4 ms·

Then the hacker proceeded in dumping the Veritaseum for 50% of market value. Now if you believe the price will bounce back, you can make a lot of profit on sto

by daddyo 9y ago

Then the hacker proceeded in dumping the Veritaseum for 50% of market value. Now if you believe the price will bounce back, you can make a lot of profit on stolen coins. Immoral? Quite possibly. Against the law? Not this year.

dullgiulio 9y ago
I think it should be tested in court. Many ICOs are the textbook depictions of Ponzi schemes. When there is stealing, possibly self-stealing, involved the word "fraud" comes to mind.
- daddyo 9y ago
  There are a few problems though. - Since Cryptocurrency is international, the US SEC does not have jurisdiction everywhere in the world. When there is millions on the line, you could just move to another country and try a scheme, or direct a foreign lackey to do it. - "The Federal Reserve simply does not have authority to supervise or regulate bitcoin in any way. To the best of my knowledge, there is no intersection at all in any way between Bitcoin and banks that the Federal Reserve has the ability to supervise and regulate." - To count for an exchange you have to issue shares. Not everybody does this. - Is cryptocurrency a token or a security? - How to distinguish between nouveau riche BTC millionaires trying out their luck with an ICO and a criminal organization using it to launder money? - Who is the single legal entity to target when the ICOs are distributed, and no single entity issues coins? - What to do with those that profit from future illegal activity, as a 3rd party? Right now there is a lot of obvious market manipulation going on. Whales banding together to influence and set prices. Pumping up interest with bots and 5-cent army trolls. Selling stolen coins for 50% of market value. Sharing upcoming announcements with a small group of investors, devs, and supporters, allowing them to speculate on insider knowledge. How do they prove I must have known about the stolen coins, when the news hasn't even broken yet and I already put out a buy order of 50% of the price in case of a flash crash?
- davotoula 9y ago
  Not all ICOs are the same. Their parameters (for example is the token for utility or just for speculation) vary. There is a test in law that people can apply to try and tell whether a specific ICO is a security or not: the Howey test. http://consumer.findlaw.com/securities-law/what-is-the-howey-test.html http://consumer.findlaw.com/securities-law/what-is-the-howey...
s73ver 9y ago
How is it not against the law? They're still fraudulently obtaining things which do not belong to them.
- daddyo 9y ago
  I'm talking about people buying the coins from the hacker on an exchange. I think in my jurisdiction we have a law against pawning stolen goods: If the price is too good to be true (100$ macbook), and you still buy it, you can get your goods confiscated. But how does this translate to cryptocurrency and its volatile pricing (a 50% drop or increase in price is not extremely rare)? Is it illegal to set a buy order for 50% of the price? Especially if you set this before the hack, just hoping to cash in on a flash crash, I can't see which law you break. About stealing coins, of course this (should) be against the law. But then again, data is not a good. For many jurisdictions, data isn't anything at all. You can not own data in the legal sense, because it only applies to tangible goods. As to "stealing" coins by manipulating a smart contract, its a grey area. Of course in the real world, contracts can be breached in spirit, not only by the letter. But with smart contracts, you only have the letter of the contract: The code is law.
  - s73ver 9y ago
    Looking at the coins as just "data" is ignoring a lot of what they are. Your bank account is just "data", but if I hacked into it and took the 1s and 0s making up your balance, well, there's no question that's a crime. Replace bank account with stock broker account and the same would apply. I don't see why it wouldn't be the same for cryptocurrency. I fail to see how smart contracts is a grey area; if you're abusing a fault in the code, that's very clearly fraudulent behavior. In short, there's a lot of "This is new! Things are different! The existing laws don't apply!" regarding some of these things, but I'm just not convinced. It may be harder to enforce or to prosecute, but that doesn't mean that it doesn't fall into existing laws.
    - daddyo 9y ago
      > but if I hacked into it and took the 1s and 0s making up your balance, well, there's no question that's a crime. It's a crime of computer / network intrusion. Not a crime of property law (you can't own a record in a database as property, and therefor I can not steal your property). > if you're abusing a fault in the code, that's very clearly fraudulent behavior. Another way to put this is that you are using the contract in a manner how it was defined by the author. Compare with a misconfigured web server showing open directories of files, or a robots.txt with a typo in it (ignore: /adminn). What is a fault and what is a feature? Who decides this? Solely the author of the contract? The parties involved (who splits the ties)? A majority of 3rd party volunteers? If everything is decentralized and open to anyone, whose computer network are you intruding/disturbing? > doesn't mean that it doesn't fall into existing laws If law was a software product, we are definitely a few pull requests behind its intended use. Look at how long it took to update authorship/copyright laws with the evolution of the internet, and how ugly things are when wrestled into the old framework of: I create it, I forever own it.

by daddyo 9y ago

dullgiulio 9y ago

I think it should be tested in court. Many ICOs are the textbook depictions of Ponzi schemes. When there is stealing, possibly self-stealing, involved the word "fraud" comes to mind.

daddyo 9y ago
There are a few problems though. - Since Cryptocurrency is international, the US SEC does not have jurisdiction everywhere in the world. When there is millions on the line, you could just move to another country and try a scheme, or direct a foreign lackey to do it. - "The Federal Reserve simply does not have authority to supervise or regulate bitcoin in any way. To the best of my knowledge, there is no intersection at all in any way between Bitcoin and banks that the Federal Reserve has the ability to supervise and regulate." - To count for an exchange you have to issue shares. Not everybody does this. - Is cryptocurrency a token or a security? - How to distinguish between nouveau riche BTC millionaires trying out their luck with an ICO and a criminal organization using it to launder money? - Who is the single legal entity to target when the ICOs are distributed, and no single entity issues coins? - What to do with those that profit from future illegal activity, as a 3rd party? Right now there is a lot of obvious market manipulation going on. Whales banding together to influence and set prices. Pumping up interest with bots and 5-cent army trolls. Selling stolen coins for 50% of market value. Sharing upcoming announcements with a small group of investors, devs, and supporters, allowing them to speculate on insider knowledge. How do they prove I must have known about the stolen coins, when the news hasn't even broken yet and I already put out a buy order of 50% of the price in case of a flash crash?
davotoula 9y ago
Not all ICOs are the same. Their parameters (for example is the token for utility or just for speculation) vary. There is a test in law that people can apply to try and tell whether a specific ICO is a security or not: the Howey test. http://consumer.findlaw.com/securities-law/what-is-the-howey-test.html http://consumer.findlaw.com/securities-law/what-is-the-howey...

s73ver 9y ago

How is it not against the law? They're still fraudulently obtaining things which do not belong to them.

daddyo 9y ago
I'm talking about people buying the coins from the hacker on an exchange. I think in my jurisdiction we have a law against pawning stolen goods: If the price is too good to be true (100$ macbook), and you still buy it, you can get your goods confiscated. But how does this translate to cryptocurrency and its volatile pricing (a 50% drop or increase in price is not extremely rare)? Is it illegal to set a buy order for 50% of the price? Especially if you set this before the hack, just hoping to cash in on a flash crash, I can't see which law you break. About stealing coins, of course this (should) be against the law. But then again, data is not a good. For many jurisdictions, data isn't anything at all. You can not own data in the legal sense, because it only applies to tangible goods. As to "stealing" coins by manipulating a smart contract, its a grey area. Of course in the real world, contracts can be breached in spirit, not only by the letter. But with smart contracts, you only have the letter of the contract: The code is law.
- s73ver 9y ago
  Looking at the coins as just "data" is ignoring a lot of what they are. Your bank account is just "data", but if I hacked into it and took the 1s and 0s making up your balance, well, there's no question that's a crime. Replace bank account with stock broker account and the same would apply. I don't see why it wouldn't be the same for cryptocurrency. I fail to see how smart contracts is a grey area; if you're abusing a fault in the code, that's very clearly fraudulent behavior. In short, there's a lot of "This is new! Things are different! The existing laws don't apply!" regarding some of these things, but I'm just not convinced. It may be harder to enforce or to prosecute, but that doesn't mean that it doesn't fall into existing laws.
  - daddyo 9y ago
    > but if I hacked into it and took the 1s and 0s making up your balance, well, there's no question that's a crime. It's a crime of computer / network intrusion. Not a crime of property law (you can't own a record in a database as property, and therefor I can not steal your property). > if you're abusing a fault in the code, that's very clearly fraudulent behavior. Another way to put this is that you are using the contract in a manner how it was defined by the author. Compare with a misconfigured web server showing open directories of files, or a robots.txt with a typo in it (ignore: /adminn). What is a fault and what is a feature? Who decides this? Solely the author of the contract? The parties involved (who splits the ties)? A majority of 3rd party volunteers? If everything is decentralized and open to anyone, whose computer network are you intruding/disturbing? > doesn't mean that it doesn't fall into existing laws If law was a software product, we are definitely a few pull requests behind its intended use. Look at how long it took to update authorship/copyright laws with the evolution of the internet, and how ugly things are when wrestled into the old framework of: I create it, I forever own it.