the detractors of Web3 who tout this false logic of "code is law" so I guess you're screwed. Examples of code NOT being the law: Some defi protocols have made those affected by a hack/loophole whole again with their own funds. Some defi protocols explicitly exclude certain jurisdictions like the US from accessing their protoco…

> Examples of code NOT being the law: Some defi protocols have made those affected by a hack/loophole whole again with their own funds. That's a terrible example. If the code really weren't law, they'd reverse the transaction, or force the hacker to give back the money, like a court could. Since the code is law they're stuck, and so just hand the victim some money out of their own pockets, to try and eliminate bad pr…

That's because the transaction isn't reversible/is hard to trace the funds. It's not that "code is law" in the sense that smart contracts are extralegal. They would and should have legal recourse if the person were caught.

And coins like USDC can blacklist addresses and comply with regulatory asks. It's hard to buy your argument that smart contracts are extralegal when there are operators that comply with legal authority.

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

#336

Post by QuantumGood »

giantg2 wrote: post #251

"In their complaint, lawyers for Kellar and Day argued that two particular steps of the attack violated statutes against market manipulation and computer hacking." So now they want crypto to be treated as regulated securities, but let me guess, only when it benefits them...

Most want the law to benefit them if they suffer harm, even if it can be argued to be self-harm. Most pay little attention to the law if no harm is taking place... unless the law will cause harm. This isn't unique to DeFi

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

#337

Post by QuantumGood »

The philosophical wishes of those protected under the law does not change the law.

What if someone wishes for full protection of the law and publicly asks for it beforehand, but then gets involved crypto/DeFi — would they then "deserve" the law's protections while others involved in crypto/DeFi do not?

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

#338

Post by maxlamb »

Ajedi32 wrote: post #65
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…

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…

The problem is that smart contracts are not in fact actual, legal contracts. So finding a loophole means no crime was committed.

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

#339

Post by ryan_lane »

dcolkitt wrote: post #258
godelski wrote: post #173

Earlier quoted context omitted.

This is a thing that confused me about smart contracts. I don't see how they can exist without a judicial system. They do seem to have some uses under that framework. Like the system is auditable so you can prove if someone cheated and changed a contract out from under you (and you lost your copy), but that's only a minor improvement on the current system. The US has a lot of legal policy that is based on spirit of t…

> I don't see how they can exist without a judicial system. Smart contracts don't have to exist outside the judicial system. Smart contracts are simply a way to automate transactions in a way that's efficient, transparent, and credibly neutral. Yes, we may still have to invoke courts for the 0.01% of transactions that are clear exploits. But the other 99.99% of the time, it's a much more efficient system than using w…

There's definitely way more real world contracts than smart contracts, and I'd be very surprised if the percentage of real world contracts that ended up with hundreds of millions of dollars being stolen on a daily basis is anywhere near the same ratio as it is for smart contracts.

Smart contracts, to date, have proven themselves to be truly idiotic inventions.

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

#340

Post by xenophonf »

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…

> But in the Ethereum smart contracts world isn't the whole premise that the code is the law? That we don't need any of these pesky courts or banks or auditors or anything: the code is the law, and the decentralized blockchain will enforce it.

It's like the people who invented smart contracts never heard of the incompleteness theorem.

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