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"The code is law" - Slock.it Said in plain english, in the same privileged voice that discussed their intentions. They were careful to state that if the code

"The code is law" - Slock.it Said in plain english, in the same privileged voice that discussed their intentions. They were careful to state that if the code and their wishes/statements disagreed, that the code was the authoritative answer. The Technological-Savvy-Investor (you called them a hacker) was induced to play a code-based Nomic for real money but was then cheated out of their prize by the conniving and dishonest administrators.

will_brown 10y ago
>The Technological-Savvy-Investor (you called them a hacker) Why put words in my mouth? >They were careful to state that if the code and their wishes/statements disagreed, that the code was the authoritative answer. It what other area of contract law are people allow to solicit investment based on false representations/marketing and hide from liability based on a disclaimer that the marketing materials may be inconsistent with the contract? I appreciate that they had the foresight to realize their code was likely to execute in unexpected ways or at least ways inconsistent with their marketing/solicitation and they made those disclaimers, but it isn't novel in law where contracts are inconsistent with marketing material (which even disclose the potential inconsistency).
- jude- 10y ago
  What was false and misleading? Didn't the DAO creators and enthusiasts insist up and down that the code is the irrefutable interpretation of the contract? Doesn't ethereum.org still state that smart contracts are "applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference"? The only false representations I've seen have been from the Ethereum developers: by hard-forking to change the terms of the DAO, they have misrepresented Ethereum to everyone who invested in its ICO. EDIT: I'm more interested to know whether or not the DAO "attack vector" was placed there intentionally. Then you might be able to argue that the developers acted in bad faith.
  - will_brown 10y ago
    >Didn't the DAO creators and enthusiasts insist up and down that the code is the irrefutable interpretation of the contract? Yes, but again this is not unique to the DAO. Moreover, it occurs all the time that marketing materials are put out with disclaimers that the marketing material is just that marketing material and that any inconsistencies between the marketing material and the contract, the contract prevails. It doesn't always make it so and there is good public policy reason why. My analogies are always kind of shot down as it relates to the DAO, but I think they help flush out the legal reasoning. How about valeting your car, obviously there is an implied contract that you will pay the fee and get your car back (maybe even a verbal representation, "just bring the stub back and we will pull your car around") but what if the stub includes language (as they do) that you agree the valet will not be responsible for stolen property and then they don't bring your car back. Who knows who took your car? Maybe the valet, maybe the valet gave the keys to someone else, maybe someone legit broke in and stole your car without the valet being aware... even though you agreed to the contract/terms of the valet ticket it does not become a contractual right for valet to take your car, they could still be liable (potentially criminally in addition to civilly). Moreover, representations remain false even with disclaimers acknowledging the representation may be false.
    - jude- 10y ago
      > Yes, but again this is not unique to the DAO. Moreover, it occurs all the time that marketing materials are put out with disclaimers that the marketing material is just that marketing material and that any inconsistencies between the marketing material and the contract, the contract prevails. It doesn't always make it so and there is good public policy reason why. I don't deny this, and I agree in the general case. However, I haven't see any case where the DAO marketing materials did not state that the code was the terms and conditions. This was, after all, its defining feature. The marketing materials and public information were practically bragging about this, and all pointed to the contract state on the Ethereum blockchain so you could see for yourself. > My analogies are always kind of shot down as it relates to the DAO, but I think they help flush out the legal reasoning. How about valeting your car, obviously there is an implied contract that you will pay the fee and get your car back (maybe even a verbal representation, "just bring the stub back and we will pull your car around") but what if the stub includes language (as they do) that you agree the valet will not be responsible for stolen property and then they don't bring your car back. Who knows who took your car? Maybe the valet, maybe the valet gave the keys to someone else, maybe someone legit broke in and stole your car without the valet being aware... even though you agreed to the contract/terms of the valet ticket it does not become a contractual right for valet to take your car, they could still be liable (potentially criminally in addition to civilly). It sounds like you're getting at the officious bystander test. The thing is, when the whole community of developers and investors were going on and on about how the code is law, the answer to the question "Should the Ethereum developers intervene if the code does something we don't like?" could very easily have been answered by all parties with a resounding "NO!". I encourage you to search through the Ethereum subreddit during the DAO's ascension, for example. You'll find cases where people were asking about what to do in this very situation, and the answer has consistently been to the effect of "whatever the code executes will be the outcome." > Moreover, representations remain false even with disclaimers acknowledging the representation may be false. Please point out a single case where the developers solicited investment using a false representation of the DAO. They were very clear, very open, and very loud about the fact that the code itself was the contract terms and conditions. The code is open-source as well, and lives on the Ethereum blockchain. Honestly, I'm having a very hard time not seeing this as a bunch of investors losing money for their failure to do due diligence. Especially since the flaw that lead to the DAO's undoing was published years beforehand, in two places [1] [2]. Maybe there's a case for negligence to be made against Slock.it, but it sounded like they were otherwise clear, up-front, and honest about what it was they were soliciting investments for. [1] https://github.com/LeastAuthority/ethereum-analyses/blob/master/GasEcon.md#callstack-depth-limit-errors https://github.com/LeastAuthority/ethereum-analyses/blob/mas... [2] https://forum.ethereum.org/discussion/comment/42100 https://forum.ethereum.org/discussion/comment/42100
- EdHominem 10y ago
  > Why put words in my mouth? I was replying to the wrong post. I had wanted to make it clear that we were discussing the same person. Amusingly, I did it explicitly to avoid the OP thinking I was putting words in their mouth. > In what other area of contract law are people allow to solicit investment based on false representations/marketing and hide from liability based on a disclaimer that the marketing materials may be inconsistent with the contract? The "code is law" was the main point of the marketing. They repeated it constantly. > it isn't novel in law where contracts are inconsistent with marketing material What was the inconsistency? That their goals didn't come true?
  - will_brown 10y ago
    >I was replying to the wrong post. No problem, though we clearly arrive at different conclusions, I thought we were having a interesting conversation. >The "code is law" was the main point of the marketing. They repeated it constantly. To be a little pedantic that is a misrepresentation as code isn't the law, "law is law", at best "code/DAO is contract" (not the marketing material). Nevertheless, I am not denying their disclosures/disclaimers all along, just that legally the contract will not supersede inconsistent representations. >What was the inconsistency? Just to pull some statements from the DAO white paper: "the DAO Token Holders can elect to ‘pull the plug’ on the Contractor at anytime and for any reason. This is a major advantage as it considerably minimizes risk." -In the case of the contract that took the funds, the token holders, were not able to pull the plug (unless you consider the fork pulling the plug, but that is what most people are complaining about, but it was the intent for token holders to have - what I will call - this contractual right). "This standard DAO framework is simple, decentralized and 100% secure." -Again I believe where I say the funds were not secure because they were taken, I know the other side of the coin is that funds at all times were 100% secure because they were intended to be taken since that is what the code allowed. However, why even mention 100% secure, when really what they meant was what ever happens to your funds (invested, taken without being invested, etc...) you consented to contractually. "The first, an informal vote on whether a DAO would like to switch Curator or not. The second, a confirmation vote to give a chance to DAO Token Holders to confirm the result of the first vote, or a chance for the minority to ‘split’ their DAO into two and retain control over their ETH." -The whole concept of voting discussed at length (not the quote I gave above) is a misrepresentation, because investor funds were taken without their vote, and the protections (above) were not actually available to the investors. Unless, again you consider the fork the protection discussed in the white paper, but we know the objections to that. >DAOs are formed by groups of like-minded individuals with specific projects and goals in mind. The DAO/smart contract that took investor funds didn't include specific projects with goals in mind by like minded people, it siphoned off investor funds without consent/voting on the specific proposal or the protections as included in the white paper.
_nalply 10y ago
Even law is not above a re-interpretation. The Germans had a lot of «unlawful» laws. «But I followed the law» didn't interest anybody at the Nuremberg trials – and rightly so.
- EdHominem 10y ago
  The issue isn't as much the rightness of the code - by that standard it was provably pretty not right... I'm talking about the purported duplicity of the DAO founders. I think that they were naive, but clear in their statements. Their goal for the DAO was X, Y, and Z, but that it was enforced by code - not by their stewardship. And boy was that right. I don't think they hid the facts from anyone. Good point about the Nazis though. Many people forget that and fall back to legality as a defense, even still.

will_brown 10y ago

>The Technological-Savvy-Investor (you called them a hacker) Why put words in my mouth? >They were careful to state that if the code and their wishes/statements disagreed, that the code was the authoritative answer. It what other area of contract law are people allow to solicit investment based on false representations/marketing and hide from liability based on a disclaimer that the marketing materials may be inconsistent with the contract? I appreciate that they had the foresight to realize their code was likely to execute in unexpected ways or at least ways inconsistent with their marketing/solicitation and they made those disclaimers, but it isn't novel in law where contracts are inconsistent with marketing material (which even disclose the potential inconsistency).

jude- 10y ago
What was false and misleading? Didn't the DAO creators and enthusiasts insist up and down that the code is the irrefutable interpretation of the contract? Doesn't ethereum.org still state that smart contracts are "applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference"? The only false representations I've seen have been from the Ethereum developers: by hard-forking to change the terms of the DAO, they have misrepresented Ethereum to everyone who invested in its ICO. EDIT: I'm more interested to know whether or not the DAO "attack vector" was placed there intentionally. Then you might be able to argue that the developers acted in bad faith.
- will_brown 10y ago
  >Didn't the DAO creators and enthusiasts insist up and down that the code is the irrefutable interpretation of the contract? Yes, but again this is not unique to the DAO. Moreover, it occurs all the time that marketing materials are put out with disclaimers that the marketing material is just that marketing material and that any inconsistencies between the marketing material and the contract, the contract prevails. It doesn't always make it so and there is good public policy reason why. My analogies are always kind of shot down as it relates to the DAO, but I think they help flush out the legal reasoning. How about valeting your car, obviously there is an implied contract that you will pay the fee and get your car back (maybe even a verbal representation, "just bring the stub back and we will pull your car around") but what if the stub includes language (as they do) that you agree the valet will not be responsible for stolen property and then they don't bring your car back. Who knows who took your car? Maybe the valet, maybe the valet gave the keys to someone else, maybe someone legit broke in and stole your car without the valet being aware... even though you agreed to the contract/terms of the valet ticket it does not become a contractual right for valet to take your car, they could still be liable (potentially criminally in addition to civilly). Moreover, representations remain false even with disclaimers acknowledging the representation may be false.
  - jude- 10y ago
    > Yes, but again this is not unique to the DAO. Moreover, it occurs all the time that marketing materials are put out with disclaimers that the marketing material is just that marketing material and that any inconsistencies between the marketing material and the contract, the contract prevails. It doesn't always make it so and there is good public policy reason why. I don't deny this, and I agree in the general case. However, I haven't see any case where the DAO marketing materials did not state that the code was the terms and conditions. This was, after all, its defining feature. The marketing materials and public information were practically bragging about this, and all pointed to the contract state on the Ethereum blockchain so you could see for yourself. > My analogies are always kind of shot down as it relates to the DAO, but I think they help flush out the legal reasoning. How about valeting your car, obviously there is an implied contract that you will pay the fee and get your car back (maybe even a verbal representation, "just bring the stub back and we will pull your car around") but what if the stub includes language (as they do) that you agree the valet will not be responsible for stolen property and then they don't bring your car back. Who knows who took your car? Maybe the valet, maybe the valet gave the keys to someone else, maybe someone legit broke in and stole your car without the valet being aware... even though you agreed to the contract/terms of the valet ticket it does not become a contractual right for valet to take your car, they could still be liable (potentially criminally in addition to civilly). It sounds like you're getting at the officious bystander test. The thing is, when the whole community of developers and investors were going on and on about how the code is law, the answer to the question "Should the Ethereum developers intervene if the code does something we don't like?" could very easily have been answered by all parties with a resounding "NO!". I encourage you to search through the Ethereum subreddit during the DAO's ascension, for example. You'll find cases where people were asking about what to do in this very situation, and the answer has consistently been to the effect of "whatever the code executes will be the outcome." > Moreover, representations remain false even with disclaimers acknowledging the representation may be false. Please point out a single case where the developers solicited investment using a false representation of the DAO. They were very clear, very open, and very loud about the fact that the code itself was the contract terms and conditions. The code is open-source as well, and lives on the Ethereum blockchain. Honestly, I'm having a very hard time not seeing this as a bunch of investors losing money for their failure to do due diligence. Especially since the flaw that lead to the DAO's undoing was published years beforehand, in two places [1] [2]. Maybe there's a case for negligence to be made against Slock.it, but it sounded like they were otherwise clear, up-front, and honest about what it was they were soliciting investments for. [1] https://github.com/LeastAuthority/ethereum-analyses/blob/master/GasEcon.md#callstack-depth-limit-errors https://github.com/LeastAuthority/ethereum-analyses/blob/mas... [2] https://forum.ethereum.org/discussion/comment/42100 https://forum.ethereum.org/discussion/comment/42100
EdHominem 10y ago
> Why put words in my mouth? I was replying to the wrong post. I had wanted to make it clear that we were discussing the same person. Amusingly, I did it explicitly to avoid the OP thinking I was putting words in their mouth. > In what other area of contract law are people allow to solicit investment based on false representations/marketing and hide from liability based on a disclaimer that the marketing materials may be inconsistent with the contract? The "code is law" was the main point of the marketing. They repeated it constantly. > it isn't novel in law where contracts are inconsistent with marketing material What was the inconsistency? That their goals didn't come true?
- will_brown 10y ago
  >I was replying to the wrong post. No problem, though we clearly arrive at different conclusions, I thought we were having a interesting conversation. >The "code is law" was the main point of the marketing. They repeated it constantly. To be a little pedantic that is a misrepresentation as code isn't the law, "law is law", at best "code/DAO is contract" (not the marketing material). Nevertheless, I am not denying their disclosures/disclaimers all along, just that legally the contract will not supersede inconsistent representations. >What was the inconsistency? Just to pull some statements from the DAO white paper: "the DAO Token Holders can elect to ‘pull the plug’ on the Contractor at anytime and for any reason. This is a major advantage as it considerably minimizes risk." -In the case of the contract that took the funds, the token holders, were not able to pull the plug (unless you consider the fork pulling the plug, but that is what most people are complaining about, but it was the intent for token holders to have - what I will call - this contractual right). "This standard DAO framework is simple, decentralized and 100% secure." -Again I believe where I say the funds were not secure because they were taken, I know the other side of the coin is that funds at all times were 100% secure because they were intended to be taken since that is what the code allowed. However, why even mention 100% secure, when really what they meant was what ever happens to your funds (invested, taken without being invested, etc...) you consented to contractually. "The first, an informal vote on whether a DAO would like to switch Curator or not. The second, a confirmation vote to give a chance to DAO Token Holders to confirm the result of the first vote, or a chance for the minority to ‘split’ their DAO into two and retain control over their ETH." -The whole concept of voting discussed at length (not the quote I gave above) is a misrepresentation, because investor funds were taken without their vote, and the protections (above) were not actually available to the investors. Unless, again you consider the fork the protection discussed in the white paper, but we know the objections to that. >DAOs are formed by groups of like-minded individuals with specific projects and goals in mind. The DAO/smart contract that took investor funds didn't include specific projects with goals in mind by like minded people, it siphoned off investor funds without consent/voting on the specific proposal or the protections as included in the white paper.

_nalply 10y ago

Even law is not above a re-interpretation. The Germans had a lot of «unlawful» laws. «But I followed the law» didn't interest anybody at the Nuremberg trials – and rightly so.

EdHominem 10y ago
The issue isn't as much the rightness of the code - by that standard it was provably pretty not right... I'm talking about the purported duplicity of the DAO founders. I think that they were naive, but clear in their statements. Their goal for the DAO was X, Y, and Z, but that it was enforced by code - not by their stewardship. And boy was that right. I don't think they hid the facts from anyone. Good point about the Nazis though. Many people forget that and fall back to legality as a defense, even still.