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>Contracts that include illegal activities, such as theft, are unenforceable. I was referring to contracts and crimes generally to highlight the concept of co

>Contracts that include illegal activities, such as theft, are unenforceable. I was referring to contracts and crimes generally to highlight the concept of contracts being per se unenforceable. In another comment I do include theft too, but further add other potential charges: criminal misappropriation, breach of trust, fraud, conspiracy, computer crime, securities fraud, and/or wire fraud.

tptacek 10y ago
Can you be specific about which crime you think is at play in this situation, and then search the Internet for "model jury instructions [that-crime]", and come back with the one that would invalidate this contract? If you fix a lottery or something, it's pretty straightforward to work out the deception/misrepresentation and reliance involved to build a fraud case. But here, the DAO's whole purpose was, "send us currency and it will do whatever the code tells it to, and only that, subject to no other rules." Again: that's kind of the point of the article: that the DAO was constructed in such a way to make problems like this unrecoverable.
- will_brown 10y ago
  I mentioned 7 crimes above that could be charged (again only if the funds get released). >and then search the Internet for "model jury instructions [that-crime]", and come back with the one that would invalidate this contract? Have a look at this Yale Law Review article: Validity of Contracts Which Violate Regulatory Statutes.[1] Say I raise investment under contract with all my investors, and I included a little provision no one reads that says I can appropriate all or part of the investment. Wouldn't you know it I absconded with their investment. My investors sue me and I file an affirmative defense of No Breach of Contract and introduce the Contract which expressly states I can appropriate my investors money as I see fit. That contract will not be enforced, are we in agreement? If you and I enter and contract where I will buy a drugs and I pay you and you don't deliver, if I sue you to enforce the contract you agree the court won't make you give me the illegal gun right? But will the court make you give me back the money? That is not a yes or no but a maybe depending on the facts do you agree? >that's kind of the point of the article: that the DAO was constructed in such a way to make problems like this unrecoverable. That is the point... funds are unrecoverable all the time in real world in contract/criminal cases, but that does not absolve anyone of liability. Moreover, you can not contract away negligence or for criminal acts. [1] https://www.jstor.org/stable/792459?seq=1#page_scan_tab_contents https://www.jstor.org/stable/792459?seq=1#page_scan_tab_cont...
  - tptacek 10y ago
    This is an interesting comment, and I'm sure it's an answer to some question on the thread, but not to mine.
    - madgar 10y ago
      He did respond and gave a clear real-world analogue to this scenario. The DAO is an investment vehicle, so he compared the use of the DAO code to abscond with the funds to the following financial contract example: > Say I raise investment under contract with all my investors, and I included a little provision no one reads that says I can appropriate all or part of the investment. Wouldn't you know it I absconded with their investment. My investors sue me and I file an affirmative defense of No Breach of Contract and introduce the Contract which expressly states I can appropriate my investors money as I see fit. That contract will not be enforced, are we in agreement? Personally I don't understand the people acting like "smart contracts" exist independent from an existing judicial system (or systems) just because there's computers involved. I guess the same people excited for cryptocurrency are largely the same people who don't believe in government so the whole point is to somehow be independent of any legal jurisdiction.
  - arcticfox 10y ago
    Why do you keep using drugs and firearms in your examples? Those are the illegal parts, not the buy / sell contract. There's nothing illegal, to my knowledge, about writing a contract that explicitly and provably says "If you push this button, the corporation will give you all of its money." If the contract instead said "If you illegally provide drugs / firearms, the corporation will give you all of its money," - of course that's illegal.
    - will_brown 10y ago
      >Why do you keep using drugs and firearms in your examples? To use examples where people can quickly grasp the law and not focus on the facts, which have a tendency to muddy the waters. But lets dive into the muddy waters: >There's nothing illegal, to my knowledge, about writing a contract that explicitly and provably says "If you push this button, the corporation will give you all of its money." Say Apple Pay updates their terms tomorrow and they include a new provision that says Apple or another Apple Pay member can take all the money from all your accounts connected to Apple Pay. Like everyone does you agree to the update without reading the terms, and next thing all your money is gone. Whether or not you know it even mighty Apple Execs would be facing criminal charges with that kind of activity. As it relates to the DAO creators, I think the big question is if they knew or should have known the software was vulnerable to the extend investments might be lost. Factually I think they knew, as I understand one of the first DAO proposals after funding was investment for the creators themselves so they could create a security framework on top of the DAO from known attacks.

tptacek 10y ago

Can you be specific about which crime you think is at play in this situation, and then search the Internet for "model jury instructions [that-crime]", and come back with the one that would invalidate this contract? If you fix a lottery or something, it's pretty straightforward to work out the deception/misrepresentation and reliance involved to build a fraud case. But here, the DAO's whole purpose was, "send us currency and it will do whatever the code tells it to, and only that, subject to no other rules." Again: that's kind of the point of the article: that the DAO was constructed in such a way to make problems like this unrecoverable.

will_brown 10y ago
I mentioned 7 crimes above that could be charged (again only if the funds get released). >and then search the Internet for "model jury instructions [that-crime]", and come back with the one that would invalidate this contract? Have a look at this Yale Law Review article: Validity of Contracts Which Violate Regulatory Statutes.[1] Say I raise investment under contract with all my investors, and I included a little provision no one reads that says I can appropriate all or part of the investment. Wouldn't you know it I absconded with their investment. My investors sue me and I file an affirmative defense of No Breach of Contract and introduce the Contract which expressly states I can appropriate my investors money as I see fit. That contract will not be enforced, are we in agreement? If you and I enter and contract where I will buy a drugs and I pay you and you don't deliver, if I sue you to enforce the contract you agree the court won't make you give me the illegal gun right? But will the court make you give me back the money? That is not a yes or no but a maybe depending on the facts do you agree? >that's kind of the point of the article: that the DAO was constructed in such a way to make problems like this unrecoverable. That is the point... funds are unrecoverable all the time in real world in contract/criminal cases, but that does not absolve anyone of liability. Moreover, you can not contract away negligence or for criminal acts. [1] https://www.jstor.org/stable/792459?seq=1#page_scan_tab_contents https://www.jstor.org/stable/792459?seq=1#page_scan_tab_cont...
- tptacek 10y ago
  This is an interesting comment, and I'm sure it's an answer to some question on the thread, but not to mine.
  - madgar 10y ago
    He did respond and gave a clear real-world analogue to this scenario. The DAO is an investment vehicle, so he compared the use of the DAO code to abscond with the funds to the following financial contract example: > Say I raise investment under contract with all my investors, and I included a little provision no one reads that says I can appropriate all or part of the investment. Wouldn't you know it I absconded with their investment. My investors sue me and I file an affirmative defense of No Breach of Contract and introduce the Contract which expressly states I can appropriate my investors money as I see fit. That contract will not be enforced, are we in agreement? Personally I don't understand the people acting like "smart contracts" exist independent from an existing judicial system (or systems) just because there's computers involved. I guess the same people excited for cryptocurrency are largely the same people who don't believe in government so the whole point is to somehow be independent of any legal jurisdiction.
- arcticfox 10y ago
  Why do you keep using drugs and firearms in your examples? Those are the illegal parts, not the buy / sell contract. There's nothing illegal, to my knowledge, about writing a contract that explicitly and provably says "If you push this button, the corporation will give you all of its money." If the contract instead said "If you illegally provide drugs / firearms, the corporation will give you all of its money," - of course that's illegal.
  - will_brown 10y ago
    >Why do you keep using drugs and firearms in your examples? To use examples where people can quickly grasp the law and not focus on the facts, which have a tendency to muddy the waters. But lets dive into the muddy waters: >There's nothing illegal, to my knowledge, about writing a contract that explicitly and provably says "If you push this button, the corporation will give you all of its money." Say Apple Pay updates their terms tomorrow and they include a new provision that says Apple or another Apple Pay member can take all the money from all your accounts connected to Apple Pay. Like everyone does you agree to the update without reading the terms, and next thing all your money is gone. Whether or not you know it even mighty Apple Execs would be facing criminal charges with that kind of activity. As it relates to the DAO creators, I think the big question is if they knew or should have known the software was vulnerable to the extend investments might be lost. Factually I think they knew, as I understand one of the first DAO proposals after funding was investment for the creators themselves so they could create a security framework on top of the DAO from known attacks.