[echoangle]

Is that how it works legally? If you hack into computers using a zero day, did you also just access the computer according to the way it was programmed? Just because you can do it technically doesn’t mean it’s not fraud/something else.

[cherryteastain]

If that's not how it works, where's the line for what is fraud and what is not? Once you move away from the "code is law" principle, companies have the perverse incentive to define fraud as "any transaction that results in negative PnL for me", which is exactly what happened here.

[echoangle]

„Code is law“ isn’t a thing. Go tell a judge that your hacking is legal because the code allowed it. That’s not something that’s allowed by law.

[cherryteastain]

I am well aware that "code is law" has no weight in actual law. The point I tried to raise was, given the following sequence of events:

1. You deploy a smart contract to the ethereum blockchain

2. I interact with your smart contract in some manner

how do we define whether the manner of interaction in step 2 is fradulent or not?

"Code is law" is one interpretation by crypto enthusiasts to define under what conditions interacting with the blockchain is fraud; in their definition, it's never fradulent.

Let's assume "code is law" is nonsense, as many comments here say. Then, under what conditions do we define interacting with the blockchain as fradulent? What is fraud and what is not fraud?

Edit: In the blockchain we can even formalize this. The ethereum blockchain at block K has a certain state S_K. I submit a certain transaction/set of instructions T to the blockchain which is mined as block K+1. How do we define a function isIllegal(S_K, T)? (Assuming block K+1 contains EVM instructions from my transaction T only)

[mschuster91]

> Let's assume "code is law" is nonsense, as many comments here say. Then, under what conditions do we define interacting with the blockchain as fradulent? What is fraud and what is not fraud?

The thing is, laws can have issues and bugs as well, just like code! And we have courts to judge not just when someone outright breaks a law but also when someone is skirting on the edges of the law.

Take Germany's "cum ex" scandal for example. Billions of euros were effectively defrauded from the state and on paper the scheme appeared legally sound, but in the end it was all shot down many years later because the actions of the "cum ex" thieves obviously violated the spirit of the law.

The only difference is that blockchains are distributed worldwide and there is no single entity that can be held accountable and forced to execute or reverse any given transaction.

[echoangle]

You’re never going to find a binary function that tells you if something is legal or not, in the end it’s up to a human judge to decide. But imagine setting up a search engine and I enter “ Robert'); DROP TABLE INDEX; --” as a search term. Would you say that’s a crime? That’s a perfectly fine thing to search for, right?

[Hizonner]

> You’re never going to find a binary function that tells you if something is legal or not, in the end it’s up to a human judge to decide.

... but the whole point of cryptocurrency, or at least of smart contracts and "DeFi", is to reject that and try to build a parallel system. That's presumably based on a belief that you can write code that behaves the way you intend, regardless of whether you really can do that or not.

So perhaps the judge should decide "Well, you signed up for that when you tried to opt out of having human judgement govern your deals. Have a nice day.".

And in fact perhaps there should be formal statutory law that makes it clear that's what the judge is supposed to decide in any case that isn't itself "borderline" somehow. Which the case at hand shouldn't be.

[IanCal]

> ... but the whole point of cryptocurrency, or at least of smart contracts and "DeFi", is to reject that and try to build a parallel system.

No, it isn't. It might be some peoples desire around it, but by no means all (or even most).

[echoangle]

If I put up a sign „trespassers will be enslaved“ on my property and then force people who trespass to work for me, would that be fine because they knew what they were getting into? You can’t just create your own justice system which contradicts the real one by making contracts.

[cherryteastain]

Yes, perfectly fine, and the fact that you can paste that string into this website without being put in prison is testament to that!

[danielvf]

The physical universe advances from state to state, but we define still can call certain behaviors illegal.

https://xkcd.com/1494/

[cherryteastain]

Alright, please go ahead and define under what legal pretext this guy's behavior might be illegal.

There are other cases where interacting the blockchain is illegal in a very clear manner. Example: if I know an Iranian or North Korean entity has the keys to an Ethereum wallet, and if I send USDT to that wallet as a Western citizen, that is very illegal due to sanctions.

[danielvf]

There is a US indictment which lays out the basics of the which laws Medjedovic is accused of breaking.

https://www.justice.gov/usao-edny/pr/canadian-national-charg...

[TimPC]

The context is completely different though. Building a normal computer app is not an attempt to do anything without government or legal structures so it makes sense that normal computer apps would be protected by government or legal structures.

It doesn't really make sense for people to build smart contracts that are intended to be an extra-judical agreement where the code enforces the rules and then run to government whenever something they don't like happens. What is the purpose of smart contracts at all if you still need the entire legal apparatus around them?

What does agreeing to a contract that inherently implies trying to work around the need for government in contracts means? What does it say about intent?

If for example, the firm that lost money had been saying "Code is Law" in their previous pro-crypto statements and had explicitly talked about smart contracts being extra-judical it seeems there intent would be to avoid legal intervention entirely and it would require a fairly high bar to argue that any bug could result in a lawsuit.

[cellis]

It may not pass muster with a judge in some backwater, but with one in the Northern District of California or a jury of their HN peers, it might. Laws are what we make them.

[archontes]

Imagine I write a contract and empower an AI to execute it. I put $10,000 in a bank account and write, "I'd like a nice car."

I do this of my own free will, at my own hazard. I know I'm playing this game. I have intentionally elected to use a system that will execute without any further intervention or oversight on my part. Verbally, I state that I am confident enough in the writing of my instruction that I feel secure in whatever outcome it may bring.

The system automatically executes and someone has sold me a very nice remote control car.

I sue that person.

Why should I have standing?

[olddustytrail]

Like buying from eBay?

[dan-robertson]

Isn’t, in the US system, the definition of fraud built up through a combination of legislation and case law from previous ‘grey area’ cases? I think most laws tend to have some balance between what is easy to define/understand and what is desirable to allow/disallow.

[freejazz]

What does one have to do with the other? Fraud is "intentional deception to gain an unfair or illegal advantage, often resulting in financial or legal harm" what does that have to do with code? What could code even do about fraud?

[cherryteastain]

If fraud is "intentional deception", who did this guy deceive? Everything was out in the open.

[freejazz]

What does that have to do with my question?